UAE, Kuwait, Oman face acute water scarcity

New research reveals that scarcity could fuel surge in oil prices

The UAE along with Kuwait, Oman and other Opec nations face an extreme water scarcity which could spiral the oil prices higher, according to the latest study released on Tuesday.

Risk analysis and mapping firm Maplecroft said of the 12 Organisation of the Petroleum Exporting Countries (Opec) members, six - Algeria, Iraq, Kuwait, Libya, Saudi Arabia and the UAE, are in the highest risk category, whilst a further two - Iran and Qatar - are rated ‘high risk.’ Collectively, these countries produced approximately 30 per cent of global oil production in 2009, whilst the countries at extreme and high risk collectively produced 45 per cent of global oil in 2009.

It said extreme water security risks across the Mena may lead to further increases in global oil prices and heightened political tensions in the future.

The Water Security Risk Index of Maplecroft rates 18 countries at ‘extreme risk’ with 15 located in the troubled Mena region. These include: Mauritania (1), Kuwait (2), Jordan (3), Egypt (4), Niger (6), Iraq (7), Oman (8), UAE (9), Syria (10), Saudi Arabia (11), Libya (14), Djibouti (16), Tunisia (17) and Algeria (18).

The UAE spends nearly Dh11.8 billion per year on the production of desalinated water to ensure its fast growing needs of drinking water and offset its dwindling reserves, Mariam Al Shannas, a spokeswoman for the Ministry of Water and Environment, said told media recently.

The investments cover nearly 70 sea desalination plants, accounting for around 14 per cent of the world’s total output of desalinated water, she said.

Mohammed Al Bowardi, Secretary-General of the Abu Dhabi Executive Council and Managing Director of the Environment Agency - Abu Dhabi, recently acknowledged that the UAE faces growing challenges with water usage, 24 times larger than the total annual renewable water resources of the emirates.

“Irrigation accounts for 76 per cent of the water use in the country. With growing population demands and large economic development plans, our water scarcity problem may grow more acute,” he warned in an interview recently.

A survey released earlier this week showed that nearly a quarter of UAE couples fear that there will not be enough fresh available water for their children.

Conducted by Procter and Gamble with YouGov Siraj, the survey found that Emiratis are more even concerned as 28 per cent worry that limited natural resources will be an issue for the next generation.

However, Minister of Environment and Water Dr. Rashid Ahmed Bin Fahd assured that adequate water supply to meet the demand of the country's population always remained among the top priorities of UAE despite the pressures and challenges faced by water resources.

He added that though the demand continued to rise during the past decades, the entire population was able to get sufficient water supply for various needs.

Maplecroft said a lack of access to water can have a great number of direct and indirect effects and the repercussions can reverberate globally. Of particular importance to the global and local economy is the use of large quantities of water in the production of oil. “Lift water,” which some companies source from aquifers, is used to force oil out of the well that would not rise under its own pressure from the geology. This process is undertaken to prolong the economic lifespan of the well, and allow a greater volume of oil to be extracted. If sufficient water is not available productivity will decrease and operations will be interrupted, which could significantly affect global oil supply and prices.

Reliance on transboundary water supplies in such a troubled region presents a significant risk for these countries. A long-running example of this is the use of the waters of the River Jordan. This has been central to many episodes in conflict between Israel and Jordan. Jordan’s attempted diversion of the river in 1964 is widely considered to have led to the “Six-Day War.” Article Six of the Israel-Jordan peace treaty of 1994 was devoted to the detail of water resources’ distribution. The river Jordan provides 25-30 per cent of Israel’s water, and 75 per cent of Jordan’s.

As water becomes scarcer in the Mena region, each country will be encouraged to safeguard its supplies by taking measures the other may see as provocative, potentially exacerbating or sparking conflict situations.

“Water security has the potential to compound the already fragile state of societal affairs in some countries,” says Professor Alyson Warhurst, CEO of Maplecroft. “For example, in Egypt water security may intensify the on-going civil tensions. In turn it is not unrelated to food security, which leads to cost of living protests and in turn violent oppression in less democratic societies.”

Technological innovations, including the desalination of salt water, may however alleviate some of these risks. The annual volume of desalinated water in Saudi Arabia is planned to double from 1.05bn m3 to 2.07m3 between 2010 and 2015 under a 5 year infrastructure spending plan. As part of these plans the world’s largest solar power desalination plant is planned to provide 10million m3 per year. Desalination accounts for about 50 per cent of the country’s drinking water, with 40 per cent coming from ground water, 9 per cent from surface water and 1 per cent from waste water.

“For business, there are three considerations,” continued Professor Warhurst. “First, studying water security is a helpful indicator of risk of societal instability. Second, water security is worsening in countries of high growth like Egypt, India and China and business sectors that are intensive in water use will need to consider their impacts. Thirdly, there are good examples of business initiatives to enhance water security for communities in water stressed regions and the lessons of good practice need to be more widely disseminated."

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