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- Dubai 05:21 06:34 12:33 15:53 18:26 19:40
Despite the ongoing financial crisis and the fall in oil price below $40 per barrel, the world needs to invest $26 trillion (Dh95trn) for the next 20 years to meet the expected growth in energy demand from population growth, new urbanisation of 500 million people and to meet the future energy requirements.
Abdul Kareem Al Mazmi, Regional Vice-President, BP Middle East, said during a presentation at the Sustainable Development Congress the oil sector needs an average investment of $1trn per year till the year 2030 and big players in the market will be able to consolidate their market position as many new entrants in the oil and gas market may run out of business due to the sudden fall in oil prices.
He said the cost of oil production in the UAE/Gulf is just $2 per barrel. "The cost of oil production used to be only $1 per barrel and now due to inflation, especially high steel price, the cost of oil extraction has gone up to $2 per barrel. The current crisis will not affect oil investments in the UAE," he said, adding the cost of oil production in the North Sea is very high. He said most of the world's proven oil and gas reserves are in the Gulf.
Speaking at the first Sustainable Development Congress in Sharjah organized by Alleem Learning Centre, Abdul Kareem said: "Oil and gas industry is hugely capital intensive industry and there is huge requirement for investment in the field. More than $26trn investment is needed to meet the projected oil and gas demand by 2030 and we will see more international investment coming into the development of these costly reserves. The energy resources are available and the capital too is available."
He said there is speculation that oil and gas reserves will run out of stock, "but if we produce at the current rate, there is enough oil for the next 42 years and gas for next 60 years".
"So far the world has produced only one trillion barrels of oil and another trillion barrels exist under the earth. The Middle East region sits on huge amounts of oil and gas, some of which are very expensive to explore," he said. There is growing long-term demand for energy, which requires massive scale of investment. Based on the simple average of International Energy Agency and the IAE reference case scenarios, upto 2030 the cumulative investment in energy supply at 2007 prices is $26trn. The fuel mix – shares of global primary energy requirement from 2070 to 2030 – is expected to growth at the rate of 1.1 per cent in oil, 1.7 per cent for gas, 1.8 per cent for coal, 1.3 per percent per year in nuclear energy and two per cent in hydro and other energy sectors.
According to Abdul Kareem, the cumulative investment in energy supply per year is $591bn in power – $274bn in oil, $237bn in gas and $32bn in coal.
He said the world is not running out of fossil fuels, but they are increasingly difficult to develop. There are 1,000 billion barrels of proven energy reserves.
He said the Middle East North Africa region would require 100 million new jobs in the industrial sector at the rate of six million new jobs every year and there is a huge challenge for governments, oil companies and educational institutions to find job for them.
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