Energy shortage threatens oil-rich GCC

SUPPLY SHORTFALL: The escalating cost and difficulty of extracting hydrocarbons is creating an energy shortage. (Getty Images)

The hydrocarbon-rich GCC is facing a looming energy shortage that risks hampering economic growth, an industry executive said on Tuesday.

Speaking at a conference in Doha, BP Middle East and South Asia President Steve Peacock said the escalating cost and difficulty of extracting hydrocarbons was creating a suppy shortfall in the region.

"The trends we see in the Middle East are similar to other parts of the world - there are plenty of hydrocarbons, but they are becoming more difficult and more costly to extract, and unprecedented growth in demand means that supply is struggling to keep pace in some areas, especially for gas," Peacock said.

"This rate of demand growth and shortage of gas for power generation, dessalination and industrial feedstock is putting some national growth plans at risk."

Peacock's remarks are just the latest warning of an imminent power crisis.

London-based magazine Middle East Economic Digest (Meed) said in March there was a serious supply and demand imbalance in the region's energy sector caused by a lack of infrastructure investment earlier in the decade.

Companies working to close this gap are coming under increasing pressure due to the soaring cost of raw materials and labour, which has let to project delays and even cancellations, the Arab Petroleum Investments Corporation (Apicorp) said earlier this month.

Apicorp estimates projected capital requirements needed to cover energy projects in the region between 2007 and 2011 has risen to a massive $345 billion, up 22% from previous estimates.

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