Facing down the shale threat


  • Share via facebook
  • Tweet this
  • Bookmark and Share

At an OPEC conference in Vienna in December, the oil minister of the United Arab Emirates was outspoken — unusually so for a top Gulf Arab official — about the threat to the cartel from rising US oil and gas production.

The US shale energy revolution is a “big issue”, Mohammed Bin Dhaen Al Hamli told the meeting of the Organisation of Petroleum Exporting Countries. OPEC, he said, should protect itself by making its oil more attractive to the world’s consumers.

OPEC decided in Vienna not to change its output policy, and since then most Gulf officials in public have stayed sanguine about the prospect of new technologies unlocking hundreds of billions of barrels of oil in the United States and elsewhere.

But Al Hamli’s remarks revealed growing concern about shale among Gulf policymakers and businessmen, which may eventually lead to a shift in economic strategy in the region.

Gulf Arab countries have ridden out the last few years of political and economic turbulence by using petrodollars to pay for large, continuous increases in state spending on social welfare and infrastructure projects.

The rise of shale energy, which could in the long term pull down oil prices and slow growth in demand for supplies from the Gulf, suggests the day is approaching when the region will no longer be able to afford that strategy.

Governments will therefore face growing pressure to create jobs in other sectors and stimulate non-oil parts of their economies. Efforts to move citizens into the private sector, and develop new industries to accommodate them, are likely to accelerate.

Business cooperation between Gulf Arab countries, in areas from financial markets to building a regional railway, may strengthen. Some economists already detect the beginnings of a policy shift.

Mark McFarland, chief investment strategist for the wealth management business of Emirates NBD, Dubai’s biggest bank, says that visiting Saudi Arabia to meet clients last month, he found the shale threat was causing a “rethink” about economic policy.

Among government officials and businessmen around the Gulf, “there is concern at the micro level: how are we going to replace our primary source of income?” he says.

Article continued on next page

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

Posted by: procan

There is so much shale in Canada we do not have to look any more. In Saskatewan large deposit of tradition oil supplies are still been located. Off shore oil and gas, oh my it may well be more than 100 years of sales and supply to local and internationals markets. Canada's Great barrier deposit in Ontario private developers looking shale oil deposits have located massive gold deposit. Yes the worlds wealth is shifting and that's only our piece of it. Russia and China working hard to access there resources also.As my family in Saskatewan say do not for get the potash : )

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Back in business

Back in business

Iran’s tankers are back on the oceans as sanctions on the Islamic...

A new future for Saudi Arabia?

A new future for Saudi Arabia?

The vast Wadd Al Shimal phosphate mine in the north of Saudi...

Will shale shake the Middle East?

Will shale shake the Middle East?

The debate over shale’s impact on the GCC continues. Will this...

Most Discussed
  • 54
    Three UAE women attacked with hammer at London hotel

    I really feel that Arabian Business.Com should now close this comments page. This should be all about sympathy for the families not what it is/has turned... more

    Wednesday, 16 April 2014 1:06 PM - Adrienne
  • 51
    Why Dubai isn't a plastic city

    What is definitely not a plastic city. The Arabs have a culture dating back to several centuries. 50 years back Dubai was just a fishing village. Today... more

    Tuesday, 8 April 2014 3:49 PM - P. MADHUSUDAN
  • 48
    DMCC boss Ahmed Bin Sulayem entertains Robert Mugabe in Dubai

    @fga ''However today, simply because he decided to dispossess a few white farmers of their land and redistribute to the poorer indigenous blacks'' more

    Sunday, 13 April 2014 3:02 PM - Matt Williams