Energy was on the agenda at last month’s Arab Strategy Forum, but only just.
It was telling to find just three or four sessions of those held over several days even began to touch on areas of interest to the Oil & Gas market. While the region knows that Arab business is not just the oil business, an agenda like this can only spread the message further.
Although it may not have been the greatest part of the agenda there were a few big names in place to discuss the energy issues, including Jeroen van der Veer, the head of Shell. He, along with a few other influential names, including Rajen Kilachand who heads up the Dodsal Group in the United Arab Emirates, appeared in a public session discussing the global race for energy, though no one ventured to say anything particularly new or unexpected. In fact, that seemed to be the case in a number of sessions, so perhaps the more meaningful discussions went on behind the scenes?
Cambridge Energy Research Associates, aka CERA, contributed to a wider speculative debate, presenting three scenarios of how the energy market could develop up to 2030. Entitled Asian Phoenix, Break Point and Global Fissures, each one presents a possible turn of events. Asian Phoenix postulates that the “centre of economic and political gravity” will shift to the Asia-Pacific region, leading the region to become the dominant energy consumer. Break Point looks at the possibility that “oil supply difficulties limit production growth, leading to sustained high prices and significant market response toward alternative fuels and technologies.”
Finally Global Fissures describes a world where there is a “widespread social and political backlash against free trade and market liberalisation in both developed countries and emerging markets.”
While all necessarily speculative, these scenarios do help fuel debate, despite the fact that not much of this was to be heard at the forum itself. All would have an impact on the economic future of the region and an ability to respond to changes will be essential, regardless of how the energy market actually develops.
Ability to change also featured in another of the forum’s discussions: Will the new oil boom kill reform and growth?
According to those speaking at this seminar session, including Mustapha Nabli, chief economist and director, Social and Economic Development Group, Middle East and North Africa region, the countries of the Middle East are diverging.
The divergence, they said, is between the oil-producing countries of the region and the non-oil producing countries, including Egypt, Jordan and Lebanon.
In an recent report entitled MENA Economic Developments and Prospects 2006: Financial Markets in a New Age of Oil, research showed that, compared with past oil booms, the resource-poor economies are not enjoying as many spill over effects from the high price of oil.
In fact, the report finds that the relationship between the benefits these countries gain and the high oil price have reduced considerably.
The session suggested the outlook is better for GCC countries. The Gulf was described as having more economic dynamism, in terms of more productive schemes and diversification, because the private sector continues to insist on reform. Also, increased oil revenues in the Gulf have been used to pay down debt and have flowed to the banking sector, not just to governments.
The speakers concluded that the consensus for reforming the oil industry today remains unaltered from the way it stood a few years ago and prior to the recent run of oil price increases: more market-based diversification for the oil producing countries and integration into the global economy.
Follow us on
