Some energy trends are set by factors that grind forward as slowly, invisibly and inexorably as a drill-bit. Only a major global conflict, climate shift or technological or social upheaval looks capable of deflecting them. Last week’s World Oil Outlook from Opec, one of the industry’s most influential reports, offers reasonable optimism for the big oil producers in the coming years, but cannot dispel the long-term concerns.
At the most basic level, global energy use continues to be dictated by a combination of geology, demographics, macroeconomics and logistics, all of which are immutable except on longer time-scales. Opec’s report noted that Asian markets will continue to grow in their energy use for the foreseeable future, with a growing proportion of oil produced being used for transport and petrochemicals. Fossil fuels' share of the overall energy mix will continue to be large, but will begin to shrink, with the Middle East’s dominant role in petroleum production being sustained.
Within this context, it is possible to see a tolerable future for major oil exporters, in particular the Opec states. The future of Opec earnings is determined by three factors: the change in world oil demand, how much of this is supplied by the Opec states, and the price. Opec’s report a slow rise in all three.
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What is striking is that this is about as good as it gets for Opec, particularly in the longer term. Short-term disruptions or a surge in demand, leading to a spike in prices, are always possible. But it is getting harder to foresee the rapid rise in prices and demand witnessed in the early 2000s. A scenario of faster economic growth over the whole period results in oil demand that even by 2040 is just 2.7 million bpd higher than the report’s mid-case.
Conversely, the Opec’s study sees alternative-fuelled vehicles – mostly electric – shaving just 4.9 million barrels per day off total road transport demand of 45.9 million barrels per day by 2040. It is not difficult to imagine – as environmentalists and even many mainstream forecasters do – that electric cars could take off much faster than Opec is forecasting.
The outlook for Opec’s market share is less rosy than for overall oil demand. The group’s total output, set to pick up a little to 2020, then stays essentially flat to 2023-2026, depending on the strength of non-Opec producers. In the most pessimistic case, when non-Opec output grows strongly, Opec would not get back to its 2017 production level until 2032 – a lost decade and a half. Compared to last year’s report, this year’s survey dramatically boosts forecasted US shale oil output up to 2022, by another 2.5 million bpd.
This eventual rise in the “call on Opec” is driven by the report’s assumption that US unconventional oil production will go into decline from 2025 onwards. Output from Russia barely grows to 2022 and then shrinks again, with only Canada, Brazil and Kazakhstan leading long-term gains. This relies on no other region emulating the American oil revolution over the next two decades.
The third component, oil price, has since the Second World War averaged $41.58 per barrel in today’s money; in the era of producer power, from 1973 onwards, it has averaged $57.67. The target price suggested by Opec’s current quota arrangement, currently around $60, might seem modest, but is actually above historic levels.
Opec’s report is itself coy on oil prices, perhaps wisely in view of other forecasters’ repeated egregious misses in both directions. Directionally though, it foresees a long-term price rise, itself a bold call in view of technology improvements and stagnating demand.
It is hard to see what could go much more right for Opec; demand or prices could certainly be somewhat higher, but not by a lot over the long term. It is far easier however to see what could go wrong: most obviously, the rise of non-oil technologies such as electric vehicles, spurred either by strong climate policies or simple technical and economic advances and consumer preference.
For understandable political reasons within the organisation, the report does not go into the division of Opec’s share between its members, or how their strategies might diverge. If the organisation’s crude output is flat around 34 million barrels per day, that gives little room for members who wish to expand: notably Iraq and Iran, and also the UAE and Kuwait. Iraq is the only country, inside or outside Opec, with the large, low-cost resources and the plan to match the Saudis in magnitude of flexible output. The Iraqis do not have the investment climate to achieve that eminence, or the strategy to use it – for now.
The tensions would be more acute if prices are not rising, making production growth the only route to expanded revenues. Members who seem doomed to falling long-term oil output due to limited reserves, notably Algeria and Qatar, will lose influence in Opec, although Doha’s gas will cushion its crude decline. Then wildcards such as Venezuela and Libya may see anything from collapse to strong growth, depending on internal politics and security.
In such a world, will the Saudi-led inclination towards moderate prices endure? And how will the Kingdom react if others within the organisation seek to gain market share and revenues while its own remain flat? The leading oil states should plan ahead for the unsettling implications of their latest research.
Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis
THE BIO
Bio Box
Role Model: Sheikh Zayed, God bless his soul
Favorite book: Zayed Biography of the leader
Favorite quote: To be or not to be, that is the question, from William Shakespeare's Hamlet
Favorite food: seafood
Favorite place to travel: Lebanon
Favorite movie: Braveheart
'Skin'
Dir: Guy Nattiv
Starring: Jamie Bell, Danielle McDonald, Bill Camp, Vera Farmiga
Rating: 3.5/5 stars
The Bio
Ram Buxani earned a salary of 125 rupees per month in 1959
Indian currency was then legal tender in the Trucial States.
He received the wages plus food, accommodation, a haircut and cinema ticket twice a month and actuals for shaving and laundry expenses
Buxani followed in his father’s footsteps when he applied for a job overseas
His father Jivat Ram worked in general merchandize store in Gibraltar and the Canary Islands in the early 1930s
Buxani grew the UAE business over several sectors from retail to financial services but is attached to the original textile business
He talks in detail about natural fibres, the texture of cloth, mirrorwork and embroidery
Buxani lives by a simple philosophy – do good to all
Day 3, Abu Dhabi Test: At a glance
Moment of the day Just three balls remained in an exhausting day for Sri Lanka’s bowlers when they were afforded some belated cheer. Nuwan Pradeep, unrewarded in 15 overs to that point, let slip a seemingly innocuous delivery down the legside. Babar Azam feathered it behind, and Niroshan Dickwella dived to make a fine catch.
Stat of the day - 2.56 Shan Masood and Sami Aslam are the 16th opening partnership Pakistan have had in Tests in the past five years. That turnover at the top of the order – a new pair every 2.56 Test matches on average – is by far the fastest rate among the leading Test sides. Masood and Aslam put on 114 in their first alliance in Abu Dhabi.
The verdict Even by the normal standards of Test cricket in the UAE, this has been slow going. Pakistan’s run-rate of 2.38 per over is the lowest they have managed in a Test match in this country. With just 14 wickets having fallen in three days so far, it is difficult to see 26 dropping to bring about a result over the next two.
Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
COMPANY PROFILE
Company name: OneOrder
Started: March 2022
Founders: Tamer Amer and Karim Maurice
Based: Cairo
Number of staff: 82
Investment stage: Series A
FROM THE ASHES
Director: Khalid Fahad
Starring: Shaima Al Tayeb, Wafa Muhamad, Hamss Bandar
Rating: 3/5
Normcore explained
Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.
SPECS
Engine: 1.5-litre turbo
Power: 181hp
Torque: 230Nm
Transmission: 6-speed automatic
Starting price: Dh79,000
On sale: Now
West Asia rugby, season 2017/18 - Roll of Honour
Western Clubs Champions League - Winners: Abu Dhabi Harlequins; Runners up: Bahrain
Dubai Rugby Sevens - Winners: Dubai Exiles; Runners up: Jebel Ali Dragons
West Asia Premiership - Winners: Jebel Ali Dragons; Runners up: Abu Dhabi Harlequins
UAE Premiership Cup - Winners: Abu Dhabi Harlequins; Runners up: Dubai Exiles
UAE Premiership - Winners: Dubai Exiles; Runners up: Abu Dhabi Harlequins
ROUTE TO TITLE
Round 1: Beat Leolia Jeanjean 6-1, 6-2
Round 2: Beat Naomi Osaka 7-6, 1-6, 7-5
Round 3: Beat Marie Bouzkova 6-4, 6-2
Round 4: Beat Anastasia Potapova 6-0, 6-0
Quarter-final: Beat Marketa Vondrousova 6-0, 6-2
Semi-final: Beat Coco Gauff 6-2, 6-4
Final: Beat Jasmine Paolini 6-2, 6-2
Children who witnessed blood bath want to help others
Aged just 11, Khulood Al Najjar’s daughter, Nora, bravely attempted to fight off Philip Spence. Her finger was injured when she put her hand in between the claw hammer and her mother’s head.
As a vital witness, she was forced to relive the ordeal by police who needed to identify the attacker and ensure he was found guilty.
Now aged 16, Nora has decided she wants to dedicate her career to helping other victims of crime.
“It was very horrible for her. She saw her mum, dying, just next to her eyes. But now she just wants to go forward,” said Khulood, speaking about how her eldest daughter was dealing with the trauma of the incident five years ago. “She is saying, 'mama, I want to be a lawyer, I want to help people achieve justice'.”
Khulood’s youngest daughter, Fatima, was seven at the time of the attack and attempted to help paramedics responding to the incident.
“Now she wants to be a maxillofacial doctor,” Khulood said. “She said to me ‘it is because a maxillofacial doctor returned your face, mama’. Now she wants to help people see themselves in the mirror again.”
Khulood’s son, Saeed, was nine in 2014 and slept through the attack. While he did not witness the trauma, this made it more difficult for him to understand what had happened. He has ambitions to become an engineer.
The specs
Engine: 2.0-litre four-cylinder turbo hybrid
Power: 680hp
Torque: 1,020Nm
Transmission: 9-speed auto
Fuel consumption: 7.5L/100km
On sale: Early 2024
Price: From Dh530,000 (estimate)
Story of 2017-18 so far and schedule to come
Roll of Honour
Who has won what so far in the West Asia rugby season?
Western Clubs Champions League
Winners: Abu Dhabi Harlequins
Runners up: Bahrain
Dubai Rugby Sevens
Winners: Dubai Exiles
Runners up: Jebel Ali Dragons
West Asia Premiership
Winners: Jebel Ali Dragons
Runners up: Abu Dhabi Harlequins
UAE Premiership Cup
Winners: Abu Dhabi Harlequins
Runners up: Dubai Exiles
Fixtures
Friday
West Asia Cup final
5pm, Bahrain (6pm UAE time), Bahrain v Dubai Exiles
West Asia Trophy final
3pm, The Sevens, Dubai Hurricanes v Dubai Sports City Eagles
Friday, April 13
UAE Premiership final
5pm, Al Ain, Dubai Exiles v Abu Dhabi Harlequins
COMPANY PROFILE
Company: Eco Way
Started: December 2023
Founder: Ivan Kroshnyi
Based: Dubai, UAE
Industry: Electric vehicles
Investors: Bootstrapped with undisclosed funding. Looking to raise funds from outside
Developer: Ubisoft Montreal / Ubisoft Toronto
Publisher: Ubisoft
Platforms: Playstation 4, Xbox One, Windows
Release Date: April 10
Haemoglobin disorders explained
Thalassaemia is part of a family of genetic conditions affecting the blood known as haemoglobin disorders.
Haemoglobin is a substance in the red blood cells that carries oxygen and a lack of it triggers anemia, leaving patients very weak, short of breath and pale.
The most severe type of the condition is typically inherited when both parents are carriers. Those patients often require regular blood transfusions - about 450 of the UAE's 2,000 thalassaemia patients - though frequent transfusions can lead to too much iron in the body and heart and liver problems.
The condition mainly affects people of Mediterranean, South Asian, South-East Asian and Middle Eastern origin. Saudi Arabia recorded 45,892 cases of carriers between 2004 and 2014.
A World Health Organisation study estimated that globally there are at least 950,000 'new carrier couples' every year and annually there are 1.33 million at-risk pregnancies.
Email sent to Uber team from chief executive Dara Khosrowshahi
From: Dara
To: Team@
Date: March 25, 2019 at 11:45pm PT
Subj: Accelerating in the Middle East
Five years ago, Uber launched in the Middle East. It was the start of an incredible journey, with millions of riders and drivers finding new ways to move and work in a dynamic region that’s become so important to Uber. Now Pakistan is one of our fastest-growing markets in the world, women are driving with Uber across Saudi Arabia, and we chose Cairo to launch our first Uber Bus product late last year.
Today we are taking the next step in this journey—well, it’s more like a leap, and a big one: in a few minutes, we’ll announce that we’ve agreed to acquire Careem. Importantly, we intend to operate Careem independently, under the leadership of co-founder and current CEO Mudassir Sheikha. I’ve gotten to know both co-founders, Mudassir and Magnus Olsson, and what they have built is truly extraordinary. They are first-class entrepreneurs who share our platform vision and, like us, have launched a wide range of products—from digital payments to food delivery—to serve consumers.
I expect many of you will ask how we arrived at this structure, meaning allowing Careem to maintain an independent brand and operate separately. After careful consideration, we decided that this framework has the advantage of letting us build new products and try new ideas across not one, but two, strong brands, with strong operators within each. Over time, by integrating parts of our networks, we can operate more efficiently, achieve even lower wait times, expand new products like high-capacity vehicles and payments, and quicken the already remarkable pace of innovation in the region.
This acquisition is subject to regulatory approval in various countries, which we don’t expect before Q1 2020. Until then, nothing changes. And since both companies will continue to largely operate separately after the acquisition, very little will change in either teams’ day-to-day operations post-close. Today’s news is a testament to the incredible business our team has worked so hard to build.
It’s a great day for the Middle East, for the region’s thriving tech sector, for Careem, and for Uber.
Uber on,
Dara
COMPANY PROFILE
Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends
2017 RESULTS: FRENCH VOTERS IN UK
First round
Emmanuel Macron: 51.1%
Francois Fillon: 24.2%
Jean-Luc Melenchon: 11.8%
Benoit Hamon: 7.0%
Marine Le Pen: 2.9%
Second round
Emmanuel Macron: 95.1%
Marine Le Pen: 4.9%