Long-term strategy for GCC Hydrocarbon exporters- Experts urged

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Expert says Gulf hydrocarbon exporters need to formulate a long-term strategy in reactionLong-term strategy for GCC Hydrocarbon exporters- Experts urged to the discovery of shale oil and gas in the U.S and other countries. This urged to diversify economy away from unstable crude costs to guarantee fixed income
Mohammed Al Asumi, a former adviser at the Ministry of Planning and Dubai’s Executive Office, said there have been who works hard in expanding their economies and progressively reposition themselves as primary source of income and energy like UAE and its partners in the six-nation Gulf Cooperation Council (GCC).
He added that in early years, the remarkable progress in energy markets that formed disputes for country oil exporters lead them to achieved the major success in both areas.
“It has hence become necessary for GCC oil producers to re-evaluate the historical relationship between oil and development in the region…these developments pose real challenges which can only be overcome by implementing long-term strategies which take all changes in the energy industry, at the local and global levels, into consideration and aim at defining approaches to be followed in order to minimize the negative aspects and maximize the positive ones,” quoted on an article published by the Abu Dhabi-based Emirates Centre for Strategic Studies and Research.
He said that the production of shale oil and gas in the United States and several other countries is a big issue.  In terms of production and prices in conventional oil and gas industry, such growth poses as threat as it’s terribly affect the gas prices.
He noted that the price of gas futures fell from $11 per thousand cubic feet five years ago to $3 at present, thereby causing severe damage to the world’s gas exporters.
As for oil, the limited reserves of shale oil discovered so far and the extraction costs, in the range of $50-$75 per barrel, is too high compared to less than $20 per barrel of oil in the Gulf region, Asumi said.
“They will be able to cover their development needs in the foreseeable future. It also negates forecasts that increased production of shale oil will lead to lower prices and create financial challenges for oil exporting countries”, he added.
Asumi explained that there is a possibility that technological innovation will result in reduced production and exploration costs in the future but will take a long time to materialize. It means that in the next few years, shale oil is not expected to be an alternative to energy while the global demand for oil is expected to rise from 87 million bpd now to 105 million bpd in 2030.
“Naturally, the increased production of shale oil and gas will lead to a decline in US imports of oil and gas. Until 2011, the US was the largest importer of oil in the world. But as US oil imports fell to almost 6 million barrels per day in December 2012, it was replaced by China as the largest importer of oil,” he said.
“Another important factor is the expected increase in the production of some countries, such as Iraq and Libya. Iraq aims to double its production capacity by up to 6 million barrels per day by 2016, compared to 3 million barrels at the present, while Libyan production is expected to increase significantly in coming years — especially if the security situation stabilizes there.”
In addition, production capacities will increase in GCC countries themselves, and oil production is expected to rise in non-OPEC countries, such as Russia, Brazil and Venezuela, which have large production capacities, Asumi said.
“In any case, the GCC countries need to redraw their development strategies, taking all possibilities into account, and they should move at a faster pace in order to achieve economic diversification and find alternative sources of income, whether by developing non-oil sectors or imposing certain taxes — such as value-added tax (VAT) — to diversify the funding of their annual budgets,” he said.
“At the same time, they should restructure public spending and reduce pressure by allowing the private sector to play a bigger role in economic diversification and create jobs for citizens, which will reduce the burden on their budgets.”