UAE to work with Opec+ to stabilise oil markets: Minister

Suhail Al Mazrouei, the UAE’s Minister of Energy and Infrastructure, on Monday said the world needs to make long-term plans for a sustainable energy future and the UAE will work with Opec+ to stabilise oil markets.

While speaking at the World Government Summit at Expo 2020 Dubai, he stated that the UAE is not leaving the Opec+ group and will not take unilateral action when it comes to oil production.

“Gas prices suddenly shoot up and they are not sustainable to many countries. Without the development of resources, we will not be able to solve this problem. We are investing in raising our capacity to five million barrels. We said this when others were saying you should not invest in increasing production. We were wise to do that because we are seeing the need for it now. We are continuing on that path. But that doesn’t mean that we are going to leave Opec+ or do something unilaterally. We will work with this group to ensure that the market is stable,” Al Mazrouei said at the opening address on Monday.

Oil prices have surged to over $130 a barrel after the Ukraine-Russia military conflict. The Western countries have been asking oil-producing countries to boost their production to help bring down the crude prices.

Brent crude price was trading at $115.8 per barrel on Monday morning.

Who will replace Russia’s 10m barrels?

The minister added that the Opec+ group is here to stay.

“The fact that we meet on a monthly basis, brought us much closer during the crisis and we have managed to get out of the (pandemic) hole but again we are faced with another crisis. Hence, we stay together and focused and do not allow politics to kick in in this organisation. We always believe that whatever we do when it comes to production, we always need to stay out of politics,” added Al Mazrouei.

“The Organisation (Opec+) will stay. Russia is an important member. Leaving politics aside, that volume is needed today and unless someone is willing to come and bring 10 million barrels, we don’t see that someone can substitute Russia,” he added.

The minister noted that the Opec+ have lost a million barrels in a year and “God knows how many more barrels we will lose. So you need to replace barrels but some countries are exposed to 15-20 per cent decline. We need to replace at least 5 to 8 million barrels that we lose every year by investing in keeping the production steady. We have growing demand and all that requires huge investments.”

Increasing oil production is not like opening a tap

The UAE minister pointed out that the UAE has been consistently saying for quite some time about the need for more investments in oil and gas.

He pointed out that financial institutions are hesitant to invest in oil and gas projects.

“Basically, they say you need to increase production only for a few years and after that thank you very much. As if it’s just like a tap – you open and close it. We definitely need to include all available resources. Abandoning some resources at the time of need where Opec+ have already lost their production by more than a million barrels, we can’t ignore or say we are going to abandon certain production. It is just not the right time because that will make the resources and the price unaffordable to many countries and they will not be able to progress. The global population is increasing and we need to make energy more affordable but we can’t do it while we have been to just investing and increasing production and no one supports,” the minister added.

He stated that energy transition will take time and will need more investments and actions from the investors.

Hydrogen has a bright future

Al Mazrouei added that hydrogen has great potential and UAE is one of the countries that have a roadmap for the utilisation of hydrogen.

“We will start with the blue hydrogen because it’s available and it’s also affordable. We can’t just bring the most expensive form of hydrogen and push it to the market. we need to start by bringing what is available and commercially viable and continue investing in technology to bring green hydrogen which is going to be the future. We are also collaborating with our friends in the US, Europe and East to advance technology to be able to commercialise more green hydrogen projects in the future,” the minister told the audience.

“At the same time, we will not produce hydrocarbon in the old way. We are aiming to produce the lowest carbon barrel in the world. We are participating in every opportunity to reduce emissions and greenhouse gases. We are also promoting renewable energy in more than 40 countries and we are proud of what Masdar is doing for clean energy,” the minister said at the summit.