The UAE is not giving up oil for renewables yet

The UAE has no plans to limit its oil production in favor of renewable energy sources, with the country’s climate minister citing strong global demand as a driver for increasing crude oil production. As one of the few countries with the capacity to increase its oil production, the UAE continues to increase its production in line with demand. However, the leader of the state-owned oil company ADNOC is concerned that if other countries do not continue to invest in oil and gas, we may face energy shortages in moving to renewables.

In September, the United Arab Emirates announced plans to increase its oil production to five million barrels per day, five years earlier than planned. Abu Dhabi National Oil Company (ADNOC) was It aims to produce 5 million barrels per dayof crude production by the end of the decade. However, thanks to increased investment, ADNOC now believes it can push this goal forward until 2025 to take full advantage of growing global demand – before demand declines in response to the transition to green.

While other oil-producing countries around the world struggle to bring their production back to pre-pandemic levels, only the United Arab Emirates and Saudi Arabia have excess oil production capacity. The increase in production levels does not come without a cost, but the UAE hopes to sell more oil and natural gas while the price of fossil fuels remains high. Oil prices have consistently broken records this year, natural gas prices have risen in the face of global shortages, and oil-producing nations are benefiting.

ADNOC advertiser Of its new goal, “As we embrace the energy transition and future-proof our business, we will continue to explore potential opportunities that can unlock more value, unlock capital, and enhance returns.” The organization also asked international partners in its oil fields to increase their crude production by at least 10%. Experts believe that if ADNOC achieves its 2025 target, it can increase its target to 6 million barrels per day for 2030.

In August, the UAE’s average production was 3.4 million barrels per day, although it blames it on lower oil production within the OPEC limits. Production could be further hampered by the recent OPEC+ announcement that it will be done Reduce oil production Also, for fear of a drop in global demand due to economic pressures. OPEC+ will cut production across member states by 2 million barrels per day starting in November. But the UAE Minister of Climate Change and Environment, Maryam Al Muhairi, made it clear that as long as the world needs oil and gas, we will give it to them.”

German Chancellor Olaf Scholz visited the United Arab Emirates in September to deepen Germany’s ties with the oil-rich country and move away from dependence on Russian energy. The United Arab Emirates has signed an agreement with Germany for the supply of liquefied natural gas, and the first shipment is expected to be delivered by the end of the year. Although many European countries are shifting away from fossil fuels to renewable alternatives, natural gas is seen as a vital part of the energy transition. The use of “cleaner” fossil fuels will help Germany and other European countries meet their energy needs while developing their green energy capacity.

While continuing to encourage investment in oil and gas, Al Muhairi is also steadfast in her support for the development of a robust renewable industry in the UAE. she explained“We need to be careful…because talks are going on and it’s all about energy, but it’s really important that we don’t lose track of economic growth, [and] Climate is also included. When discussing renewable energy projects in the country, she said, β€œIt’s not just about production…You have to look at the storage, you have to look at the grid, you have to look at the distribution. It’s a complex network.” She added, “It’s really important that economic growth, energy security and climate action work together.”

But not everyone is optimistic about the future of oil and gas. ADNOC CEO Sultan Al Jaber said in September that there was little room for maneuver in oil markets that may be set for further turmoil with minimal spare capacity. He pointed out that the lack of investment in fossil fuels may lead to a gap between supply and demand, while the world is just beginning to develop its capacity for renewable energy. he is explained“If people’s basic energy needs are not met, economic development slows down, and so does climate action.” Jaber added, “If we reduce investment in today’s energy system before tomorrow’s energy system is ready, we will make matters worse.”

The CEO believes that oil spare capacity is equivalent to only 2 percent of global consumption at the moment, a challenge that OPEC+ has highlighted several times. Without increased investment in oil and gas outside the UAE and Saudi Arabia, this protection is unlikely to increase, meaning that dependence will remain heavy on the two oil-rich countries as demand continues to grow.

By Felicity Bradstock for Oilprice.com

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