Changing Energy Landscape of the Middle East
After over two years of production caps agreed by Opec and non-Opec oil producers, global oversupply of oil is reducing. This has increased the stability in the market. Oil, which covers 31% of global energy supply, will continue to be the dominant source of energy until 2050.
Despite the increase in energy demand due to rapid population growth, implementation of tighter fuel-efficiency standards and more energy-efficient forms of transport will lower oil demand gradually with slowdown expected to begin in few years.
The Middle East is shifting its focus towards East as the US and European demand for crude is declining. China and India are the key growth markets of Asia where long-term demand for crude, refined products and petrochemicals looks optimistic.
The regional producers now see petrochemicals as a source of new revenue streams, with demand expected to more than double over the next 20 years. Further, integrating refining and petrochemical complexes minimize energy costs, maximize operational benefits and improve the overall process economics.
Also contributing to the changing energy scene of the ME is the inclusion of renewables in its energy mix with much larger share being planned to come from alternative sources. This would in turn contribute to sustainable development and improve socio-economic conditions across the region. About 62% of the planned or underway power projects, worth $329 billion, in the Mena region is from nuclear, solar and wind sources.
Achieving renewable energy deployment targets in the GCC by 2030 could save 354 million barrels of oil equivalent in fossil fuel consumption in the power sector which is 23% decrease over the baseline, according to IRENA.
Further, the digitalization of industries, cleaner transportation fuels and electrification of vehicles are set to transform the region’s energy market and enhance its global competitiveness.