HOUSTON: The Middle East has great potential as a shale oil-producing area, according to the UAE Energy Minister Suhail Al-Mazrouei, who said the Emirates would inevitably produce shale at some stage.
Speaking at the CERAWeek by IHS Markit energy forum in Houston, Texas, Al-Mazrouei said that the economics of the energy industry had changed following the boom in US shale production, and the UAE was looking at how it might exploit its resources.
“We need to thank the shale oil producers for significantly dropping the cost. That has helped us look at shale with a different eye in the Middle East and in many parts of the world where it is a viable source,” he told delegates.
The UAE’s move into shale will not come immediately, he added. “First, I think we want to produce and consume the easier oil, which we have plenty of. There will be a time when we will tap into the shale oil, but definitely we have looked at the potential,” Al-Mazrouei said.
The technology-driven boom in US oil production has revolutionized the global energy industry, with the International Energy Agency forecasting that the US will overtake Russia as the second-biggest oil exporter, after Saudi Arabia, by 2024.
Al-Mazrouei, who was president of the Organization of the Petroleum Exporting Countries (OPEC) last year, said that this transformation had altered perceptions of the shale business. “The oil revolution is something that demonstrates how tech can help us look at the new frontiers, and whatever we see today as not commercial, one day can be commercial,” he said.
Countries in the Arabian Gulf, including Saudi Arabia and the UAE, have potentially significant reserves of shale oil, but because they also have the greatest concentration of conventional oil in the world, at geologically accessible locations, they have not considered it economically worthwhile to produce shale.
“In the beginning people were thinking it’s just a phenomenon, it’s not going to last for longer. Personally, I was thinking that shale oil is needed, and that we need to work with shale oil producers as partners. We need to complement each other,” Al-Mazrouei added.
For the past two years at CERAWeek, OPEC representatives met with executives from the US shale business to discuss areas of mutual interest.
“We started to have a technical dialogue, not a commercial dialogue, to see how can we complement each other in fulfilling the demands of the world and making sure that we have the right commodity at the right time for the right consumers,” Al-Mazrouei said.
He credited the alliance between OPEC, led by Saudi Arabia, and other major oil producers, led by Russia, for bringing about balance in the world oil market. “We managed to get a consortium together. Since then we began to gradually recover the market balance, and we achieved that balance last year in the summer,” he said.
However, for many reasons, including geopolitics, “we had to change the strategy again and adopt the new agreements that we adopted at the end of 2018. Now we’re seeing that strategy has been working, reducing inventories and trying to get to the five-year average (oil price), where we feel it’s the right environment for the balance and for the oil industry to thrive again,” he added.