GCC states, particularly the UAE, Qatar and Saudi Arabia, plan to award contracts worth over $68 billion during the next five years to raise gas production, according to a report.
Gas will overtake oil in demand in the Middle East after 2025, with 50 per cent of all energy demand coming for gas in 2040, said a white paper released by Deloitte titled ‘Middle East Energy and Resources: Managing scarcity for the future’.
Most National Oil Companies (NOCs) in the Middle East already have multi-billion dollar investment plans for gas exploration and production, it said.
Meanwhile, despite a growing focus on renewable and alternative forms of energy, oil and gas will account for about 60 percent of global energy demand in 2040, up from 55 percent in 2010, it said.
Although oil is still projected to remain the primary fuel, significant advancements in technology will cause natural gas to overtake coal as the number two fuel source, according to Deloitte’s white paper.
“Although the share of demand for oil and gas is set to rise, it is important to note that alternative energy sources such as nuclear, wind, solar and biofuel will also take on an increasingly significant role in meeting the world’s energy needs in the future,” said Kenneth McKellar, energy and resources leader at Deloitte in the Middle East.
With the nature of oil and gas production diversifying, strategies shifting to the unconventional, and an unprecedented rise of energy demand globally, research and development (R&D) will play a crucial role in the longevity of the industry. This is especially significant to the Middle East, where capacity building in local knowledge capital is critical to the development of the socio-economic fabric of the region, the paper said.
Deloitte’s whitepaper also explores the challenges facing the energy industry, which include the serious issue of skills shortages. This is a global problem but even more pronounced in the Middle East where students across the region are choosing to pursue business careers outside of technology, physical sciences and technical process industries. These trends are stimulating high demand for a powerful combination of technology and talent in the Middle East. The restructuring of the existing talent pool, with preference for local hires rather than expensive expatriates, is yet another obstacle to bringing in the required skills in the short run, it said.
In addition to skills shortages, substantial organizational change across the major NOCs, in the form of human resources transformation, strategic change and workforce planning among other areas, is leading to further delays in the decision-making process and project approvals. R&D centres may also face significant challenges from political instability in the region, which may result in domestic strategies shifting and government funding being swayed to other areas, as national security and other domains take priority. Hence, Middle East oil and gas markets may remain volatile for the foreseeable future, the paper added.