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Analysts say transparency key in tackling energy challenges in Mideast

Analysts say available resources are not going to be adequately meeting demand domestically in a few years

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Energy demand continues and will continue to grow among GCC countries, forecasts Andreas Kyrilis, Principal at Boston Consulting Group Middle East.

Going forward, he said the question of how to make optimal use of energy resources is set to become a burning topic – especially as standards of living become higher, energy demand increases and new supply sources come on stream.

In the MENA region, in particular, the collective annual primary energy consumption – across countries such as Saudi Arabia, UAE, Kuwait and Qatar – has surged from 310 MTOE to 395 MTOE in the past five years, he noted. “This figure – which represents a 4.5% increase year-on-year – is the result of the rising energy demand of fast-growing populations and the push towards diversification through the development of a strong local industrial base driven by the petrochemicals sector,” Kyrilis said.

Available resources are not going to be adequately meeting demand domestically in a few years, he further said. In addition, there has been a parallel rise in rates of domestic energy consumption and population growth in the GCC, the latter which increased by 4.1 % annually from 2000 to 2014. This, of course, makes effectively managing energy – across the region – a pressing concern, he pointed out.

Kyrilis suggests that countries should adopt a strategic, holistic approach toward optimizing all aspects of the energy sector, saying “an integrated energy strategy is an imperative necessity for countries looking to extract more value from their resources.” He explained that “as part of the strategy, overarching key principles should be followed. These include establishing deep integration between resource utilization and economic objectives at a national level; shifting some of the focus away from the monetary benefits of hydrocarbon exports; and, building a more diversified economy through investments across the energy value chain.”

More importantly all important aspects of energy should be observed in a coherent and coordinated manner rather than through individual initiatives – decisions that affect the everyday habits of the public regarding electricity and transportation fuel prices for private and industrial use, installation of energy efficient technologies, building code regulation should be taken in tandem with the plan for deployment renewable and nuclear technologies and central oil and gas production, Kyrilis stressed.

“This will ensure that all decisions are purposeful and not apply strain on living conditions if other more effective ways of saving energy exist.”

To make this happen, he underscored that it is important that all energy related regulation and policymaking is taking place with strong coordination among the existing policymakers, who in the case of energy can comprise a very broad network representing producers and consumers of energy: industry, commerce, transportation, economic development, and urban development are a few of the sectors that can have a strong influence in national energy policymaking.

“Due to the complex nature of the relationships though,” Kyrilis said “it is crucial that all stakeholders are aligned around certain key goals at national level (typically economic development/diversification, security of supply, resource sustainability and cost competitiveness). Transparency and clarity around common goals will ensure that there is clear understanding of the purpose behind sometimes difficult changes in the existing regulation (e.g. retail fuel prices) and support driving change at national level.”

This article was first published in the Saudi Gazette on Feb. 1, 2016.