Global shifts set to transform the Middle East energy sector

Global shifts set to transform the Middle East energy sector
Published: 17 February 2018 - 12:04 a.m.
By: Utilities ME Staff

Growing global diversification of the energy mix and an increased share of natural gas, renewables and electrification, is challenging conventional approaches and business models in the energy value chain.

Oil rich nations have a window of opportunity to transform and be well positioned to benefit from this shifting global energy landscape, according to recent report 'The Great Energy Shift, produced by global strategic management consultants, A.T. Kearney.

Eduard Gracia, principal at A.T. Kearney said: 'Market trends along the energy value chain are dramatically changing the landscape. We expect an energy market characterized by increased demand in addition to increased electrification, supply fragmentation and consumer power. This will over time lead to stabilization of energy prices and a convergence of energy markets.

According the report, three recommendations which will support oil-rich nations and national oil companies in the region to effectively address the global disruptive changes of the energy sector embrace renewables; leverage gas reserves and expand down the value chain.

Sean Wheeler, partner, A.T. Kearney said, 'Our industry is rapidly changing. Global energy transition will lead to a broader mix of energy sources and a more fragmented supply, also in this region.

Many of the regional oil players have already initiated projects to prepare for the great energy shift ranging from investments, into solar energy and gas, to increasing downstream oil and gas investments.

Commenting on this strategy, Rudolph Lohmeyer, vice president A.T. Kearney Global Business Policy Council said, 'The Middle East enjoys an important advantage due to both its comparatively cheap hydrocarbon reserves and its geographic location. At these times of change, it is key that nations and national oil companies manage uncertainty by applying the disciplines of strategic foresight to their decision-making. This is particularly critical for a sector in which the returns on capital investment unfold over decades.

The report concludes that oil rich nations must focus their investments on opportunities that leverage their competitive advantages, an educated workforce and the ideal geographic location.

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