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Page added on August 30, 2009

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The mirage of energy independence and the reality of interdependence

(MENAFN – Arab News) The International Monetary Fund’s executive board has urged Saudi Arabia to maintain a longer-term perspective on global oil demand. While praising Riyadh for its leadership in stabilizing oil markets by continuing to expand capacity in the face of falling prices, the IMF directors “encouraged the authorities to continue basing their capacity expansion decisions on medium to long-term (and indeed not short-term) demand conditions.”

Indeed easier said than done in many respects, one can’t fail underlining here, especially in the given environment.

Crude business is a serious one. To flourish and prosper, it needs a very conducive environment for it requires huge investments in infrastructure. Billions and billions of dollars are involved and no one could be allowed to dump money on unfeasible and economically unjustified projects. Projects need to be economically feasible. Products need to have a market before one could expand output. It is indeed hard to justify any investment until and unless fair returns could be projected. This is pure business. However, with talks in influential quarters, of developing alternatives and reducing dependence on fossil fuel, that very environment seems missing. Yet, what a paradox indeed; major producers are being pushed, by the likes of IMF, to invest in projects that at best could be hard to be termed as feasible in many respects in today’s environment.

Yet the most unfortunate aspect is that those who matter don’t really seem to be interested, at least for the time being, in creating and generating an environment that could attract investments, huge investments, in the sector.

MENAFN



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