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Page added on October 29, 2013
UAE ‘not threatened’ by US shale boom, oil minister says
The United Arab Emirates – OPEC’s fourth-largest crude oil producer – does not feel threatened by the U.S. shale boom, according to the country’s energy minister.
The United States has overtaken Saudi Arabia to become the world’s biggest oil producer as the jump in output from shale has led to the second-biggest oil boom in history, leading U.S. energy consultancy PIRA said this month.
“I’m not threatened by that dynamic,” UAE Energy Minister Suhail Mohammed Al Mazrouei told CNBC in an interview on Monday during Singapore International Energy Week.
“Definitely there are countries – as members of OPEC [Organization of Petroleum Exporting Countries] – that will be impacted because their conventional market is the U.S.”
The U.S. shale boom has raised fears in some quarters of OPEC – which pumps more than a third of the world’s oil – of a structural decline in U.S. demand as the world’s largest energy consumer moves closer towards self-sufficiency and oil flows are re-drawn.
OPEC forecasts released in July showed that the world will need less of its crude in 2014 because of rising output in the U.S. and Canada. Demand for OPEC’s crude will fall by 300,000 barrels a day next year to 29.6 million a day, the producer group said.
However, Al Mazrouei noted that the UAE was prepared for a decline resulting from the U.S. shale boom.
U.S.-educated Al Mazrouei, 40, said the UAE saw the potential threat to OPEC’s market share from U.S. shale “years back” and drew up plans accordingly to foster deeper ties with fast-growing economies in Asia including South Korea, China, Japan and India that went beyond traditional supply contracts.
“We have them playing a role in our country whether in the upstream or in the contracting business and we are also contributing through our investment arms through major investments in those countries including exploration and production,” Al Mazrouei said.
“The energy map is shifting towards Asia,” he added.
South Korea’s state-run Korea National Oil Corp secured three oil production blocks in the UAE in March of last year, investing about $2 billion to take a 40 percent stake in the blocks in Abu Dhabi with estimated reserves of 570 million barrels, according to the Financial Times.
The finalized deal was the culmination of long negotiations by South Korean officials, who have been forging a strong rapport with the emirate after securing a $20 billion deal to build nuclear reactors there in 2009, the FT reported.
Despite the UAE’s position, other OPEC members showed signs of concern. Saudi billionaire Prince Alwaleed bin Talal has warned that the kingdom’s oil-dependent economy is increasingly vulnerable to rising U.S. energy production, breaking ranks with oil officials in Riyadh who have played down its impact, the Wall Street Journal reported in July.
In an open letter dated May 13 addressed to Saudi Oil Minister Ali al-Naimi and several other ministers, he warned that the expansion in U.S. shale oil and gas will reduce demand for OPEC crude.
5 Comments on "UAE ‘not threatened’ by US shale boom, oil minister says"
Jimmy on Tue, 29th Oct 2013 11:37 am
“The United States has overtaken Saudi Arabia to become the world’s biggest oil producer”
Idiots!
mo on Tue, 29th Oct 2013 1:38 pm
Every thing we produce we have to use. Plus we have to import 6,7,8 million barrels a day! Where doing so good!
shortonoil on Tue, 29th Oct 2013 2:49 pm
According to our calculations for 2012: if conventional crude had been replaced with non-conventional (extra heavy, shale oil, tar sands, ultra deep) to power the same economic activity that was seen in 2012, it would have required world wide production of 131 mb/d. The price of crude would have been much higher at over $200\b. These numbers will increase each passing year.
The Hill’s Group
rockman on Tue, 29th Oct 2013 5:21 pm
Again the thought that the oil exporters are the least bit concerned about increased US production is absurd. Because the same high prices that have driven the US oil boom has also increased the revenue from exporter by over 300% in just the last 10 years. The KSA has increased it’s oil revenue from $60 billion/yr to over $300 billion/yr. IOW if they lost half their market share to the US they would still be making 2.5X what they were making not too long ago.
The last thing the oil exporters want to see is the US oil boom to crash and burn. And for a simple reason: that would happen if oil prices crashed and burned and they would see their revenue stream shrink.
The boom in US unconventional oil production is one of the strongest supports of the PO crisis IMHO. And that’s because it has resulted from the high oil prices created by the PO dynamic.
Kenz300 on Thu, 31st Oct 2013 11:45 am
The sooner we transition from oil as the major transportation fuel the better.
It is time to end the oil monopoly on transportation fuels. Electric, biofuels, hybrids, CNG, LNG and hydrogen are all good options for diversification.
Biofuels can be produced locally providing local jobs and local energy.
Biofuels can now be made from trash or waste. It is time to end the War for oil mentality and move to other sources of energy.