DOHA: The fall in global energy prices are threatening the economic feasibility of new projects in the oil and gas sector. The exploration investments in the sector were down 20 percent, or by $130bn, year-on-year in 2015, H E Dr Mohammed bin Saleh Al Sada, Minister of Energy and Industry, said yesterday.
Speaking at the Asian Ministerial Energy Roundtable here Dr Al Sada said on the long-term, the decline in price will lead to a fall in supply as companies struggle to develop the productive capabilities of its wells, or even to maintain the productivity of wells that are on the verge of depletion. He noted that uncertainty over demand does not encourage investors to develop their resources, even though there will be a growing demand for them in the future.
Dr Al Sada said that securing energy needs is the toughest challenge facing the Asian Countries, not forgetting another crucial aspect involved under this challenge, which is “that our countries should attach great importance to the issue of limiting the rise of greenhouse gas emissions, especially considering the growing role that coal plays in the Asian energy mix.”
He said that all countries have been affected, directly or indirectly, over the past one and a half years, by the decline in oil prices from $110 to less than $50 a barrel at the moment.
He added that national and international oil companies felt the brunt of this decline and the economies of oil-producing countries suffered from a deficit in their budgets, while the major consuming countries have benefited from lower prices. Both, the surge in shale oil supplies and weak global demand growth, had significant roles in the decline in oil prices. It resulted in several repercussions, most importantly, the fall of investment in the exploration and development of oil and gas industry projects in addition to the changing patterns of trade in such goods.
The minister said that the coal occupies the second place among the most widely used energy sources in the world. Despite the environmental hazards resulting from the use of coal, it remains an essential element of the energy mix in the continent of Asia. The coal market movement saw some of changes related to the increase in production to meet the Asian needs.
He said that the abundance of natural gas and its attractiveness as a clean source of energy remains a strong incentive for developing gas projects, adding that natural gas still has opportunities for entering new markets, in light of the global trend and commitment to achieving the tougher goals to face climate change.
Dr Al Sada stressed the urgent need for exchanging views on the prospects of supply and demand for energy and the policies that need to be adopted to help Asian economies pursue sustainable development. The roundtable gave Asian policy makers the opportunity to enhance regional cooperation in the energy field, building on the talks which took place in 2013 in Seoul.