GCC members must reduce energy consumption and subsidies while boosting efficiencies to keep the region’s rapidly rising energy demand in check, Oman’s top energy official has said.
“We must drastically reduce our consumption, not only in Oman but in the region as a whole,” the Sultanate’s minister of oil and gas Dr. Mohammed Hamad Al-Rumhy said in an address at the Oman Energy Forum.
“Subsidy is killing us. We should preserve energy on a daily level and use it wisely, which we are not doing.”
According to a report by British think tank Chatham House, the GCC consumes more primary energy than the whole of Africa despite its population being only one-twentieth the size of the continent’s.
Heavily subsidised energy has also fuelled consumption growth in the region, causing energy subsidy bills for the Gulf governments to shoot up.
The International Monetary Fund (IMF) estimated that energy subsidy costs in some of the GCC countries ranged as high as 28 per cent of government revenues in 2011.
Abdulla Bin Hamad Al-Attiyah, president of Qatar’s Administrative Control & Transparency Authority and the country’s former oil minister, said that the GCC should make a collective effort to cut down energy subsidies.
“This is not a single country issue but a GCC problem. The region needs to move quickly to find a solution,” he said.
The Gulf’s increasing appetite for energy has fuelled concerns about the impact on its oil export capacity.
Domestic oil consumption among the Organization of Petroleum Exporting Countries (OPEC) members has increased seven‐fold in 40 years, to 8.5 million barrels per day (bpd).
However the oil cartel will be able to produce an additional six million bpd of crude by 2018, said OPEC secretary general Abdalla Salem El-Badri.
El Badri said that the increase would make up for declining output elsewhere, in particular in the US, where tight oil output is expected to start winding down by 2018.
OPEC output stood at 30.05 million bpd in September, down 400,000 bpd versus August levels.