Shale Gas Will Not Affect GCC Oil Demand – Report - Gulf Business
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Shale Gas Will Not Affect GCC Oil Demand – Report

Shale Gas Will Not Affect GCC Oil Demand – Report

The latest developments in fracking technology will not affect GCC oil demand negatively.

The demand for GCC oil will shift from the US towards Asian economies, where the need for conventional energy sources will rise in future.

The high cost of shale gas and the projected growth of Asia’s oil consumption will safeguard the GCC region from any negative impact, said a report from Asiya Investment.

Asia’s oil production is expected to outpace natural gas consumption, the report added.

“There is much hype about shale oil and gas these days, and much of it is true, especially in the US. But on the global scene we see no major changes in the dynamics of Gulf oil in the next two decades. Consumption is projected to continue to grow driven by fossil-fuel hungry Asian economies. And the Gulf is successfully shifting its attention to cater to that demand,” said Dana Al Fakir, economist at Asiya Investments.

The report also points out that even if the US becomes a shale gas exporter by 2017 and energy independent by 2030, the lost energy demand will be offset by Asian economies.

Though China has the largest reserves of shale gas, technical issues such as the lack of water, depth of the gas deposits and proximity to urban areas will push up the costs of exploitation of the reserves.

“Asia will play a more central role in the Gulf’s exports. However, prices will probably be affected, reducing oil revenues in the GCC and making Asia more competitive due to cheaper inputs,” said Francisco Quintana, senior economist at Asiya Investments.


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