Recently, the chief executive officer of oil-and-gas giant BP, Bob Dudley, stated that “the oil prices in the world are too high and it’s unhealthy for the world.” Speaking at a conference in the Hague, Dudley also stated that oil prices were “artificially high” thanks to Venezuela “defying economic gravity” as well as the Iran sanctions.

As a consequence, some emerging market economies such as South Africa, India, and Turkey are suffering from their highest-ever prices of gasoline because the international market price.

Oil is by nature very cyclical and very volatile, but the current state of global politics is making it more volatile than ever. Dudley was eager to stress that oil & gas will continue to play a large part in the future of the energy landscape, noting that “even optimistic projections only see renewables making up around one-third of the energy mix by 2040.”

It’s time we spent as much energy discussing the future of oil and gas as we do the present state of politics.

Energy is not just an everyday commodity it is a political tool. The fickle relationship between politics and energy is well encapsulated in an acronym that is fast becoming a part of the everyday vernacular in policy-making circles: AVUCA, which stands for Ambiguous, Volatile, Uncertain, Complex, and Accelerating.

There have been specific causes for this trend to become more evident in recent years. In particular, the 70% oil-price fall since mid-2014 has focused attention on a set of new realities. One such reality is the seeming paradox that oil is “not a scarce resource any more”. It is inescapably true that the prime geopolitical battles in the industry are no longer taking place over access to resources but about global market share.

This is because patterns of consumption have radically changed with increasing urbanisation across the developing world. There is no longer a clear-cut front of oil producers versus consumers. Most of the significant players now act in both capacities.

For example, over 30% of Saudi production is now consumed domestically. Three years ago, Russia was overtaken by the United States as the globe’s largest energy producer in terms of oil and gas. These rapid changes have the power to fundamentally shift the means by which alliances are formed and policies are concocted. Coordinated action is being made more difficult. As market dynamics change, formerly established centres of stability become less predictable.

What we are seeing emerge as a result is new centres of influence able to act unilaterally.  One of the global players sitting at the juncture of all of these changes is the United Arab Emirates. With nearly 10% of the total world supply of proven crude oil reserves, the UAE is an important provider to global energy markets. Crucially, however, it is uniquely positioned in a geopolitical sense. Its network of regional and global alliances is comparatively uncomplicated. As such, the manner in which it prioritises its economic relationships in the coming years will be of crucial importance to both the oil industry and the global economy.

One of the UAE’s leading companies in the application of technology to the industry, Abu Dhabi’s national oil company, ADNOC, is also emerging as an increasingly dynamic regional operator. Last week, an ADNOC spokesperson announced that the company had started producing and exporting a new crude grade known as Umm Lulu. T

The new oil will help lift ADNOC’s oil exports after Russia and the Organization of the Petroleum Exporting Countries (OPEC) agreed to increase their output in order to stabilise global oil markets following the recent trends that Dudley was speaking of: disruptions in supplies from several producers, most notably Iran and Venezuela.

This is the type of unilateral adaptability that oil markets can expect to see more of. Yet the real consequence of this trend is likely to see a rise in bespoke partnerships enabling nimble policy cooperation.

This, in turn, will require increased communication. This is especially the case when viewed through the spectrum of efforts to navigate the question of climate change, which serves as a stark reminder that these power shifts are taking place in the context of forces which are uncontrollable by definition.

Dudley argued that governments need to put a price on carbon, especially because renewable energy “can’t do it alone” when it comes to reducing emissions.

Next month, Dudley will be speaking at ADIPEC in Abu Dhabi, dubbed the world’s largest annual oil & gas conference – which is spear-headed by ADNOC. This year, ADNOC’s CEO, Dr Sultan Ahmed Al Jaber aims for the event to have a more forward-looking agenda than ever, with global leaders of both national and international energy companies due to address the inter-relationship between politics and energy head-on.

With these changes having a tremendous effect on markets, the timing is critical. Behind every headline concerning a political figure or a political event lie countless, often unquantifiable fluctuations in the energy market that affect the lives of millions.

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