Emirates energy minister deserves credit

The UAE's energy minister has been as good as his word so far this year. When major oil and gas projects in the region ground to a halt in January and February, Mohamed bin Dhaen al-Hamli told MEED the UAE's energy megaprojects would go ahead as planned.

However, contractors in the country were sceptical about whether this would actually happen, as multi-billion-dollar projects such as the retendered Sahil, Asab, Shah (Sas) full-field development and the Shah gas development were still delayed.

But what appeared to be stalling tactics from the minister now look like canny moves on the part of the world's eighth-largest oil producer. Capital expenditure costs for oil and gas projects have fallen by 20-30 per cent since 2008 and Al-Hamli has managed to make some substantial savings. When companies bid on the Sas development in January, the prices came in at $1bn less than the original estimates.

In March and April, bidding began on Abu Dhabi's integrated gas development project to overhaul the emirate's gas infrastructure.

Contractors tell MEED that an official tender for the massive $12bn Shah development will be released on 27 June.

With the price of crude oil at $60 a barrel at the time of writing, up from February's low of less than $37 a barrel, the oil and gas sector is showing more promise than many would have dared imagine in the second half of 2008.

International oil companies and oil ministries the world over are reassessing projects that they put on hold in the first quarter of this year. Energy analysts such as the Paris-based International Energy Agency are predicting a 'capacity crunch' after 2010, when demand for oil and gas rebounds, pushing prices up to new highs.

The UAE now finds itself ahead of the pack in preparing for the upturn. Ambitious production targets set for 2015 onwards no longer seem so unbelievable. And Al-Hamli is so far proving that his word is worth its weight in gold.