The volatility in the world’s energy markets over the past four years has triggered widespread discussion about the future of energy, and about the demise of oil as the world’s primary source of fuel.
Inevitably, it has also led to a great deal of debate about the consequences for the oil-dependent economies of the Gulf’s oil producers.
For many analysts, the 2014 oil crash marked the long-predicted structural shift in global energy. The technological innovations that made unconventional oil commercially viable, combined with the rise of renewable energy, meant that oil had peaked and was now on a long, slow decline.
Throughout, the Gulf’s producers have warned of the dangers of this viewpoint, arguing that population growth and Asian industrialisation are driving long-term demand growth and that unless considerable investment is made in oil production, we are heading for shortages that could damage global growth.
With close to $700bn-worth of oil and gas investment programmes announced and under way, the GCC’s producers are putting their words into action. And the long-term benefits to the region could be immense.
Investing in oil exploration and production capacity now will provide GCC oil producers with increased flexibility to manage volatility in the market in the future.
It will also enable them to increase market share at a time of shorter supply, and to develop vital strategic ties with their new customers in Asia, particularly in India and China.
For beleaguered contractors and consultants in the Gulf, the investments provide rays of promise for a recovery in the GCC projects market.