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Crude at $50 will be Good for the Global Economy: Al Hamili

DUBAI - An oil price of $50 per barrel will provide the much-needed support to the global economy while allowing some room for investment, UAE Energy Minister Mohammed bin Dha’en Al Hamili, said on Monday.

“Maintaining prices at reasonable levels is vital to help the world economy recover faster. But equally important is a new round of heavy investment in the energy industry to avoid another cycle of high oil prices,” Hamili said at the Middle East Petroleum and Gas Conference in Dubai.

The Minister said recent production cuts by the Organisation of Petroleum Exporting Countries, or Opec, had led to oil prices stabilising at around $50 a barrel. “Oil prices are market determined. We have lived with prices of oil much lower than $50,” the Minister told reporters when asked if the UAE’s economy could operate at oil prices at $50 per barrel.

In terms of proven reserves, the UAE ranks sixth in the world for oil and fifth for natural gas. In production, the UAE ranks ninth for oil and 16^th for marketed natural gas, he pointed out.

“This clearly underlines the potential of the country as a hydrocarbon producer well into the future,” Hamili said.

In recent years, the UAE has invested heavily across the hydrocarbon value chain. In particular, it has sought to increase long-term sustainable production capacity. Hamili, a former president of the Opec, said the global oil market was well supplied. But because of the recession, stocks are building while refineries are not running at full capacity.

“The outlook remains uncertain and bleak, despite the passage of time that has allowed the industry to adjust to the new situation,” he said. “It still remains uncertain when the financial crisis will abate and the resonating hope within the industry is that it will end sooner rather than later.”

However, looking beyond the crisis, the long-term outlook for the industry is bright, he said. “The general consensus among analysts is that, once the dust has settled from the present crisis, world energy demand will start to grow. The heavy demand for fossil fuels will remain, with oil keeping its position as the predominant source of energy, while gas and renewables will continue to increase their share of the energy market.”

Renewable energy would inevitably become an important part of the energy landscape. “The UAE firmly believes that this is a trend that hydrocarbon producers should embrace. A diversified energy mix is needed for a world that recognises the true value of energy,” he said.

· issacjohn@khaleejtimes.com