In an interview with Global Platform, Hatem Al Mosa, CEO of Sharjah National Oil Corporation, speaks on the ways in which Sharjah is working to ensure its long-term energy security through revising the energy mix and investing in gas storage solutions. As the region adjusts to a world in which fossil fuels are just one of many sources of power, finding new efficiencies is becoming an increasingly important concern for sector players.
Low oil prices for sure will impact the investment level in the oil and gas industry, and typically in a negative way, and higher gas prices or oil prices will impact the industry in a positive way. So low gas prices and low oil prices always also create opportunities: opportunity for the sector to improve their efficiency, to improve the cost of production, to improve their organisational infrastructure.
When the prices dropped significantly in the beginning of 2015 – and they dropped from like almost $100 to close to $30 – that almost put a screeching halt on investment at that time. Regardless of what the price is whether it is high or low, the industry cannot stop investing in the sector. It can impact the timing of the decisions, but eventually no matter how low prices will get and how long they stay low, or how long they stay high, the sector needs continuous investment to stay able to meet the demands of the industry and the world.
A new energy mix
The region has historically been a major supplier of fossil fuels for the world. And that was the normal game in the region: always try to find more discoveries, always try to get more out of existing discoveries, always try to optimise on the cost and reduce the cost of discovery. That was the case before. Now, the region itself is coming to grasps with the new reality of the world that fossil fuels will not be the main source of energy, will not be the cheapest source of energy. It’s definitely not the cleanest source of energy in the world and it’s not enough by itself. We will be continuing to use fossil fuels for a very, very long time, but we have to use them responsibly, in the most efficient way and only as a complement to the full energy picture of the world’s energy production and consumption.
Setting a high target in reducing the carbon footprint – like the one that the UAE has announced to reduce greenhouse gas emissions, or the energy mix to be 50% renewable/nuclear versus 50% fossil fuels – setting challenging targets is a must to force a change in our culture of the way we deal with energy. So what we will see in the future is rather than one type of energy replacing the other type completely, is you will see a more optimised mix of all the types of energy generation. And you will always see renewables working side by side with conventional fossil fuels and nuclear at the same time.
Development and exploration of oil and gas reserves will always be a very important factor in any major oil-producing country. How we deal with these discoveries would not be exactly the same all the way, where you just open the well full steam, put it in the market and sell it. We would have to be smart about how we deal with additional reserves. It is more and more difficult to find new reserves, so we have to utilise them efficiently.
In the case of Sharjah, there is a very good chance that we will divert any new discoveries to build up our gas storage infrastructure so that this becomes part of our strategic long-term plan of managing the energy mix for Sharjah.
Managing energy security
Sharjah starts with a very good position in infrastructure, with a vast pipeline network for gas. It is the only city in the UAE with city gas circulated to essentially almost all of the consumers. But with that said, we will have to look always to continuously evaluate this infrastructure and identify where the bottlenecks are.
The emphasis now for Sharjah, besides providing reasonably priced energy, is to make sure that there is no shortage of energy. And this is being handled by installing new infrastructure to be able to import gas in the form of energy or pipeline gas to make sure not only it satisfies 100% of Sharjah’s current and future demand, but also to have enough surplus to satisfy 100% of all the Northern Emirates demand, and provide an energy security and a new source of point of entry for gas to the UAE for a whole.
Gas storage should be treated the same way, as an energy security issue that the country should be looking at and making sure that it invests in the infrastructure for that. And this is very important for a country that it is very hot in the summer and uses very high level of electricity per capita, compared to the winter where there’s no requirement for heating or air conditioning at all. To manage the vast swings between demand in the summer and the winter, storage becomes a major player in managing these changes, in addition to being a very important source of energy security.
Sharjah has been a net energy importer for more than 10 years so when we’re talking about energy security for the long term for Sharjah it has to be always a mix of import and export, and development and renewables, and storage and infrastructure. Now we have to think like the rest of the world. We are no longer just an energy provider to the rest of the world. We actually have to be part of the main player of the world in terms of managing energy the most efficient way in terms of production, minimising waste, efficiency, to contribute our part to the reduction of greenhouse gas emissions while also making the best kind of revenue by being more efficient.