Sheikh Hamad bin Khalifa Al Thani, Emir of Qatar, on ensuring energy security in a global economy

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Sheikh Hamad bin Khalifa Al Thani, Emir of Qatar

The global economy is undergoing major changes and rapid developments that have led to economic and financial crises. These have started to affect the cohesion of regional trade and political relations among states, and the capacity of many developing nations– especially poor countries – to achieve the general objectives of development. There is no doubt that the energy system is at the core of this situation, because all of its components and parties influence these changes. The spread of globalisation has also increased the extent of interdependence among economies. Therefore any rhetoric about energy independence has become unreasonable, especially against the backdrop of growing demand.

There is a sharp disparity in the availability of energy resources among nations. A large portion of the world’s population does not have access to the minimum quantity of energy necessary for heating, lighting and cooking. This situation traps many people in poorer countries in a vicious circle of poverty and underdevelopment. More advanced nations have a collective responsibility to consumers and energy exporters to set in motion the wheels of sustainable development in these countries.

This cannot be achieved by taking unilateral action pertaining only to energy supply, but rather must be done by supporting the development process in these countries, especially in finance, education, health, training and infrastructure. Qatar has attached great importance to this issue as part of the fundamental objectives of its “National Vision 2030”, which aims to enhance the country’s contribution to achieving international peace and security through political initiatives, development and humanitarian aid.

The negative impact of burning fossil fuels on the environment, particularly the consequences for air quality due to harmful emissions and climate change, are well known and documented. However, tackling these problems cannot be handled by a single party working in isolation. For example, the development of clean and renewable energy sources is a necessity, and oil and gas exporters strongly support this. But the motivation for achieving this goal has to come from the right place – it must not simply be regarded as an opportunity to fight against the control of oil exporters, or for reasons other than environmental concerns. In addition, the development of these alternative sources should not be carried out without informing exporters of the detail of these activities.

There should also be transparency in terms of estimating future demand for oil and gas. Cooperation between parties is necessary for several reasons. First, meeting the growing needs for oil and gas requires significant investments from exporting countries. The financing of these investments, and securing their profitability, requires the most accurate data possible regarding factors affecting global demand for these two commodities to reduce the degree of risk that can affect these investments. It is not reasonable to expect exporting countries to meet future need for these two commodities while at the same time consumer countries carry out unilateral activities that augment the risks facing these investments.

Second, optimising the benefit of potential energy resources is essential to meet growing global demands. Therefore, efforts to upgrade technology that alleviates the negative impact of fossil fuels on the environment should coincide with the development of renewable energy sources. Third, apart from the efforts made by advanced countries to develop alternative energy sources, oil and gas exporting countries as well as international oil companies are seeking to develop these resources. No doubt cooperation in research and funding, in addition to taking risks and exchanging information on projects associated with these developments will reward all parties.

The events now taking place in the Arab world touch on the debates and concerns regarding energy security given the region’s important role in meeting global energy needs. Qatar, as an exporter of oil and gas, acts to secure the flow of our supplies and cooperation with members of the energy organisations with which we are linked to achieve this goal.

The global economy is still reeling from the consequences of the economic crisis that started to unfold late in 2007 – and worsened in 2008 – in spite of the economic recovery in 2010-11. While the volume of public debt in most advanced countries went beyond acceptable limits, expectations indicate that economic growth in these countries will slow in 2012. These two factors create a dilemma, which is difficult to resolve, since addressing one of them aggravates the problems caused by the other. Moreover, efforts to reduce levels of public debt – an essential task – have been met with severe resistance in the EU, and attempts to address this challenge have yielded conflicting responses from policymakers in the US.

This situation will have a negative impact on developing countries’ economies, particularly on those relying on exports for their growth. All this leads to increased uncertainty about the strength of the global economy over the coming years, and consequently more uncertainty in the energy market as well.

Fossil fuels still represent the largest share of the total energy mix consumed globally. This situation will probably continue for the foreseeable future. Therefore, the increasing challenges facing this industry are not confined to meeting the growing demand for energy, but they also extend to include the environmental, social and economic concerns facing both exporting and importing countries. This is due to the growing integration of energy with these other aspects of society and their mutual impact on each other.

These escalating challenges urge us to look for a variety of innovative solutions that are economically viable and guarantee the interests of both consumers and producers. The utilisation of hydrocarbons to achieve economic and social development has a negative impact on the environment, but natural gas has an advantage over all other types of fossil fuels, since it is one of the most important clean energy sources. This has led to its increasingly widespread use in electric power generation, petrochemicals and metallic industries and household consumption.

Despite this expanded use of natural gas, the gap between oil prices and gas prices on the basis of the equivalent thermal power has not been reduced, but rather this discrepancy has increased as of late. Oil prices have increased despite the thermal and environmental advantages enjoyed by natural gas. Therefore, gas exporters should not give up their demand for equivalence between oil and gas prices and need to explore all means necessary to fulfil this demand.

In Qatar, the issue is not about controlling production, but instead about upgrading and supporting the technologies that expand the number of uses of natural gas, as well as advocating its use at international forums, influencing the laws that support gas exploitation, enacting laws that take into account the environmental advantages of gas, and exchanging information on markets and technical and financial aid and promotion of new markets.

The expansion of the use of liquefied natural gas (LNG) has created an ideal solution to the problem of a lack of geographic proximity between gas consumption markets and production areas, as is the case in the markets of East Asian countries. It has also addressed the problem of heavy dependence on one resource to fulfil consumption needs, as is the case in European markets. Natural gas has opened new markets in China and India, and increased the consumption of gas in Europe and elsewhere. In return, the rise in the role of LNG has necessitated a substantial increase in the volume of capital investments at all stages of its production, from processing to export, as well as a fundamental change in the nature of the contracts governing the operations of buying and selling gas. Therefore, it is necessary to strengthen long-term strategic partnerships among all parties involved in the production and distribution of gas.

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