30-03-04

Gas consumption in the Arab world is set to overtake oil demand in 2005 as many regional countries are switching to the cleaner source of energy in power generation and other sectors, according to official forecasts.

The bulk of the demand growth will be recorded in the UAE, Saudi Arabia, Egypt and other countries with relatively high energy consumption and steady growth in their industrial sector, the Organisation of Arab Petroleum Exporting Countries (Oapec) said in a report on future energy consumption in the region, according to a report.

Between 2005 and 2015, consumption of oil products, excluding those used in power generation, is projected to grow by around 1.6 % from 3.4 mm bpd to 3.9 mm bpd, the 10-nation group said. Gas demand is expected to surge by 3.5 % from 3.5 mm bpd equivalent to around 4.9 mm bpd/e in the same period. Total energy consumption, including oil, gas, coal and other sources not used in power generation, is forecast to grow by 2.6 % from 7.1 mm bpd in 2005 to 8 mm in 2010 and nearly 9.19 mm bpd in 2015.

"Expectations are that the share of the gas in the Arab energy market will rise from 48.9 % in 2005 to 53.3 % in 2015 to overtake the oil share, which will decline from 47.4 % to 42.8 %," Oapec said. "The other energy sources, including coal, wind and hydroelectricity, will remain almost unchanged, with their market share standing at 3.7-4 %."

According to the report, the industrial sector in the region is the main consumer of energy, with a share of 35.2 %. The communication sector ranks second, with a consumption of 24.4 % in 2002.
"Consumption of oil, gas and other sources in the Arab world is influenced by economic growth, energy policies, consumption in previous years, expansion of some sectors and prices of energy. As a result, growth in consumption in some members is much higher than growth in other members."

In a separate study last year, Oapec said Arab states need to invest at least $ 100 bn to expand their oil and gas sectors to face growing demand in the local and foreign markets. It noted that the bulk of the expansions would take place in the Gulf, which controls more than 60 % of the world's total recoverable oil reserves and 40 % of the global gas wealth.

The projects along with expansions in other producing countries will push up OPEC's sustainable output capacity from around 30 mm bpd in 2000 to 38.4 mm in 2010, to 44.8 mm in 2010 and 60.2 mm in 2020. A breakdown showed the UAE's capacity will climb from 2.5 mm bpd in 2000 to 3 mm bpd in 2005, to 3.7 mm in 2010 and 5.1 mm in 2020. Saudi Arabia will lift capacity from 9.4 mm bpd to 12.5 mm then to 14.6 mm and 22.1 mm in the same period.

Source: WAM