Solar and wind can only provide some of the answer to our future energy needs, writes
Renewables are exciting, but there also needs to be continued investment in oil and gas
Electric vehicles quietly cruise the streets of the United Arab Emirates. Wind turbines turn on a hilltop in Jordan. Global companies compete to build Saudi Arabia’s first major solar power plant. And in Oman, the government promotes the use of solar panels on homes to cut electricity costs.
New energy trends are emerging across the Middle East as countries pursue their visions of a lower-carbon future. But, as the population increases and standards of living improve, these countries also face the challenge of meeting rapidly rising energy demand.
Across the region, energy consumption is expected to outstrip the rate of increased use globally in the coming decades, according to the World Energy Council. How can governments meet such demand while also significantly cutting emissions of the greenhouse gases that contribute to climate change?
Renewable energy sources, such as solar and wind, will play a key role. But they can only provide some of the answer. Such sources produce electricity, which currently delivers around 20 per cent of the world’s energy needs. Over time, with the greater electrification of energy systems, the role of renewables will grow.
But while the emergence of the new energy future in the Middle East is exciting, there continues to be a need for investment in oil and gas projects to power economies on the road to a lower-carbon future. For instance, industrial processes, petrochemicals and transport such as aircraft, ships and trucks will depend on oil and natural gas for the foreseeable future.
Through digital technologies, and by finding opportunities to combine oil and gas with renewables, compelling new projects in the UAE and across the region can meet demand more efficiently and contribute to prosperity in the process.
In natural gas, the cleanest-burning fossil fuel, we have an energy source that bridges the traditional and the new, today and the future. In the Middle East, and globally, it exists in abundance. Countries such as Iraq, Saudi Arabia, Egypt and the UAE are stepping up gas production.
Its economic and environmental benefits are clear. Gas is a versatile fuel that works across an entire economy. It can light, cool or heat homes and businesses and is a key ingredient in petrochemicals. It can fuel cars, trucks and ships. And it produces the extremely high temperatures needed to make essentials such as iron, cement and steel – the heavy industry which renewables cannot currently power. When used to generate electricity, natural gas produces less carbon dioxide and far less local air pollution than other fossil fuels.
Importantly, it is a reliable partner for renewable projects like solar power plants or wind farms. Gas-fired power stations can be turned on quickly to meet demand if there is no sun or no wind.
Developing new projects is essential to fuel the region’s rapid economic growth. But, in line with the drive towards a cleaner energy system, new oil and gas projects need to be more efficient. At Shell, we are working hard to achieve this.
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Basrah Gas Company, in which we are a partner, is one example. Today it processes natural gas from three oil fields in southern Iraq to supply power plants, produce liquefied petroleum gas and provide other products. This valuable resource, which was previously burned off, or flared, is now providing energy for homes and businesses in Basrah and the surrounding region.
Continuing investment in oil and gas projects will also help governments to diversify their economies. The growth of petrochemicals has helped Gulf countries diversify away from heavy dependence on oil exports.
The region now produces more than 10 per cent of the world’s petrochemicals. By 2020, a further 30 million tonnes of annual production capacity will be added. This is a story of success. Such growth is creating precious jobs and greater prosperity for a young and increasing population.
Digitalisation is also improving production of the energy that economies need to thrive. Just as digital technologies are transforming our lives, they are also reshaping the energy industry. At Shell, digital applications are already creating new business models, driving cost efficiencies and improving production in our operations.
Take Petroleum Development Oman, in which Shell is a partner. PDO is producing more oil by analysing vast amounts of data gathered through sensors inside components across its 10,000 oil wells around the country. This data provides key indicators on the state of reservoirs, helping engineers to make speedier and more informed production decisions.
While we remain an oil and gas business, Shell is reshaping its operations to respond to the world’s changing energy needs and that requires investment in new energies, with new horizons. Among other projects, we invest in production of low-carbon biofuels in Brazil, wind farms - including a new development off the coast of the Netherlands - and we recently acquired Europe’s leading electric vehicle charging company. For our company it makes business sense to invest in the future – to fulfil our aim of producing more and cleaner energy to power human progress.
Ben van Beurden is CEO of Shell. Adipec, Abu Dhabi International Petroleum Exhibition and Conference, runs from Monday until Thursday