A storm is brewing – one we cannot allow to gain too much momentum. A pullback in financing for traditional energy platforms, notably oil, has emerged at a time when the volume of greener energy resources is not sizeable enough to plug the gap. Essentially, the “sunrise” aspect of lower carbon energy and the “sunset” aspect of oil markets risk are misaligned – and we do not want to be left in the dark. Worst case, this could jeopardise energy security – a throw of the dice that no public, company or country can afford.
This is especially true considering rising population rates and their subsequent energy demands. Unicef expects the population in the Mena region to double during the first half of the 21st century. The UN estimates a global population explosion of nearly 25 per cent to reach 9.8 billion people by 2050.
Ensuring everyone can reliably flick on the light switch and be able to power their vehicles is paramount, especially as we still lag in terms of capacity. More than 1 billion people worldwide still do not have reliable access to power.
Multiple factors are propelling the pullback on the oil markets. The primary drivers are the surge in global momentum for decarbonisation – greener energy markets are a linchpin to success – and the reduction in demand amid the Covid-19 pandemic.
Overall, oil and gas companies cut their capital expenditure by 34 per cent in 2020, slightly more than the initial 28 per cent reduction after crude prices plummeted in 2014, according to the Boston Consulting Group.
GCC countries have also been selling energy assets, with Saudi Arabia and the UAE spearheading the charge. In April, Aramco sold 49 per cent of its pipeline network to a US-led consortium in a $12.4 billion deal, while Adnoc raised $10bn by selling gas pipeline leasing rights last year.
Such moves are partly aimed at helping companies sustainably pursue their energy transitions without generating debt bundles, especially amid lower oil prices, which is a smart move.
This is also timely considering the risk of stranded assets. Around $900bn would evaporate if governments made aggressive attempts to restrict the rise in temperatures to 1.5°C above pre-industrial levels for the rest of this century, according to the Financial Times’ Lex column.
This is not just another blip in this boom-and-bust industry. After decades of analysts placing varying bets, peak oil is very much upon us. BP, TotalEnergies and others have suggested that oil demand could peak in this decade and Opec expects world crude demand to peak somewhere around 2040. But don’t write off oil just yet.
That greener energy will dominate in time, instead of black gold [an industry term used to describe oil or petroleum], is rightly inevitable. But pinning down the right pace of transition is both hard and critical – and some may be acting too soon. Of course, oil dynamics have taken a hit amid the aforementioned drivers. Global oil demand is unlikely to catch up soon with its pre-Covid trajectory.
In 2020 – the start of the the International Energy Agency’s forecast period – oil demand was nearly 9 million barrels per day, below the 100 million bpd level seen in 2019, and it is not expected to return to that level before 2023. But unless there are rapid policy interventions and behavioural changes, this is viable considering today’s change of pace. And then the longer-term growth drivers will push oil demand to 104.1 million bpd by 2026, which equates to a 14.2 per cent increase.
Without a crystal ball, we can’t determine the speed of oil recovery in different countries and regions. But there is no doubt it will recover to some degree, helping to soak up some of the glut from 2020 and further support prices, which is good news for oil-centric economies in the Middle East.
Energy forecasts up to 2050 are valuable in giving investors goalposts, but we can’t lose sight of sustaining energy security in the near-term; we cannot forget the here and now. So, when it comes to reallocating oil-related investments and divestments, a lighter touch may not be a bad idea, at least until the pandemic-triggered dust settles.
Badar Chaudhry is the senior vice president, unit manager, energy sector, Mashreq Bank
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The Lowdown
Us
Director: Jordan Peele
Starring: Lupita Nyong'o, Winston Duke, Shahadi Wright Joseqph, Evan Alex and Elisabeth Moss
Rating: 4/5
Developer: Ubisoft Montreal / Ubisoft Toronto
Publisher: Ubisoft
Platforms: Playstation 4, Xbox One, Windows
Release Date: April 10
ESSENTIALS
The flights
Emirates, Etihad and Swiss fly direct from the UAE to Zurich from Dh2,855 return, including taxes.
The chalet
Chalet N is currently open in winter only, between now and April 21. During the ski season, starting on December 11, a week’s rental costs from €210,000 (Dh898,431) per week for the whole property, which has 22 beds in total, across six suites, three double rooms and a children’s suite. The price includes all scheduled meals, a week’s ski pass, Wi-Fi, parking, transfers between Munich, Innsbruck or Zurich airports and one 50-minute massage per person. Private ski lessons cost from €360 (Dh1,541) per day. Halal food is available on request.
More from Neighbourhood Watch:
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
The smuggler
Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple.
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.
Khouli conviction
Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.
For sale
A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.
- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico
- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000
- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950
The five new places of worship
Church of South Indian Parish
St Andrew's Church Mussaffah branch
St Andrew's Church Al Ain branch
St John's Baptist Church, Ruwais
Church of the Virgin Mary and St Paul the Apostle, Ruwais
Engine: 3.5-litre V6
Transmission: eight-speed automatic
Power: 290hp
Torque: 340Nm
Price: Dh155,800
On sale: now
The Porpoise
By Mark Haddon
(Penguin Random House)
Specs – Taycan 4S
Engine: Electric
Transmission: 2-speed auto
Power: 571bhp
Torque: 650Nm
Price: Dh431,800
Specs – Panamera
Engine: 3-litre V6 with 100kW electric motor
Transmission: 2-speed auto
Power: 455bhp
Torque: 700Nm
Price: from Dh431,800
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
