# OPEC and Peak Oil: Future of Energy in the Middle East

An episode of [Switched On](https://invisiblenetwork.ai/podcast/1469286286), 20 Dec 2023, 23 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/01a10738-3608-4dec-883c-ae3c00026b36/d0c9cab4-362b-4473-81e1-b0de00b02454/audio.mp3?utm_source=Podcast&in_playlist=6d114f63-833d-4b78-bbf5-ae3c00026b44

The final agreement signed at the COP28 climate summit marked a significant step forward, addressing for the first time the need to transition away from fossil fuels. Among its signatories were oil-and gas-rich nations in the Middle East, many of whom currently center their economies around the export of fossil fuels. But what are these countries’ clean energy plans, and do they have alternative business models to offset the potential losses from a greener future? On today’s show, Dana sits down with Philip Geurts, an analyst from BloombergNEF’s oil team, to talk about the Middle East. Together, they discuss OPEC+ and the significant output cuts from some of its members, the debate over when and if peak oil demand will be reached, and whether hydrogen offers the region a realistic path away from fossil-fuel production. Complimentary BNEF research on the trends driving the transition to a lower-carbon economy can be found at BNEF<GO> on the Bloomberg Terminal, on bnef.com or on the BNEF mobile app. Links to research notes from this episode: Fossil Fuels Are Raking in Investments in Emerging Markets - https://www.bnef.com/shorts/s53df5dwx2ps00?context=eyJjb250ZW50VHlwZSI6InNob3J0IiwicmVnaW9uIjpbXSwic2VjdG9yIjpbIjJkNjM3YWE4NDExYjNiMjUiLCIyZDYzN2FhODQxMWI0YjA5Il0sImF1dGhvciI6W119 Hydrogen Hard-Pressed to Become Pillar of Big Oil’s Future - https://www.bnef.com/insights/32349/view $290 Billion Oil Cash Edge Allows Late Mideast Transition - https://www.bnef.com/insights/32111 See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: This is Dana Perkins and you're listening to Switched on
[0:03] Speaker 1: the B and EF podcast. Just over a week ago,
[0:06] Speaker 1: I was in Dubai on the ground at COP twenty eight,
[0:09] Speaker 1: which concluded with a landmark agreement including wording that the
[0:14] Speaker 1: world needs to transition away from fossil fuels and energy
[0:17] Speaker 1: systems now. Each year headed into COP, bn EF creates
[0:21] Speaker 1: a scorecard regarding what we think will happen across ten
[0:25] Speaker 1: key areas, and then once the negotiations have concluded, we
[0:29] Speaker 1: do it again. In the fossil fuel phase down category.
[0:33] Speaker 1: We actually gave it a score of four out of ten,
[0:36] Speaker 1: but following the meetings, well that went up to six
[0:38] Speaker 1: point five. Certainly that's a much rosier outlook, but according
[0:43] Speaker 1: to BNF analysis, this pledge could have been more ambitious,
[0:47] Speaker 1: and despite being included in earlier drafts, the omission of
[0:50] Speaker 1: the terms phase out or phase down has meant that
[0:53] Speaker 1: the final wording could be interpreted as being less urgent,
[0:57] Speaker 1: with the phrasing transition away from being more open to interpretation.
[1:02] Speaker 1: Adding to this, there was also a last minute inclusion
[1:05] Speaker 1: of a potential role for transition fuels, which could allow
[1:09] Speaker 1: for countries to lobby for the use of more carbon
[1:11] Speaker 1: efficient but still emissions intensive technologies, for example switching out
[1:16] Speaker 1: coal for natural gas. Now. If you'd like to look
[1:19] Speaker 1: at further BNF analysis on these final COP agreements, you
[1:23] Speaker 1: can check out the report not Quite a cop Out
[1:25] Speaker 1: in Dubai and if you'd like to have a look
[1:28] Speaker 1: more closely at what this means for the fossil fuel sector,
[1:31] Speaker 1: check out the research note titled Devils in the Details
[1:34] Speaker 1: of landmark COP twenty eight Fossil Fuel Pledge. You may
[1:38] Speaker 1: also want to have a listen to our sister Bloomberg
[1:41] Speaker 1: podcast Zero, hosted by Akshatrathi. He has a recent episode
[1:45] Speaker 1: that goes through the final agreements at COP in detail now.
[1:49] Speaker 1: While groups such as the United Nations, UK, European Union
[1:53] Speaker 1: and Australia were in favor of phase out or phase
[1:57] Speaker 1: down as the wording in the end, other namesations including
[2:00] Speaker 1: OPEC countries like Kuwait and Saudi Arabia one out with
[2:04] Speaker 1: the phrasing that was redrafted to include transition away from
[2:08] Speaker 1: Of the nations that push back against the phase down
[2:10] Speaker 1: and phase out ording, many were Middle Eastern energy producers
[2:14] Speaker 1: and with fifty four percent of global proven oil reserves,
[2:18] Speaker 1: held across five countries, including Saudi Arabia, the UAE, Kuwait,
[2:23] Speaker 1: Iran and Iraq. It's not hard to see why. So
[2:26] Speaker 1: what are the current clean energy plans and policies of
[2:29] Speaker 1: the fossil fuel rich Middle Eastern nations and do they
[2:32] Speaker 1: have alternative business plans to offset their potential losses of
[2:36] Speaker 1: petroleum exports as we reach peak oil demand. To help
[2:40] Speaker 1: us understand the region better, on today's show, I speak
[2:43] Speaker 1: with a member of BNF's oil team who has been
[2:46] Speaker 1: looking at the Middle East in detail. That's analyst Philip Gertz.
[2:50] Speaker 1: We discussed the outlook for peak oil demand and the
[2:52] Speaker 1: differences between bnef's view, that of the IEA and the
[2:57] Speaker 1: contrasting view held by OPEK. We also discussed Saudi Arabia
[3:01] Speaker 1: and what recent cuts to supply have meant for oil prices,
[3:05] Speaker 1: as well as the OPEC plus countries. And finally, we
[3:08] Speaker 1: take a look at hydrogen and compare it directly to
[3:11] Speaker 1: the current oil and gas businesses held by a number
[3:14] Speaker 1: of oil companies in the region and what this means
[3:18] Speaker 1: for their business in terms of scale and outlook. If
[3:20] Speaker 1: Middle Eastern nations want to harness their ability to create
[3:24] Speaker 1: green hydrogen. We also discussed where they intend to get
[3:27] Speaker 1: the required water from. If you like this podcast, if
[3:30] Speaker 1: you subscribe, you'll receive an update when we publish a
[3:33] Speaker 1: future episode, and if you give us a review, it'll
[3:36] Speaker 1: make us more discoverable by others. But right now, let's
[3:38] Speaker 1: jump into our conversation about the Middle East and fossil
[3:41] Speaker 1: fuel industry with Philip. Philip, thank you for joining us today.
[3:56] Speaker 2: Thank you for having me, Dana.
[3:58] Speaker 1: The theme of today's show is to be about oil
[4:01] Speaker 1: and gas in the Middle East and pathways to decarbonization. Now,
[4:04] Speaker 1: before we can even really think about where this is
[4:07] Speaker 1: all going in the future, let's take a step back
[4:10] Speaker 1: and talk about what's happening, well, really right now and
[4:14] Speaker 1: what the state of play is in the Middle East. Now,
[4:16] Speaker 1: within the Middle East, you have five countries that control
[4:19] Speaker 1: over half of known oil reserves. So this is certainly
[4:23] Speaker 1: the right place in the world to really be thinking
[4:25] Speaker 1: about what the future of oil and gas really looks like.
[4:28] Speaker 1: So prior to cop Saudi Arabia had been making some
[4:31] Speaker 1: headlines about cutting the production along with other OPEC nations,
[4:36] Speaker 1: and I want to better understand what the market impact
[4:40] Speaker 1: was of that and really what the motivation was.
[4:43] Speaker 2: For it, all right, So Dosto questions are intimately tied
[4:47] Speaker 2: to one another, all centered around the theme off keeping
[4:50] Speaker 2: prizes within a reasonable range. You don't want prices to
[4:53] Speaker 2: be high because in that case demand will drop, and
[4:55] Speaker 2: you don't want prizes to be low because your revenues
[4:58] Speaker 2: will decline. So talk to goal of OPEC is to
[5:01] Speaker 2: coordinate oil supply in such a fashion and tying that
[5:04] Speaker 2: to how they think oil demand will develop in the
[5:07] Speaker 2: foreseeable future, in the next quarters, in the next year,
[5:10] Speaker 2: and then arranging supply in such a way that well,
[5:13] Speaker 2: oil prices are kept within a reasonable range, which right
[5:16] Speaker 2: now would mean anything between let's say seventy and one
[5:20] Speaker 2: hundreds dollar per barrel, which also ties into what's often
[5:23] Speaker 2: cited the fiscal break even point, which for Saudi Arabia,
[5:26] Speaker 2: for example, if we include all new renewable energy aspirations
[5:29] Speaker 2: such as NEO, would be roughly one hundredes dollar per barrel,
[5:33] Speaker 2: so significantly higher than the average has been over the
[5:36] Speaker 2: past months. So, getting back to your question, oil cuts
[5:39] Speaker 2: mainly intended because OPEK saw that demand development was fairly
[5:43] Speaker 2: lukewarm in some regions China for example, on the US
[5:46] Speaker 2: OECD front, you still had pretty lukewarm economic growth or rebound.
[5:50] Speaker 2: So the decision was that we need to cut supply
[5:54] Speaker 2: to keep oil prices within a reasonable range.
[5:57] Speaker 1: When we talk about removing one million barrels of oil
[6:00] Speaker 1: per day, it sounds like a pretty big amount from
[6:03] Speaker 1: my standpoint, But I want to know how big is
[6:05] Speaker 1: this really and essentially, is that a big gap that
[6:08] Speaker 1: they're leaving in the market or is it a drop
[6:10] Speaker 1: in the bucket.
[6:11] Speaker 2: That's a great question. Let's start from the basics. Oil
[6:14] Speaker 2: market at large right now, as of twenty twenty three,
[6:17] Speaker 2: we're talking about an overall demand of roughly one hundred
[6:20] Speaker 2: million barrels per day one hundred and one maybe that
[6:22] Speaker 2: includes all types of liquids. So you have crude oil,
[6:25] Speaker 2: you have what's called natural gas liquids, and you have biofuels,
[6:29] Speaker 2: and you have even what's called refinery processing gains. Coming
[6:32] Speaker 2: back to the essens, you throw them all together, you
[6:34] Speaker 2: have roughly one hundred million barrels per day, So one
[6:37] Speaker 2: million barrel per day would be roughly one percent of
[6:39] Speaker 2: the market. Now, cutting the market supply by one percent
[6:43] Speaker 2: does not sound like an enormous difference. And it's not groundbreaking,
[6:47] Speaker 2: but it's also not negligible. It does have an impact
[6:49] Speaker 2: on the price.
[6:50] Speaker 1: And what is the production capacity of Saudi Arabia when
[6:54] Speaker 1: we look at it in light of the national companies
[6:57] Speaker 1: and the independent oil companies.
[6:59] Speaker 2: So Aramco is the only operator in Saudi Arabia, meaning
[7:02] Speaker 2: that the company's production capacity is equal to that of
[7:05] Speaker 2: Saudi Arabia at large. And it's very interesting to put
[7:08] Speaker 2: the production capacity of Aramco two dose next to dose
[7:11] Speaker 2: of let's say, what we consider to be big oil
[7:14] Speaker 2: so Exxon Shell to Tile Energies, BP, et cetera. Simply
[7:17] Speaker 2: because it's almost an order of magnitude difference. Aramco, if
[7:21] Speaker 2: you talk about crude oil, only has a production capacity
[7:24] Speaker 2: of twelve milion barrels per day, or that's the typical
[7:26] Speaker 2: industry estimate. Including natural gas liquids, that would actually go
[7:30] Speaker 2: up to about thirteen point five malonbaros per day. Now
[7:32] Speaker 2: we can compare that to the largest of our Western
[7:35] Speaker 2: oil companies, which would be Exon Mobile, which as of
[7:38] Speaker 2: twenty twenty two had a production capacity of two point
[7:42] Speaker 2: four million barrels per day, the largest out of dose. Right,
[7:44] Speaker 2: then you take Shell total that's about one point five
[7:47] Speaker 2: malion barrels per day. You have a couple of other
[7:50] Speaker 2: national oil companies, meaning oil companies in which a government
[7:53] Speaker 2: has a majority stake, such as Covide Petroleum Corporation. Those
[7:57] Speaker 2: typically tend to also be on the larger sides. Provide
[8:00] Speaker 2: Petroleum Corporation has about two point seven million barrels per day.
[8:04] Speaker 2: Ottrosnifft from Russia has about three point eight bottom line
[8:07] Speaker 2: being still, you can compare those against Saudi Aramco ord
[8:10] Speaker 2: of magnet difference twelve to thirteen million barrels per day
[8:12] Speaker 2: compared to what's usually a range of about one point
[8:15] Speaker 2: five to three. And those are already the really large
[8:17] Speaker 2: companies right as one point five to three, But then
[8:19] Speaker 2: you have Aramco as pretty much an absolute outlier on
[8:22] Speaker 2: that front.
[8:23] Speaker 1: So in the background of COP twenty eight, the OPEC
[8:26] Speaker 1: member nations, we're having discussions around this wording round fossil
[8:30] Speaker 1: fuels and what should and shouldn't be included, And without
[8:34] Speaker 1: actually discussing the cop negotiations in any detail, I want
[8:37] Speaker 1: to better understand how the OPEC countries. So they're thirteen
[8:41] Speaker 1: of those and another OPEK plus ten, so twenty three
[8:46] Speaker 1: in total. How often they tend to move together when
[8:50] Speaker 1: it comes to commitments regarding well, I mean really what
[8:53] Speaker 1: they're designed to cooperate with each other on, which is output.
[8:57] Speaker 2: As an organization with lots of different entity naturally there
[9:01] Speaker 2: will be disagreements or there will be divergences in the
[9:04] Speaker 2: priorities it goes with an OPEK goes within the EU.
[9:07] Speaker 2: That said, typically in most cases there is quite some adherents.
[9:12] Speaker 2: Now I'm speaking in very general terms here simply because
[9:15] Speaker 2: it can differ a lot by period. Historically speaking, for example,
[9:19] Speaker 2: there have been a lot of cases in which quotas
[9:21] Speaker 2: were implemented and subsequently countries actually produced more than the
[9:25] Speaker 2: quota that was implemented. So those things do happen, but
[9:27] Speaker 2: across the board there is a lot of compliance to
[9:31] Speaker 2: those quota. So getting back to your question about, well,
[9:35] Speaker 2: how much internal agreement there is, I think in terms
[9:38] Speaker 2: of overall priorities, each state of course determines what's best
[9:41] Speaker 2: for themselves, but quite often it could also just be
[9:43] Speaker 2: staying in line with what OPEK, which principally is Saudi
[9:47] Speaker 2: Arabia now also Russia because they to get our account
[9:50] Speaker 2: for more than half a production capacity of your organization
[9:52] Speaker 2: what those two countries dictate.
[9:54] Speaker 1: We're sitting here at the end of twenty twenty three
[9:57] Speaker 1: and really talking about well a lot of things that
[9:59] Speaker 1: have actually come to pass in this year, but we're
[10:02] Speaker 1: already looking ahead to next year. Do you think that
[10:04] Speaker 1: we'll continue to see cuts in twenty twenty four or
[10:07] Speaker 1: is it more than likely that there will be a
[10:10] Speaker 1: reinstatement of previous output levels.
[10:13] Speaker 2: As things are standing right now, oil demand in twenty
[10:16] Speaker 2: twenty four is supposed and by suppose, I mean if
[10:18] Speaker 2: you look at the forecast of institutes such as the
[10:21] Speaker 2: IA of Opek itself, twenty twenty four oil demand grove
[10:25] Speaker 2: is supposed to be or is likely to be, significantly
[10:28] Speaker 2: lower than what we've seen in twenty twenty three. At
[10:31] Speaker 2: the same time, twenty twenty three grove has also been
[10:34] Speaker 2: more lukewarm than what was anticipated in twenty twenty two.
[10:37] Speaker 2: It's taking this line of argumentation and also considering that
[10:40] Speaker 2: quite a lot of supply editions, specifically in Latin America
[10:43] Speaker 2: so Guyana, Brazil, are supposed to come online. US also
[10:47] Speaker 2: continues to grow at chill production, albeit at a slower rate.
[10:51] Speaker 2: Taking all of those things together, one could make the
[10:53] Speaker 2: argument that supply is relatively abundant. Still, Accordingly, one could
[10:58] Speaker 2: make the argument that Toki prices within a reasonable range,
[11:02] Speaker 2: that Opek will continue its cuts.
[11:05] Speaker 1: And this all boils down to profitability and wanting to
[11:08] Speaker 1: make money. National oil companies are, in and of themselves companies. Oftentimes,
[11:13] Speaker 1: when we're talking about the decarbonization of the oil and
[11:15] Speaker 1: gas industry, we talk about hydrogen as a potential option
[11:20] Speaker 1: and a pivot for these businesses. What I want to
[11:22] Speaker 1: better understand is is hydrogen when compared with oil a
[11:27] Speaker 1: really enticing prospect?
[11:30] Speaker 2: Right maybe taking a step back first and looking at
[11:32] Speaker 2: the hydrogen market at large compared to the fossil fuel markets,
[11:36] Speaker 2: you first want to look at the market, where does
[11:38] Speaker 2: demand come from and how is demand likely to develop?
[11:41] Speaker 2: So right now we're talking about demand principally for oil refining,
[11:45] Speaker 2: which is about forty five percent of hygen demand, and
[11:48] Speaker 2: then the remainder is mainly just for ammonia and methanol,
[11:51] Speaker 2: and we're talking about a total of about ninety five
[11:54] Speaker 2: million tons of hydrogen used per year. Now, if you
[11:57] Speaker 2: convert that into barrels per day of oil equivalent, just
[12:00] Speaker 2: to be able to compare it to the size of
[12:03] Speaker 2: the fossil fuel market, we would be talking about roughly
[12:06] Speaker 2: five million barrels per day of oil equivalent, which compares
[12:09] Speaker 2: to one hundred sixty six million barrels of oil equivalent
[12:12] Speaker 2: per day of oil and gas. So we're talking about
[12:15] Speaker 2: two point five to three percent of the phosphe market
[12:17] Speaker 2: right now, and most of it is also used internally
[12:20] Speaker 2: within refinery, so it's within the confines after oil companies themselves.
[12:25] Speaker 2: If we then look at a net zero scenario and
[12:27] Speaker 2: a decarbonizing world b inf or we in our net
[12:31] Speaker 2: in our new energy outlook, we expect hydrogen demand clean
[12:34] Speaker 2: hygen demand to go to five hundred two million tons
[12:38] Speaker 2: per year by twenty fifty, so it's practically five times
[12:41] Speaker 2: as much, which means we would be hovering around twenty
[12:44] Speaker 2: five to thirty million barrels of oil equivalent per day
[12:46] Speaker 2: in terms of oval energy content, which is still just
[12:49] Speaker 2: one fifth to one sixth of the entire phosphuel market
[12:53] Speaker 2: as we see right now. So in a very simplified
[12:57] Speaker 2: line of argumentation, one could see that the oval market
[13:00] Speaker 2: potential market, even in an at zero world for hydrogen,
[13:02] Speaker 2: is significantly smaller than what we have for phosphuels right now.
[13:05] Speaker 2: Accordingly in terms of overall geopolitical cloud first and foremost,
[13:09] Speaker 2: but also in terms of overall potential profitability and debt
[13:13] Speaker 2: would depend on demand and supply mechanics. It's arguably a
[13:16] Speaker 2: lot less sizeable than what the phosphuel industry offers right now.
[13:21] Speaker 1: Using oil price is the backdrop of really why production
[13:25] Speaker 1: is being cut or increased. Let's talk about demand rather
[13:29] Speaker 1: than the supply side for oil demand in the future.
[13:32] Speaker 1: Bn EF as a view on when we may be
[13:35] Speaker 1: reaching peak oil demand, as does the IA, and actually
[13:38] Speaker 1: as does OPEK. Would you be able to shine some
[13:41] Speaker 1: light on how those maybe three different forwardlooking scenarios differ.
[13:46] Speaker 2: Absolutely so. If you compare those three institutes, we can
[13:50] Speaker 2: roughly see dichotomy between BNF and the IA on one hand,
[13:54] Speaker 2: and OPEK on the other. Now, both BENIF and IA
[13:57] Speaker 2: work with multiple scenarios, whereas op only has the default forecast,
[14:02] Speaker 2: which means what Opek considers likely to manifest. But if
[14:06] Speaker 2: we take the same base case scenarios for b and
[14:09] Speaker 2: EF and the IA, we see that oil demand should
[14:12] Speaker 2: peak or is likely to peak this decade, principally driven
[14:15] Speaker 2: by actually a fall in road field demand, whereas for
[14:19] Speaker 2: OPEK there is not really any peak inside yet the
[14:22] Speaker 2: forecast goes until twenty forty five, but just shows a
[14:25] Speaker 2: steady increase, albeit at a certain point at a slower rate.
[14:28] Speaker 2: But it goes all the way up to one hundred
[14:30] Speaker 2: and sixteen million barrels per day in the twenty forties
[14:33] Speaker 2: compared to one hundred and one that we have now,
[14:35] Speaker 2: whereas for the IA and B and EF it goes
[14:37] Speaker 2: to about one hundred five one hundred six million barrels
[14:40] Speaker 2: per day toward the end of this decade. Then you
[14:42] Speaker 2: have multiple forces slowly pressing it down. So specifically, once
[14:46] Speaker 2: again roadfield demand, petrochemical demand goes up and keeps it
[14:51] Speaker 2: somewhat at bay, or keeps the fall at bay. But
[14:53] Speaker 2: across the board we need the fall in roadfield demand
[14:55] Speaker 2: would drive this fall in overall oil demand.
[14:58] Speaker 1: So pivoting a bit to them thinking about renewable energy
[15:01] Speaker 1: development in the Middle East, let's talk a little bit
[15:04] Speaker 1: about that, because that actually was another theme of this
[15:07] Speaker 1: most recent COP was the tripling of renewables by twenty
[15:11] Speaker 1: thirty of the different projects that are taking place in
[15:14] Speaker 1: the Middle East and then announced renewable energy plans, Are
[15:17] Speaker 1: there any developments of particular significance that we should be
[15:21] Speaker 1: thinking about, and do we think that existing targets for
[15:24] Speaker 1: renewables in the region will be met.
[15:27] Speaker 2: At this moment. If we take Saudi Arabia as a
[15:30] Speaker 2: case study, considering that in terms of overall installed electricty
[15:34] Speaker 2: capacity about ninety five gigle what, it's by and large
[15:37] Speaker 2: the biggest in the region. We take Saudi Arabia as
[15:39] Speaker 2: a case. In twenty sixteen, Saudi Arabia put forward as
[15:43] Speaker 2: a target to reach twenty seven gigo what by twenty
[15:46] Speaker 2: twenty three of renewable electricity and fifty eight giga what
[15:49] Speaker 2: by twenty thirty. As of now, we're only standing at
[15:53] Speaker 2: a fraction of about three to three point five percent,
[15:56] Speaker 2: indicative of Saudi Arabia currently not being on track. Now,
[15:59] Speaker 2: on the other hand, you do have a lot of
[16:01] Speaker 2: additional projects that are in the pipeline, are announced at
[16:04] Speaker 2: being planned for the years to come, which would be
[16:06] Speaker 2: roughly in the rage of somewhere between eight and ten
[16:09] Speaker 2: giggle wood. But still that's a far cry from the
[16:11] Speaker 2: target that was stipulated initially in twenty sixteen. Now, for
[16:15] Speaker 2: different countries, you have different targets different paces. The YOE
[16:19] Speaker 2: is more on track. Oman more broadly, also including hydrogens,
[16:23] Speaker 2: is quite a proliferation of renewable energy projects. But across
[16:26] Speaker 2: the board, if you look at the capacity at large
[16:29] Speaker 2: and where the Middle East or specifically the Gulf region
[16:32] Speaker 2: is heading, it's still a relatively small share. And with
[16:35] Speaker 2: Saudi Arabia accounting for the majority of installed capacity, and
[16:38] Speaker 2: Saudi Arabia are really legging its target, it's hard to
[16:41] Speaker 2: see how a boy twenty thirty a reasonable share of
[16:44] Speaker 2: electricity would actually be renewed l energy.
[16:46] Speaker 1: We've been talking about the Middle East as a region.
[16:48] Speaker 1: We have called out Saudi Arabia a few times, but
[16:51] Speaker 1: let's talk about a few other countries that you think
[16:54] Speaker 1: really stand out, first of all in setting the tone
[16:57] Speaker 1: or because they're maybe doing very interesting things. Which countries
[17:01] Speaker 1: in this region are you watching most closely?
[17:05] Speaker 2: So from an energy perspective, which is very heavily tied
[17:08] Speaker 2: to just how large is the country in terms of
[17:11] Speaker 2: economy and in terms of population, We would definitely need
[17:14] Speaker 2: to talk about Egypt. Iran, of course, with an oil
[17:17] Speaker 2: market's at large important player, but also when it comes
[17:20] Speaker 2: to emissions, it's a very large emitter, the sixth largest
[17:24] Speaker 2: demeter globally. Iraq awesome, fairly large country, very sizable oil producer,
[17:30] Speaker 2: and also very heavily demographically growing, but still economically of course,
[17:34] Speaker 2: being very much held back by the conflict that the
[17:36] Speaker 2: country has seen over the past two decades. So those
[17:39] Speaker 2: would really be the three countries that I would single out, Egypt, Iran,
[17:42] Speaker 2: and Iraq. And the reason well next to the ones
[17:45] Speaker 2: that I just mentioned, but the reason why I would
[17:47] Speaker 2: single them out when it comes to decarbonization looking forward
[17:50] Speaker 2: and actually looking at the decarbonization framework globally, so keeping
[17:54] Speaker 2: it under one point five degrees, we do also want
[17:57] Speaker 2: to consider that there are a lot of countries with
[18:00] Speaker 2: a lot of people that are still in the process
[18:02] Speaker 2: of developing and that have or that are trying to
[18:04] Speaker 2: strike a balance between developing as quickly and as much
[18:07] Speaker 2: as possible and doing so in a way that actually
[18:10] Speaker 2: minimizes the emissions. Consequently, I think Egypt especially is a
[18:14] Speaker 2: good country to watch because it's just very sizeable terms
[18:17] Speaker 2: of demography, talking about one hundred to one hundred five
[18:19] Speaker 2: million people here, still very heavily growing, but also on
[18:22] Speaker 2: the cusp of developing economically which could push up the
[18:25] Speaker 2: energy demands significantly, which, accordingly, if not actually being let
[18:29] Speaker 2: into the right trajectory, could also very heavily push up
[18:32] Speaker 2: the emissions.
[18:33] Speaker 1: Is there a country that you would call out as
[18:35] Speaker 1: a bright spot or perhaps a leader in the energy
[18:37] Speaker 1: transition for the Middle East?
[18:39] Speaker 2: Yeah, if we look at the Middle East, and specifically
[18:44] Speaker 2: would have in this case again to look at the GCC.
[18:47] Speaker 2: All things considered, the GCC does seem to prioritize development
[18:52] Speaker 2: or decarbonization the most. The UE and Oman specifically stand down.
[18:57] Speaker 2: So the UE takes a fairly wide spectrum or a
[18:59] Speaker 2: very whole holistic approach to the energy transition, also talking
[19:02] Speaker 2: about nuclear energy amongst others, but for renewable energy in
[19:06] Speaker 2: relative terms compared to the overall power capacity that it
[19:09] Speaker 2: has deployed, it's moving the quickest. Hydrogen goes for both
[19:12] Speaker 2: the YUE and even more so for Oman, very big
[19:15] Speaker 2: players or very big potential players. Lots of consortia, especially
[19:18] Speaker 2: in Oman once again having been established over the past
[19:21] Speaker 2: two years, lots of tenders having been handed out, so
[19:24] Speaker 2: would definitely single out those two. With the side note
[19:28] Speaker 2: that for the UE it seems to be more of
[19:30] Speaker 2: a holistic approach, whereas for Oman seems to be very
[19:33] Speaker 2: heavily tilted toward green hydrogen specifically.
[19:36] Speaker 1: So let's talk about something that seems like maybe it
[19:39] Speaker 1: isn't related, which is water in the region, but it
[19:42] Speaker 1: very much is, because in order for there to be
[19:44] Speaker 1: green hydrogen production, we're going to have some demand on water.
[19:48] Speaker 1: And well, many parts of the Middle East, although not all,
[19:52] Speaker 1: are indeed deserts without very much water, and there have
[19:56] Speaker 1: been pioneers in the region that have been actually looking
[19:58] Speaker 1: at desalination, UAE being one of them. Can you just
[20:01] Speaker 1: talk a little bit about desalination and really what's happening
[20:05] Speaker 1: there in terms of it as as a market and
[20:08] Speaker 1: how much it's being used.
[20:10] Speaker 2: Desalination very very pertinent topic when it comes to decarbonization
[20:15] Speaker 2: at large in the Persian Gulf, principally because the countries
[20:19] Speaker 2: in the region they lack freshwater, and that's been increasingly
[20:23] Speaker 2: the case over the past decade as inland reservoirs or
[20:27] Speaker 2: aquifers are actually being depleted. So the amount of desalination
[20:31] Speaker 2: capacity has been rising very significantly, and that's very much
[20:35] Speaker 2: set to continue over the next two decades, especially if
[20:39] Speaker 2: countries are going to move in a big fashion toward
[20:43] Speaker 2: hydrogen production or green hydrogen specifically. And another important side
[20:47] Speaker 2: note on this front is that desalination is very heavy
[20:51] Speaker 2: on electricity demands. So if desalination capacity further increases at
[20:56] Speaker 2: this rate, you also see a pretty huge spike in
[20:59] Speaker 2: terms of overall power supply needed. And at this rage,
[21:03] Speaker 2: like we talked about earlier, for Saudi Arabia, renewable energy
[21:06] Speaker 2: deployment is still pretty heavily lagging fossil fuels in terms
[21:09] Speaker 2: of power capacity. For Saudi Arabia, we'll be talking about
[21:12] Speaker 2: roughly forty five percent oil, fifty percent gas and then
[21:16] Speaker 2: remaining three person well actually less, it's one percent renewal energy,
[21:19] Speaker 2: but so predominantly really fossil fuels health oil, health gas
[21:23] Speaker 2: for Saudi Arabia. So for Saudi Arabia, would also mean
[21:25] Speaker 2: that if desalination capacity or needs increase at the pace
[21:29] Speaker 2: that are currently doing that, it pretty much actually outpaces
[21:33] Speaker 2: the deployment of renewable energy, pretty much negating any potential
[21:37] Speaker 2: gain you would get emission wise.
[21:39] Speaker 1: That is really interesting in a perspective that was not
[21:43] Speaker 1: readily obvious, at least to me. So thank you for
[21:45] Speaker 1: being here.
[21:46] Speaker 2: Thank you very much for having me. Dana appreciate it.
[21:57] Speaker 1: Bloomberg ne Ef is a service provided by Bloomberg Finances
[22:00] Speaker 1: LP in its affiliates. This recording does not constitute, nor
[22:03] Speaker 1: should it be construed, as investment advice, investment recommendations, or
[22:07] Speaker 1: a recommendation as to an investment or other strategy. Bloomberg
[22:11] Speaker 1: ne Ef should not be considered as information sufficient upon
[22:14] Speaker 1: which to base an investment decision. Neither Bloomberg Finance LP
[22:18] Speaker 1: nor any of its affiliates makes any representation or warranty
[22:22] Speaker 1: as to the accuracy or completeness of the information contained
[22:25] Speaker 1: in this recording, and any liability as a result of
[22:28] Speaker 1: this recording is expressly disclaimed.

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.