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Subsidy reform and further economic diversification away from oil and gas are the most critical elements in overcoming the current squeeze on government revenues resulting from a sustained period of lower oil prices, energy and financial sector experts told the APICORP Energy Forum, held in Bahrain under the patronage of Prince Khalifa bin Salman al-Khalifa on 19 November.
A total of 45 per cent of the delegates at the forum said that diversification was the biggest issue facing the region. This was followed by 34 per cent who favoured subsidy reform. Only 16 per cent thought spending cuts is the preferred option.
More than 350 delegates attended the APICORP Energy Forum. Keynote speakers included Ali bin Ibrahim al-Naimi, Saudi Arabia’s Minister of Petroleum and Mineral Resources; Abdul Hussain bin Ali Mirza, Bahrain’s Minister of Energy and Tarek el-Molla Egypt’s Energy Minister.
A slim majority — 53 per cent — voiced confidence in OPEC’s policy of maintaining production levels to maintain market shared; 22 per cent said they believed it would not work. A total of 91 per cent said that the Brent oil price will remain below $70 for the coming 12 months. Only 1 per cent expected the oil price to have reached $100 by this time next year.
Industry attendees were largely split on the impact falling oil and gas prices are likely to have on investments in renewables and the global energy mix: 24 per cent said volatile prices would force governments to seek alternative energy sources, 36 per cent predicted investments in renewables would fall, and 40 per cent predicted governments would take a long view on investment and not change their investment plans.
Commenting on the Forum, Dr Aabed al-Saddoun, chairman of APICORP said:
“The APICORP Energy Forum is a unique occasion and an opportunity to hear from a mix of critical energy stakeholders and experts. We have policy makers in the same room as bankers and finance professionals, researchers and analysts, and private companies and investors. Their views and actions are partly what move the energy markets.
“A key takeaway from the Forum is that while there is widespread acknowledgement that there are serious challenges facing the global energy industry, there is also an abundance of optimism and positivity about the sector’s future in this region. Investments in infrastructure, skills and technology are always important and must continue. APICORP is here to help enable these investments.”
APICORP is a multilateral development bank established to foster the development of the Arab world’s oil and gas industries.