UAE sees only ‘moderate’ rise in shale output

Suhail Al-Mazrouei, pictured here in Kuwait, says that Abu Dhabi had invested 400 billion dirhams in its oil industry. (AFP)

ABU DHABI: The UAE expects only a “moderate” increase in output from US shale oil producers next year, even if oil prices maintain their steady upward trend.
Suhail Al-Mazrouei, the Emirates’ minster for energy, told an audience at the Bloomberg Invest Abu Dhabi event in the UAE capital that he had been “positively surprised” that growth in US shale output has been relatively low this year, despite the crude oil price hitting the $60 per barrel amount most experts regard as the economic level for profitable shale production.
“Growth in shale has not been as fast as expected, and I think it will also be moderate next year. I think the shale producers have in the past concentrated on the ‘sweet spots’ — reservoirs where it’s cheap and easy to get oil. But the new reservoirs are not as easy, and the costs are higher,” he said.
“So while I think shale oil production will increase, I don’t think it will rise enough to offset the production limits agreed under the OPEC deal, combined with the increase in global demand for oil. We were surprised by the growth in demand in 2017, and I think next year will also be healthy,” he added.
Al-Mazrouei said that Abu Dhabi had invested 400 billion dirhams ($109 billion) in its oil industry, making it one of the most efficient in the world. “I’m sometimes asked if we can compete against the low-cost producers, but we are one of the lowest-cost producers and that will continue.”
He said that at the recent OPEC meeting in Vienna, “a group of responsible nations came up with a production cut to manage the glut of oil and reduce inventories. OPEC will continue to be a responsible market balancer for oil supplies.”
Waleed Al-Muhairi, who is chief executive of alternative investments for the Mubadala Investment Company, told the gathering that it had invested in 16 technology firms as part of its $15 billion investment in the SoftBank Vision Fund, in which Saudi Arabia’s Public Investment Fund is also a leading investor. He said the investments had been in the sectors of artificial intelligence, robotics, and agricultural technology, including what he described as “vertical farming,” a high-tech form of agriculture that he said was more efficient than farming “in the ground.”
Mubadala is to open an office in San Francisco to be near to investment prospects in America’s technology heartland.
Mohamed Jameel Al-Ramahi, chief executive of the Masdar alternative energy business, said that he was considering big investments in Saudi Arabia, including in the solar panel business.
“It’s clear that Saudi Arabia, as the biggest economy in the region, is a very important market and they are committed to renewables. We are also committed to that market,” he said.