BRATISLAVA, Slovakia – The United Arab Emirates (UAE) is committed to boosting Europe’s energy security and fighting climate change through increased investment in renewables, UAE Minister of Energy and Industry Suhail Al Mazrouei, who holds the presidency this year of the Organization of Petroleum Exporting Countries (OPEC), told New Europe in a rare and exclusive interview at the GLOBSEC 2018 forum in the Slovak capital of Bratislava.
“We’re a major investor in Europe. We own 24.9% of OMV (Austria). We own 64% of Borealis (Austria), and we own 100% of Cepsa (oil company Compañía Española de Petróleos) in Spain. So we’re a major investor in Europe. Our companies in Europe hire around 20,000 employees. In addition to oil, we’re a major investor in Dresden, Germany in the semi-conductor business. We are the largest investor in Dresden when it comes to the industrial sector,” said Al Mazrouei.
“Europe is important for us. Our investments in Europe are increasing. We’re expanding; all of these companies are expanding their businesses. But at the same time we also recently gave those European companies a significant stake in Abu Dhabi. Energy security to Europe is something we have done in the past and we’re committed to continue through OMV in northern Europe and Cepsa in Southern Europe…In Spain we’re the operator of the pipeline from Algeria to Spain,” Al Mazrouei added.
Turning to renewables, Al Mazrouei said there is potential for cooperation between the UAE and the European Union, saying, “We’re a major investor in the London Array project,” in reference to a massive offshore UK wind farm 20 km off the coast of Kent in the outer Thames Estuary. “We’re also a major investor in Spain in solar and look forward to participating in other projects in Europe. Europe is important for us for investment but at the same time we’re giving European companies investment opportunities in our country.”
Investment in renewables
The development of renewable technologies is also helping the UAE strengthen its economic ties with the EU, which, according to Al Mazrouei, significantly boosts further innovative development between European and Emirati research teams.
“Technology is very important. We’re investing in the R&D in Europe in a collaborative manner. So the innovation centre in Borealis, there’s one in Austria, one in Abu Dhabi; even one in China. The three centres of excellence are coming up with new technologies, jointly, between the Europeans and Emiratis, and they are improving these technologies for the petrochemical industry, which the world is benefiting from…and we’re very proud of these joint teams,” Mazrouei said. “I think that’s the right model for us. We don’t want just to invest and someone else to bring us the technology. We’re investing together to bring the technology.”
The minister noted that UAE announced in 2017 the country’s energy strategy, which is calling for a transformative move to greener forms of energy that will form the backbone of the UAE’s energy mix, increasing from 1% to 44% by 2050.
“Gas is now number one, but it will become number two at 38%. Primarily, it’s going to be indigenous gas with some minor importation. And we will have nuclear within that energy mix. Every five years we will revise that strategy,” said Al Mazrouei, who also told New Europe that his country would look at some options at capturing CO2 from clean coal plants. “If we go with this energy mix, which is balanced at almost 50-50 – fossil fuels at 50%, non-fossil at 50% – we will reduce the CO2 percentage by 70%.”
The UAE plans to meet the goals set by 2015 Paris Agreement. “That’s why we’re aligned with Europe in terms of the vision. But the difference is we’re not doing it with subsidies – zero subsidies. We buy them at the price that makes the whole system make sense,” Al Mazrouei said.
The UAE minister also expressed his hope that the US Administration of Donald J. Trump will reconsider its decision to pull out of the Paris Climate Accord.
“Everyone needs to do their job. Europe needs to convince the US to come back to the agreement. The US is a major industrial country and it doesn’t matter what we do if the US and China are not doing what they’re supposed to do.
And I think China is doing a lot, they’re committed,” Al Mazrouei said, adding, “I think the fact that gas is available in the US and at that price and with the efficiency that we’re achieving in gas, it will make the shift easy to think about it. I think in the US it has more to do with job creation for those coal workers,” he said in reference to Trump’s decision to pull out of the accord, which many have attributed to playing to his electoral base instead of considering the economic practicality of the move.
OPEC, non-OPEC to balance market
With oil prices spiking by over 70% in the past year, Al Mazrouei cautioned against being overly ecstatic about the increased revenue for OPEC countries, saying, “Obviously, constant volatility is a concern for us. We don’t want to have huge volatility within the same year and we don’t think it’s driven by fundamentals. It’s driven by geopolitics and that is something that we don’t like to see,” he said while noting that OPEC and non-OPEC producers are striving for a balanced market with a fair and sustainable level of inventories for consumers.
“We have to look at the price from the beginning of the year. As we speak, we’re assessing what the average price is with the ministers of OPEC and non-OPEC countries. We’ll have a meeting in one month with everyone to decide what is needed…What I can assure you is that we’re committed to achieve that market stability and this group is resilient to many changes in the past and I think it will continue carrying out its duties to hopefully achieve the market balance even if we have a geopolitical situation where we need to do something about it,” said Al Mazrouei, who is also OPEC’s president.
OPEC and some non-OPEC producers, including Russia, are scheduled to meet in Vienna next month where they will discuss their previous agreement to cut the combined output by about 1.8 million barrels per day to boost oil prices and clear a supply glut.
“Sometimes geopolitics pushed the price for a week or two, or even a month. But that’s not sustainable. It will go and disappear when that effect disappears. We will take a month to look at it, to assess everything, and hopefully when we meet in June, we’re going to make a decision,” he said. “We’re not ignoring the market and we’re not benefiting from having this type of fluctuation.”
Al Mazrouei praised Russia’s cooperation with OPEC, saying Moscow has been a very reliable partner to OPEC. “They did what they said they would do in terms of compliance. Their compliance is exemplary and they have benefited, as we have benefited, from them joining us with other groups…We’re looking to making this a long-term relationship,” he said, noting that the large group of OPEC and non-OPEC members, including Russia, can easily cope with any destabilisation in the market as their cohesiveness and size allow them to “do things faster” as a cooperative unit.
Asked about the effect of US shale producers and American LNG on the energy market, Al Mazrouei said there are still constraints in the US oil and gas infrastructure due to the overall cost of producing and exporting energy from American sources.
“The United States can be a potential exporter of LNG. But the question is going to be at what price and whether LNG could compete or becomes attractive verses renewable in the future,” he said.
Europe has tried to diversify its energy resources, reducing its reliance on Russia, but Al Mazrouei told New Europe he believes the link between the two is too strong and mutually beneficial for a full disengagement.
“My personal view is that Russia and Europe are partners when it comes to energy. I think the infrastructure that exists is great – you need to capitalise on it. You don’t want to be introducing an alternative – LNG – because that could be very expensive. Pipeline gas is always cheaper and more assertive to LNG. You have LNG to balance, so that you have an alternative supply, but I don’t think it can and should replace the fact that you have a neighbour that has enormous natural gas supply potential. I’m not a politician in terms of foreign relations, but my business sense tells me that the long-term relationship between Europe and Russia should overcome any obstacle.”
East Med energy potential
Al Mazrouei also took time to hail the energy potential of the East Mediterranean, saying, “These enormous gas discoveries are good news for those countries. It will provide enough for Egypt and provide energy security for Egypt, which is a country with a huge population and that’s going to stabilise things for Cairo,” he said, referring to Egypt’s giant Zohr offshore field.
The discoveries of large gas deposits in Israel and Cyprus are also good news for the region, Al Mazrouei said while emphasising that the untapped supplies will help meet domestic needs and “should be enough to export”, which could provide pipeline gas to Europe” along with LNG and Russian gas.
“We have already decided to invest in Zohr in Egypt – a small investment. But we’re a major investor through Cepsa in Algeria, which is bringing the gas to Spain, so we’re also providing some options to Europe,” Al Mazrouei pointed out before saying that the scale of the UAE’s future investments would depend heavily on the price of gas.
“What will the price of gas be? And is it going to continue attracting investors or are they going to seek alternatives because they’re economically cheaper?” Al Mazrouei concluded.