The UAE and other Gulf states should continue to take a long-term view of the energy sector and not allow themselves to become distracted by demand security concerns driven by the soaring price of oil, industry experts said on the sidelines of the International Petroleum Technology Conference.

The event was formally inaugurated by Sultan bin Saeed Al Mansouri, UAE Minister of Government Sector Development, in a ceremony attended by Tony Hayward, group chief executive of BP, as well as a number of senior executives and government representatives.
The main theme throughout the conference – which features more than 250 technical papers – was the importance of positioning the industry to ensure sustainable development.
Keynote speaker Daniel Yergin, chairman of Cambridge Energy Research Associates (Cera), said that continued investment is absolutely critical to the long-term stability of the industry.
“People, equipment, and skills shortages have doubled upstream production costs in the last three years alone,” said Yergin.
“Contraction in the industry from 1986 to 2000 lead to a draw down of resources, but, since 2003, the industry has been running hard just to keep up. Investment now will bring increased stability to the sector in the near term,” he added.
Yergin said earlier this year that oil prices had become decoupled from supply and demand due to external factors, namely the weakening US dollar but also the resulting tendency to use oil as a hedge against the weakening dollar.
Part of the discussion at the event focused on potential responses to the Cambridge Energy’s “breakpoint scenario” that could result from the current climate, where oil supply difficulties limit production growth, leading to sustained high prices and a significant market response towards alternative fuels and technologies.
In this scenario, rising concerns about energy security promote moves toward major changes in energy policies, the conference participants observed.