Middle East under pressure to fill oil gap left by Russia

• Opec+ keen to supply oil but other producers must also up their game
• GCC in talks to sell gas to a number of European countries

The Gulf states are in prime position to plug the global energy gap caused by the Ukraine war, but other countries must also step up, experts said this week at Adipec, the region’s top energy event.

In recent months, the UAE and Qatar have been in talks with Europe to sell gas to those who are cutting ties with Russia. 

Austria’s OMV, for example, has agreed with Abu Dhabi’s Adnoc to explore partnership possibilities of exporting liquified natural gas. Similar conversations have been taking place with Qatar Energy.

The ongoing conflict between Russia and Ukraine has led the [European] continent “to be weak,” said Claudio Descalzi, chief executive of Italian-based energy company Eni.

Referring to the world’s energy supply deficit, he said that “any energy-producing nation can take advantage of it”, including the US and the Gulf states.

• Adnoc’s new pilot scheme to address UAE’s carbon footprint
• Energy crisis inflates Gulf demand and strains Europe
• Emerging ‘consequences’ of the US-Gulf fallout over OPEC’s cuts

Opec+ saw a surplus in the fourth quarter, which could extend into early 2023 as the world faces recession.

“When we saw these forecasts on October 5 we took [the] decision to be proactive and preemptive,” Opec+ secretary general Haitham Al Ghais told journalists during Adipec. 

“We definitely feel Europe is in a recession so these economic things will have an impact on oil demand, and that’s why our forecasts are surplus right now and evolving,” Ghais said.

UAE energy minister Suhail Al Mazroei said that Opec+ is keen on supplying the world’s requirements but, at the same time, other producers also needed to step up. 

“We are always going to be a technical organisation – we balance the supply and demand,” Al Mazroei said, defending Opec’s recent cuts.

“That is our commitment. If there is a requirement, we are only a phone call away.”

Opec+ faced a backlash from the US for the cuts it announced in October.

Ali Abdulla Kanoo, president of Kanoo Industrial & Energy Division, told AGBI that the market is shifting eastwards away from Europe-centrism.

“The Middle East is actually playing neutral,” he said, adding “this is the time for supplements, the new technologies, the new manufacturing, the jumps in engineering, and trying to figure out what will be required for the next five to 10 years.

“The market is shifting east – that’s where the investments are going. There is pressure on oil and gas. So, it makes sense to drill now and sell them how much you can sell.”