It was argued last week, by Abhay Bhargava, associate director of Frost & Sullivan, an Energy and Environment Practice, that this period of volatile fuel prices could be a good thing for the GCC countries.
He further writes that this situation being not a novelty to the GCC’s oil sector, it is its fluctuations and most notably those rapid downward trends that are reasons for serious concern. Oil and gas exports contributes 85% to the GDP of every country of the Gulf Cooperation Council.
Alternate sources of energy, depletion of conventional oil production coupled with a slump fuelled by a general slower world economy and the voluntary reduction on behalf of certain countries of their dependencies on imported oil tend to push prices down and worse maintain them down.
Major oil firms as a consequence have cut back on new projects and 26 large projects were lately been scrapped by the GCC countries alone.
State-owned Qatar Petroleum (QP) affected by these oil price fluctuations is planning some restructuring so as to face up to this new situation. The move could mean that the authorities are after some consolidation of their industry for perhaps a better future.
It must be said that member countries of the GCC whilst enjoying a large contribution to their economies from the production and export of oil had always had this premonition that they could sometime face a significant decline in potential earnings. Prices have in effect more than halved in a 6 months period and these are very likely to remain unchanged.
These are the reason why now is time to review and adjust to not only the current lean times conjecture but to also to an uncertain future that could last.
Scrapping projects of buildings and infrastructure development could be generalised on top of the restructuring of all those money guzzling administrations are and will definitely be numerous on the agendas.
Everybody on the other hand feels that after all demand for OPEC oil is likely to improve but would certainly never get above the $100 mark.