U.A.E. plans to keep investing in energy amid volatile oil price
ANTHONY DIPAOLA and MAHMOUD HABBOUSH
ABU DHABI (Bloomberg) -- The United Arab Emirates will continue building and upgrading its oil facilities to maintain its role as a major producer amid the decline and volatility in prices, Energy Minister Suhail Al Mazrouei said.
“Many are saying because of what’s happening around us in terms of the commodity prices, companies should rethink what they invest in their infrastructure. I disagree with that,” Al Mazrouei said in a speech at a conference in Abu Dhabi, the U.A.E.’s capital and largest emirate. “I think the investment in the infrastructure and the upgrade of infrastructure has to continue.”
The U.A.E. pumped 2.7 MMbopd in December, making it the fifth-biggest supplier in the Organization of Petroleum Exporting Countries, according to data compiled by Bloomberg. The Persian Gulf nation can produce 3 MMbopd, the data show, and it plans to boost capacity to 3.5 MMbopd in 2017. Brent crude has dropped 55% in the last 12 months and was trading at $48.13/bbl at 7:25 a.m. in London.
Oil slumped last year by the most since the 2008 financial crisis, with the U.A.E. and Qatar estimating surplus supply at 2 MMbopd. OPEC is battling a U.S. shale boom by resisting production cuts, signaling its readiness to let prices fall to a level that slows U.S. output, which has risen at its fastest pace in three decades.
“Our investments are on track to make sure our standing as a major oil producer stays in the future,” Al Mazrouei said, without providing details.
‘Positive Turn’
Sultan Bin Saeed Al Mansoori, the U.A.E. economy minister, said the country has sufficient financial reserves to weather the current slump in oil prices for as long as two years.
“If it extends beyond two to three years, it becomes an issue that challenges all of us,” Al Mansoori told reporters at a separate event in Abu Dhabi. “By the middle of this year, we should see some positive turn in the prices of oil due to the expected positive turn in the economies of the major blocs,” such as the European Union, the U.S. and China, he said.
OPEC cut estimates for the crude it will need to produce this year by 100,000 bpd, to 28.8 MMbpd, in its monthly market report on Jan. 15. The group, which supplies about 40% of the world’s oil, decided on Nov. 27 to maintain its collective output target at 30 MMbpd. It exceeded that target for a seventh consecutive month in December, when it pumped 30.2 MMbpd, data compiled by Bloomberg show.
