Gulf oil exporters should cut exports??

European Pressphoto Agency

U.A.E. Oil Minister Suhail Mohamed Al Mazrouei

Already forced to develop alternative sources of energy, Gulf oil exporters should introduce legislation to cut their domestic reliance on fossil fuels to ensure they have enough oil to export, according to the U.A.E.’s energy minister.

“Given the trend we’re observing with Gulf countries emerging as major energy consumers, it is clear that the region has entered a new era,” Suhail Mohamed Al Mazrouei said. “It will now require new policies to manage and meet domestic energy demand, while at the same time ensuring our commitment to our customers across the world.”

Mr. Mazrouei didn’t elaborate on the regulatory framework the oil-rich Gulf states need to create to maintain their position as reliable oil suppliers, but his remarks highlight a serious concern that these countries risk consuming an ever-growing amount of their own fossil fuels, leaving less to be exported.

Oil production from the Gulf members (Kuwait, Qatar, Saudi Arabia and the United Arab Emirates) of the Organization of the Petroleum Exporting Countries is close to 20% of total global oil demand. Around 80% of that was exported, according to official data.

Demand for energy in Saudi Arabia, the cartel’s kingpin producer, is currently growing at a rate of 7% a year. If this continues for the next 20 years, the kingdom will burn more than eight million barrels a day domestically, or around two-thirds of its current production capacity of 12.5 million barrels a day, some economists say.

In neighbouring U.A.E., the demand for electricity is set to rise at a rate of about 9% a year through 2020. The country, which is one of the world’s top five power consumers per capita, has already turned into a net gas importer in the past decade, due to rising gas demand from power stations and industrial users such as petrochemical makers and steel manufacturers.

Subsidised petrol and electricity programs are a major contributor to the huge waste of energy across the region, and its fast growing population has little incentive to moderate energy use. Since popular unrest started to spread in the Middle East and North Africa in 2011, these subsidies have become lynch-pins in the social programs of some autocratic regimes desperate to maintain public support.

“We cannot just cut subsidies and risk a popular discontent, even though that subsidies is eating up energy resources fast. It is too hot politically and especially now,” a Gulf oil official told The Wall Street Journal. “We are left with investing in renewables and nuclear, while coming up with new regulation that may help ease energy waste.”

But past attempts to cut subsidies in the region have faltered. In 2010, the U.A.E. considered phasing out fuel subsidies, but the plan stalled amid the turmoil of the Arab uprising. In early 2012, the Federal National Council of the U.A.E. unanimously approved plans to cut gasoline prices after complaints from citizens that they pay too much.