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President and CEO, Atlantic Council
H.E. Dr. Sultan Al Jaber
Special Envoy for Climate Change, Minister of Industry and Advanced Technology, United Arab Emirates; Managing Director and Group CEO, Abu Dhabi National Oil Company
H.E. Eng. Suhail Al Mazrouei
Minister of Energy and Infrastructure, United Arab Emirates
FREDERICK KEMPE: What a gorgeous venue. Excellencies, ladies and gentlemen, what a profound pleasure it is to welcome so many of you back in person, as well as those joining us virtually, to the sixth—the sixth annual Atlantic Council Global Energy Forum in the United Arab Emirates.
For those of you who have joined us before—and I see quite a few familiar faces—thank you for being here again. For those who are joining us for the first time, we hope you find the forum insightful, productive, and engaging, so that you return to help us set the energy agenda for years to come. I find I remember the people I’ve met here as much as the ideas I learn, and both are crucially important.
It is our greatest honor to hold this forum again under the patronage of His Highness Sheikh Mohamed bin Zayed Sultan Al Nahyan, crown prince of Abu Dhabi and deputy supreme commander of the United Arab Emirates armed forces. We thank—we thank him for his country’s generous hospitality.
I also want to extend my thanks to the World Government Summit and His Excellency Omar bin Sultan Al Olama, minister of state for artificial intelligence, digital economy, and remote work applications. As many of you know, we traditionally hold the forum each January in Abu Dhabi as part of Abu Dhabi Sustainability Week. This year, the outbreak of the Omicron variant in Europe and the US prohibited us our travel to Abu Dhabi in January. So we’re thankful to WGS Expo 2020 and Minister Omar Al Olama for their hospitality, their flexibility, and partnership.
In January, none of us could have imagined how significantly the world would change in just the first weeks of 2022. We have lurched from pandemic to global inflation to supply chain difficulties to some of the most volatile energy markets we’ve experienced in some years, all now falling into the jaws of Putin’s unprovoked, unjustified, and criminal war in Ukraine, the worst European conflict since World War II. President Biden in Poland this past weekend delivered one of the most significant speeches of his career, prompting comparisons with Ronald Reagan’s and John F. Kennedy’s speeches in Berlin. Quote: “Time and again,” President Biden said, “history shows that it’s from the darkest moments that the greatest progress follows. And history shows this is the task of our time, the task of this generation.”
We at the Atlantic Council believe we confront a historic inflection point as consequential as the periods after World War I, after World War II, after the Cold War. How we respond as a global community will show whether we can usher in one of the most promising periods of human history or whether we will instead confront a new period of conflict and division.
What we’ve seen in the past weeks and months is how central energy is in this global drama as it plays out.
First, the war in Ukraine has reawakened Europe to the risks of its overdependence on Russian gas and oil, driving a long-overdue conversation around the role of energy security within the global energy transition. The agreement this week between the United States and Europe to send an extra 15 bcm of LNG per year to Europe is a first but important step within a wider goal to reduce Europe’s dependence on Russian energy.
Second, Europe’s energy disruptions have global consequences and send a global message: The energy transition isn’t a light switch, but will take years to successfully navigate. We have insufficient hydrocarbon resources and investments even as renewables are too slow in development to satisfy an energy-hungry world in the middle of a transforming energy system. Rising energy prices are putting the post-pandemic recovery at risk and endanger the politics of clean-energy transition that our world requires. What’s at risk, either by distraction or by destabilization, is the global cohesion necessary to realize the urgency of global climate action and net-zero emission world—in a net-zero emission world.
We open this year’s Atlantic Council Global Energy Forum at a moment when our energy system is confronting concurrent geopolitical, energy security, and climate crises. I can’t imagine a better time for us to gather and put our best minds together so that we can better navigate this period of uncertainty. We must avoid letting this crisis force us to choose—force us to choose between energy security and climate action. Our call to action this year at this forum is that we must stand together to avoid that false choice.
The demand for leadership has seldom been greater, regardless of whether you come from the east or the west, from the north or the south; whether you’re from a resource-rich country or an energy-poor one. It is with that in mind that I reflect on the recent loss of a member of the Atlantic Council family, a member of our International Advisory Board, a personal friend, and a leader whose wisdom would be so valued in Europe and beyond at this time, former Secretary of State Madeleine Albright, the first woman to serve in that position. Her commitment to principle and her relentless focus on building a better future globally should inspire us here. The Atlantic Council also lost former Secretary of State General Colin Powell last year. I always asked him whether he preferred being called secretary of state or general, and he told me: General, because that’s the one I earned. And then, the year before that, we lost General Brent Scowcroft. So a generation of some of the giants of international policy is leaving us at a time when now we must rise and others must rise to fill their—to fill their difficult roles.
Fortunately, this is a region where great leadership can be found, such as my partners on this stage and throughout the now six years of this forum: His Excellency Suhail Al Mazrouei, minister of energy and infrastructure of the United Arab Emirates; and Dr. Sultan Al Jaber, minister of industry and advanced technology in the United Arab Emirates, the managing director and group CEO of Abu Dhabi National Oil Company, chairman of Masdar, and the United Arab Emirates special envoy for climate change. Gentlemen, it’s been an honor working with you these six years, and then adding this year as our partner Minister Omar Al Olama. I hope we, together, can work to create a better world, as President Biden put it, “today, tomorrow, the day after, and for the years and decades to come.” These are relationships that we never intended to be short term, and they have been long term. So welcome and thank you.
The UAE has shown the leadership to play a critical role in this moment, when energy security and energy transition appear to be at odds. This is a region which has long been a geopolitical fulcrum between east and west—a region blessed with equally as significant hydrocarbon resources as ambitions for clean-energy leadership, and a region which will help shape the next two years of climate diplomacy. COP-27 next year in Sharm el-Sheikh will be key to taking the next steps in realizing climate ambitions raised by this past November COP-26 in Glasgow. We also look forward to returning to Abu Dhabi for COP-28 in 2023. The Atlantic Council will be in—was in Glasgow, will be in Sharm el-Sheikh. We’ll also be back in Abu Dhabi for COP-28 in 2023 with our Global Energy Center working on mitigation issues and our Adrienne Arsht-Rockefeller Foundation Resilience Center working on adaptation issues.
So, on behalf of the Atlantic Council, we are honored to have the responsibility of being a trusted convener to help shape the future of the energy system, as uncertain as that future may be. I look forward to the next couple of days of shared insights, and to work closely with our new partners in Egypt and our old friends in the UAE for COP-27 and COP-28.
Finally, this event would not be possible without the tremendous support of our key presenting partners: ADNOC, led by Dr. Sultan Al Jaber; Mubadala Investment Company, led by CEO Khaldoon Al Mubarak as well as the CEO of Mubadala’s UAE investments platform, Musabbeh Al Kaabi; and the CEO of Masdar, Mohamed Jameel Al Ramahi. And furthermore, it is such a pleasure to host this event in partnership with the UAE Ministry of Energy and Industry, led by Minister Suhail Al Mazrouei.
And with that, we—I am glad to turn the platform over—I think you’ll also hear a voice doing it more officially than I am—to Dr. Sultan. Thank you so much for being here.
H.E. DR. SULTAN AL JABER: Your excellencies, distinguished guests, ladies and gentlemen, good morning. And it indeed gives me great pleasure to welcome you to the United Arab Emirates and to the sixth Atlantic Council Global Energy Forum. Let me take advantage of this opportunity to thank my very dear friend Fred Kempe, his great team, and the World Government Summit organizers for bringing us together in this place at this time in person again.
It is also great to see you all here at Expo 2020 as we count down to the end of this very remarkable event. With 192 national pavilions, Expo provides an ideal, inclusive platform for industry and policymakers to engage on the key issues shaping our energy landscape today.
Ladies and gentlemen, the theme for this year’s forum, “The Geopolitics of the Energy Transition,” could not be more timely. We are all witnessing firsthand how sensitive energy markets are to geopolitical shocks. Yet, the current volatility in oil prices is the result of a deeper underlying structural issue. Long-term underinvestment in oil and gas has left markets more exposed to risks of any kind and wherever they take place.
According to the IEA, annual investment in oil and gas is $200 billion below where it needs to be, and that is just to keep up with demand through 2030. Near term, we are also seeing markets tighten, with demand up almost 3 million barrels over last year and expected to reach pre-pandemic levels by fourth quarter of this year. In short, the push to divest from hydrocarbons has met a stark reality, and we must accept and acknowledge that.
While we fully embrace the energy transition, we need to recognize that policies should be tailored to real-world scenarios. And they should follow the basic rule of progress, that if we fail to plan our plan will definitely fail. An unrealistic approach that ignores basic economics will only lead to tighter markets that are even more exposed to geopolitical shocks. Divesting from the energy sources that drive the global economy will lead to a systemic supply crunch that erodes economic growth. Put simply, we cannot and must not unplug the current energy system before we have built the new one.
It is worth noting that others around the world, including many of our friends in Europe and in the United States of America, are starting only now—only now are starting to come to terms with these realities and they’re starting to accept those facts. They are starting to acknowledge that the transition will take time. Transitions, by definition, take time, and this one will take time. Now they are pivoting their policies to ensure that near-term energy security is not undermined by long-term goals. And they have now come to the same conclusion that we came to a while ago—that we need to hold back emissions, not progress.
This has been the balanced, proactive, and positive approach that we have adopted in the United Arab Emirates—an approach that is pro-growth, pro-sustainability, pro-prosperity, and pro-climate. As such, we are increasing investments in low-carbon and in no-carbon energy sources—low-carbon and no-carbon energy sources. We are expanding production capacity of the world’s least-carbon-intensive oil to more than 5 million barrels per day while also growing our renewable portfolio fivefold. We are growing our national capacity by more than 30 percent, enhancing our ability to supply more LNG. We are making more carbon-free energy available from our first-in-the-region nuclear program. And we are establishing zero-carbon hydrogen value chains with key markets in Europe and Asia.
We are doing all this with a strategy that is based on a sound business case. And I believe that a realistic, well-balanced energy transition provides a resilient pathway for new industries, new jobs, and long-term sustainable economic growth.
In the United Arab Emirates, we are taking this pathway to adopt a new low-carbon, high-growth economic model, a model that will guide our development for the next 50 years. When the UAE began its investments in renewable energy over 15 years ago, the economic case was somewhat difficult to make at the time. But our leadership’s vision has been verified by hard and true facts, and today the UAE is home to the three largest and lowest-cost solar power plants in the world.
As we prepare to host COP-28 next year, we will continue to focus on practical and positive solutions that drive progress for the climate and the economy—climate and the economy; both go hand in hand. As such, we intend to make COP-28 as inclusive as possible, and that means bringing the energy sector. Because in a world that needs more energy, it simply just makes perfect sense to include the energy experts in the dialogue. And let me take this opportunity to invite all of you to come to us with your innovative ideas, solutions that we can work together on—solutions that are climate friendly yet commercially viable.
Ladies and gentlemen, we as energy leaders have a responsibility to inject a dose of realism into the planning for the energy transition. Let’s create a clear roadmap that is based on real and solid foundations. Let’s adopt policies that strengthen the stability of energy markets. Let’s continue to invest in new and future energies, but let’s not defund the current energy system. We cannot defund the current energy system before the new one can take its place. If we take this approach, we will reinforce our collective resilience, drive prosperity, and deliver sustainable progress for all.
Thank you again for the opportunity.
H.E. ENG. SUHAIL AL MAZROUEI: Excellencies, ladies and gentlemen, it’s a great pleasure to see you face and face after two years of separation. It feels good to reconvene, and I’m grateful for the Atlantic Council and for the World Government Summit to organize this event here at Expo.
I will be only complementing the information that His Excellency Dr. Sultan have mentioned, because basically he took all of the ideas. But where are we today? We are at a situation that we probably warned about a few years back. Year on year, we’ve been saying we need more investments in the oil and gas—we need more resources, we need more diversity. And whether it’s geopolitics or an excuse that the net zero need to take effect immediately and we need to take actions, therefore we don’t need additional investments, we are at an environment where everyone is saying raise your production, bring more resources, while if you go to financial institutions they are a bit hesitant and they are still hesitant to finance many oil and gas projects in the world. Basically, they are saying we need you to increase the production for only a few years and after that thank you very much, as if it’s a tap—you open it and you can close it.
We definitely at this time need to include all available resources. Abandoning some resources at a time of need where the group of OPEC+ have already lost of the—of their production—of the countries’ production more than a million barrels, we cannot ignore or say we are going to abandon certain production. It’s just not the right time, whatever reason you have, because that will make the resources and the price unaffordable to many countries and they will not be able to progress, as Dr. Sultan said. We need progress for people to bring food to the table, people to work. The population is increasing. Obviously, we need to make the energy more affordable. But we cannot do it while we’ve been asked to just invest and increase the production and no one is supporting.
At the same time, we need to realize that the geopolitical situation is very tense. And it’s not only affecting the oil and gas sector; it’s affecting every aspect of our lives, from the food security to the rare minerals to everything. So, basically, we need to be courageous to tell the consumers your bill is going to be doubled or tripled in the future if we don’t do anything about it. And that is problematic, because that means starvation for many nations and that mean we going to have more problems than the geopolitical problems that we are seeing, whether they’re—we don’t like it. No one likes war. And for us here in the United Arab Emirates, we think and we believe in peace, and we need to promote peace. So we need to work on this crisis between Russia and Ukraine to end as soon as possible by diplomatic means, not by pouring more weapons into the situation, because basically the people are going to be the victim.
The energy transition, as Dr. Sultan said, will take time and will need more investments. And we need actions from the investors. We need them to be investing and promoting investments. And we need to diversify the sources, especially in gas. Gas prices have not been helping in the past, and suddenly shooted through the roof. So they are not sustainable as they are today to many countries. But without developments of resources, we will not be able to solve this problem.
We as a country are trying to do our best. We are investing and raising our capacity to 5 million barrels. We said this when people were saying you should not invest, and we were wise to do that because now we are seeing the need for it. So we are continuing on that—on that pathway. But that does not mean that we are going to leave OPEC+ or do something unilaterally. We will work with this group to ensure that the market is stable.
At the same time, we will not produce hydrocarbon in the old way. Like Dr. Sultan said, we are aiming to produce the lowest-carbon barrel in the world. And we are investing to do so, from bringing the electricity to the oilfields purely from renewable or clean sources, nuclear included, to the fact that we are participating in every opportunity to reduce the emissions and reduce the greenhouse gases.
We are also promoting renewable energy in more than 40 countries. And we are very proud of the work that Masdar is doing in promoting renewable energy and bringing clean investments in many parts of the world. It becomes an agenda for those countries to include renewable energy in their energy mix, which was not the case.
Hydrogen has a great potential. And we are one of very few countries that have put a roadmap for the utilization of hydrogen, and we have projects onstream to deliver. We will start with the blue hydrogen because it’s available and it’s also affordable. As we care about the affordability, we cannot just bring the most expensive form of hydrogen and push it to the market. We need to start by bringing what is available and commercially viable, and then we continue investing in technology to bring the green hydrogen, which is going to be the future. So in that—in that sphere, we are also collaborating with our friends in the US, in Europe, and in the east to advance the technology to be able to commercialize more green hydrogen projects in the future.
Sustainable mobility is also an area that the ministry is working on. And we are working to provide optionality for the people here in the UAE from hydrogen-cell cars to EVs to combustion engine. The choice is going to be to the people and we are not going to be promoting one form over the other. I think the economics will make it viable for the renewable energy project—I mean, sources of mobility to prevail as we are reducing the cost.
So UAE have a strategy, and that strategy have a KPIs and milestones, and we are progressing very well. But many countries, I’m worried they don’t have strategies and they are—they are puzzled by the energy transition questions. Should we go this direction or that direction? We’ve been living in a roller coaster, seeing the prices going up and down, making it so difficult to many countries that doesn’t have an energy security to deal with this issue and formulate a proper strategy.
Three main pillars in defining energy strategy. One is the security of supply. And today, the geopolitics, people think it’s the most important element. It’s not. Without affordability, it’s not going to work. So affordability is the second pillar. And sustainability, which is a must, is the third pillar.
With that, I will leave you. And I again thank you, Fred and the Council members, for bringing us together, and I look forward to hearing from you and learning as well. Thank you.
FREDERICK KEMPE: Minister Suhail has been kind enough to give us, you know, no more than 10 minutes of questions. And I really like the way that you ended your comments, and I want to give my thanks again to Dr. Sultan and to Minister Suhail for this partnership. And Mubadala and Masdar, it’s been just a terrific partnership throughout.
Because I see His Excellency Mohammad Barkindo here—and it’s great to see you, sir, and thank you for your service over these really troubled years—let me go to what you said about OPEC+. And in this situation, the geopolitical difficult situation—war in Ukraine right now—you were there at the birth of this institution, of this changed institution. Where does this go now? What are the challenges of the current period for OPEC and how should it—and how should it respond to this period?
H.E. ENG. SUHAIL AL MAZROUEI: Well, as I mentioned, even at the early days or after the first year of the formation of OPEC+, I stated that this is an alliance to stay, an alliance that we need. And I still see that relevance. I think the fact that we meet on a monthly basis brought us much closer during the crisis of COVID, and we have managed to get out of the—of that hole. But again, after getting out we are faced—we are faced with another crisis. And I am sure, staying together, staying focused, and not allowing politics to kick into this organization—as Mohammad was lecturing us over dinner yesterday of the wisdom that he received from some of the rulers here in the—in Kuwait and Saudi and the GCC, we always believe that whatever we do as countries when it comes to production and this work, it needs always to stay out of politics. We have two countries that are under sanctioned and we managed to produce while they are with us. We gave them whatever they need.
So I think—I think the organization will stay. Russia is an important member. And leaving the politics aside, that volume, as I mentioned, is needed today. And unless someone is willing to come and bring 10 million barrels, we don’t see that we can—someone can substitute Russia, basically.
FREDERICK KEMPE: So, Minister Suhail, I look at my friend Hadley Gamble of CNBC in the audience and I know she would just love it if you would commit news here, but I won’t put—I won’t put you in that position. However, you did talk two or three times about the pressure to raise production, the pressure to bring more resources, which is contradictory to some of the earlier messages of getting to net zero or at least sounds a little contradictory to getting to net zero as quickly as possible. What is your answer to those who say one has to raise production now, the situation demands it now?
H.E. ENG. SUHAIL AL MAZROUEI: Well, it’s so difficult because every country is facing a reduction—a natural decline/reduction, and we have seen it in—as I mentioned, in the OPEC+ group we lost a million—a million barrel over one year only, and God knows ending of this year how many more barrels we will lose. So you need to replace the barrels, and some countries are exposed to 15 percent, 20 percent decline, not a 5 percent as ADNOC or Saudi Arabia or others who are deploying lots of capital to maintain production. But others who are not doing that, they are losing 10 percent, 15 percent of their production. So one thing that we need to understand, we need to replace at least 5 to 8 million barrels of—that we lose every year by basically investing in keeping the production where it is. In addition, we have a growing demand and we need—we need to add to that.
So all of that requires huge investments. And now, when people are coming and saying to the investors—well, they are saying it; there’s no proof of it—that that production is not needed after five years, that makes it difficult for the investors to come and invest. And if people are saying to the investors you should not be in the oil and gas business, period, then that also puts lots of pressure on many of the IOCs because their shareholders are telling them to leave it. And if that is happening, we as producing and NOCs cannot replace the IOCs’ production if they are leaving. So we need to be wise of what we are and careful of what we are wishing for if that is – if that stays.
I think in COP-26 the—all of the producers felt that they are uninvited and unwanted and felt like they are in a corner. But now we are onstage and they want us to produce more, so we are again the superheroes. It’s not going to work like—in, like, a span of a year. So we need to be wise and I think we need wisdom here. We need to be long-term planners and we need to sit with the IOCs, to sit with the NOCs if we want to have a sustainable and affordable future of energy. If that is not happening, geopolitics will go away one day but we will be remaining with the fact that we need to invest and we need to produce.
And how much do we need to produce from each source? That need to be complemented, of course, with raising up the investments in renewable energy. We’re not saying you should not—you should invest in one. You should think of dual investments and you should invest more in renewable. You should clean up the barrels. And some barrels are not clean, whether we like it or not. Today, some barrels are really nasty and bad, and others are doing their best. So we need to recognize those who are putting more investment to reduce emission when it comes to oil production.
FREDERICK KEMPE: Thank you, Minister Suhail. And it’s interesting you refer to superheroes because I believe it may be Spider-Man—people have to tell me if I’m wrong—“With great power comes great responsibility” as well.
Last question, and this will be in two parts. First of all, you and Dr. Sultan both called upon much more investment. Can you give maybe one or two examples where it could make the most difference fastest? You know, what could really shift things in terms of the investment that’s lacking?
And then, secondarily, you pointed to the sort of thing that could happen should we not address these issues. Starvation, you used the word; more geopolitical. How worried are you about that ugly turn?
H.E. ENG. SUHAIL AL MAZROUEI: When I see the prices of all commodities, including food, I tell you, I become very worried. So what’s happening to the oil and gas is nothing compared to what we are going to see in all of those commodities because they are needed in the oil and gas, one, so they will raise the cost of production. Even solar is not as cheap as it used to be because of that. The solar prices will go higher. Gas prices, because of the sudden shift due to the geopolitics, are historical high. I don’t think we have seen gas prices that high ever. And companies are confused, which—in their economics which price they should use. Should they use a percentage of the—of the—of a 12 percent slope or should they use the prices that they have seen?
And I am worried because we have this—I mean, we are living in kind of two spheres. One sphere is saying now we need investments, now we can give you money to invest, but the risk is in you. That is not going to happen. So we need IOCs to invest. And for IOCs to invest, their shareholders need to be convinced because those are—those are the shareholders that yesterday told them: Claudio, you should not invest. And now they are saying: We need more gas, please come and save us. So long-term contracts will be on demand because they cannot put 5 [billion dollars] or 10 billion dollars in a—in a plant that brings gas and they don’t know if that gas is going to be needed and for how many years. So that dynamics as well need to change.
So spot market is not enough for companies to make their investments, especially when the financial institutions are tightening their resources to the oil and gas. And that is, I think, where wisdom need to be there. We need to talk about long-term demand. If Europe needs gas and needs gas quickly, they need to put that plan. They need to sit with the producers, and they need to identify their requirements, and they need to be reasonable and realistic. And one thing they have to say, they need to tell the consumers that, by the way, you get ready to pay double or triple the price of energy in the future, and that is not happening. And I’ve been saying this for two years. I can see prices going higher, but no one is talking to the consumers. Affordability is key, and we need—we need to look at it, and we need to be transparent. Because at different prices the gas or any commodity or the oil, the demand may be less but the money is going to be more for those producers.
So it is difficult to predict the price and I will never predict what is the price. You asked me that question last night. And it is impossible to predict it for the same reason I mentioned. And we need, I think, the—institutions like EIA, the IEA to be realistic, wise, and don’t tell the world information that are misleading. If you look at some of the information that was passed—and we said those are not right—no investments needed in the oil and gas, and now they change their mind, those are respectful, I mean, organizations. They cannot give the world such information. We need, I think, to be predictable. And to be predictable, we need to be realistic and we need to be wise of our choices.
FREDERICK KEMPE: Thank you, Minister Suhail. And we’ll keep in mind also your three pillars: security of supply, affordability, and most of all sustainability.
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