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Thursday, 17 August 2017

Demand for gas just a bunch of hot gas?

The Middle East is traditionally synonymous with oil and natural gas, but old perceptions may no longer hold true with the region going through an economic slump that is slowing everything down and forcing diversification away from the fossil fuel industry as a crutch. Bloomberg contributor Robin Mills argues that even though traditionally gas rich countries, including Egypt, have turned into importers in the last few years, Middle Eastern demand will be curbed “on three fronts: economics, efficiency, and competition.” Rising costs during the oil price slump has most governments weaning their populations off subsidies and looking for more energy efficient means for power. While gas powered grids are already in place, future expansion is looking toward other means, namely renewable energy in our solar-rich desertscapes.

The International Energy Agency (IEA), however, still forecasts growth in the natural gas sector, seeing it growing by 1.6% per annum through 2022. While Mills’ argument for renewables holds water, population growth is exploding in countries including Egypt, and economic slumps are always going to be cyclical. The political aspect can’t be denied, either. With the Eastern Mediterranean witnessing a gas exploration boom, we can expect allied blocs such as Egypt, Saudi Arabia, and Israel to push investment in a direction that takes advantage of new resource discoveries.

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