Energy

The energy sector, which consists of all the activities involved in the production, transformation and sale of energy, including the petroleum, gas, electricity, coal, nuclear power, and renewable energy industries, is one of the main drivers of socio-economic development. In other words, hydrocarbon resources play an important role in the development and economic growth of countries with large reserves of oil and gas, alongside the rising importance of renewable sources and the increasing efforts to implement the Paris Agreement[1].

 

The Arab region is one of the world’s richest regions in terms of oil and natural gas resources. According to recent estimates, 42 percent of the World's proven oil reserves are located in the Arab region with 14 out of 22 Arab countries holding proven oil reserves. Saudi Arabia held the second largest proven oil reserves in the World with 36.6 billion metric tons in 2014, followed regionally by Iraq and Kuwait at 19.3 and 14 billion metric tons respectively. In addition, 29 percent of the world’s proven natural gas reserves are located in the Arab region, with Qatar having the third largest reserves in the world at 25 trillion cubic meters in 2014 (World Energy Council, 2016).

 

The existence of large oil and gas reserves impacts the production of energy products that amounted to a total of 1,780 million toe[2] in the Arab region[3] in 2014. The energy consumption reached 428 million toe in 2014, with the GCC countries consuming more than half of the supplied energy. It is noteworthy to mention that the most energy[4] consuming sectors in the region are transport and industry at 31 percent each, followed by households at 16 percent. The abundance of hydrocarbon resources and the high production rates make the Arab region a large exporter of energy products, with 69 percent of the energy produced being exported.

 

Crude oil production amounted to 1.3 billion toe in the Arab region in 2014 with Saudi Arabia producing 553 million toe. Out of the crude oil and oil products produced in the Arab region, 81 percent were exported in 2014, mainly to China, Japan, India and Europe, among other countries[5] (British Petroleum, 2015). On the consumption side, the average oil products consumption per capita amounted to 590 kgoe[6] for the whole region and 2,200 kgoe for the Gulf region, compared to the World average[7] of 520 kgoe per capita in 2014. The transport sector was the most oil consuming sector in the Arab region at 58 percent, followed by the industry sector (14 percent) and households (8 percent).

 

Globally, 16 percent of the World natural gas production and 20 percent of the World natural gas exports derived from the Arab region in 2014. Natural gas production in the Arab region amounted to 454 million toe in 2014, with Qatar producing 142 million toe, followed regionally by Algeria and Saudi Arabia at around 70 million toe. Out of the total production in the Arab region, 38 percent of the natural gas was exported. On the consumption side, 106 million toe were consumed in the Arab region in 2014, with the industrial sector consuming 74 percent of the total natural gas supplied, followed by the households sector at 7 percent.

 

Up till 2014, there has not been any production of coal in the Arab region. However, 7 million toe have been imported in 2014, of which Morocco imported 4.3 million toe and UAE 1.5 million toe. While the total primary energy supply of coal amounted to 6.7 million toe, the industrial sector, which is considered the most coal consuming sector in the region, consumed only 2.3 million toe.

 

Electricity production in the region relies heavily on conventional fuel sources, with a production amounting to 1,050 TWh in 2014, of which only 40 TWh were produced using renewable sources. The consumption of electricity amounted to 81 percent of the total electricity produced in 2014, reaching 855 TWh. At the sectoral level, 44 percent of electricity was consumed by households, followed by commerce and public services at 26 percent, and industry at 22 percent. On the other hand, the electrification rate in 15 Arab countries was above the World average of 85 percent in 2012, with 6 countries reaching 100 percent electrification rate. Comoros and Djibouti have electrification rates of 69 and 53 percent respectively, while the remaining four Arab countries (Yemen, Somalia, Sudan and Mauritania) have electrification rates below 50 percent (World Bank, 2017).

 

Given the high economic impact of energy subsidies on national economies, the international drop in the prices of petroleum products, and the aspirations of some countries to drive green solutions forward, some Arab countries are phasing out energy subsidies. So far, subsidy reforms have been initiated in Egypt, Jordan, Morocco and the United Arab Emirates. In 2014, more than half of the Arab countries had energy subsidies, where the subsidies share of GDP varied from 3 percent in Qatar to 18 percent in Libya (International Energy Agency fossil-fuel subsidies database, 2015).

 

In recent years, the CO2 resulting from the transformation process of combustible fuels has gained importance worldwide due to its share in total CO2 emissions of countries. The CO2 intensity of the energy sector[8] varied between 0.4 and 2.6 kg equivalent of CO2 per USD of economic output, with an average of 1.2 kg equivalent of CO2 per USD of economic output for the region, which is considered above the regional level of China, the United States and the European Union (IEA, 2015).

 

This overview has been drafted by the ADP team based on most available data as of 1 July 2017. 

 


Sources:

 


[1] In 2015, the international community witnessed the unprecedented unification of 175 States to combatting climate change by strengthening the ability of countries to deal with the impacts of climate change, known as the Paris Agreement (United Nations Framework Convention on Climate Change, 2015).

[2] Tons of oil equivalent

[3] Regional calculations were completed using data from the International Energy Agency and the United Nations Statistics Division

[4] Energy includes oil products, natural gas, coal, electricity and heat from renewable and non-renewable sources

[5] The region exports to other countries that are not listed at quantities less than 100 million toe. Enlisted countries represent oil imported from the Arab region exceeding 100 million toe per year in 2014.

[6] Kilogram of oil equivalent

[7] World average is calculated based on energy data from the International Energy Agency and population data from the United Nations World Population Prospects 2015.

[8] Energy data used from the IEA and national account data used from the UNSD.



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