The Business Year

HE Suhail Mohamed Faraj Al Mazrouei

UAE, ABU DHABI - Energy & Mining

Charging Up

Minister of Energy, UAE

Bio

HE Suhail Mohamed Faraj Al Mazrouei was appointed as UAE Minister of Energy on March 12, 2013. He is also the Chairman of the Boards of Directors of the Federal Electricity and Water Authority, Mubadala Petroleum, and Emirates Liquefied Gas Company, as well as a Member of the Board of Directors of the Petroleum Development Co. and Dolphin Energy. He has held multiple positions in government as well as the private sector, and registered numerous achievements in the service of the country throughout his career. Al Mazrouei graduated in 1996 from the University of Tulsa in the US with a Bachelor’s degree in Petroleum Engineering.

What long-term plans are in place for gas in the UAE? The UAE has long relied on its gas resources. In 2007, the Dolphin Gas Project started to import more […]

What long-term plans are in place for gas in the UAE?

The UAE has long relied on its gas resources. In 2007, the Dolphin Gas Project started to import more gas to the grid from neighboring Qatar. This was the start of our reliance on alternative resources in response to rising gas demand. Since then, the government of Abu Dhabi has also started to revamp its plans regarding more ambitious gas exploration. We started to look at the master plan to assess future growth potential and demand. In 2007 and 2008, business was booming on double-digit growth. We saw the potential for a decline in this growth level should we be unable to satisfy demand. During the crisis we slackened our pace; however, we were still experiencing growth, but needed to secure sufficient gas to justify it. Additionally, we looked at diversifying beyond gas alone. Gas is cleaner and we, as a country, are keen to target clean fossil fuel energy, rather than just relying on diesel or fuel oil, which are both more expensive and harmful to the environment. They are also not sustainable as they require many refineries, which present a logistical problem. Therefore, we initiated a roadmap that takes us up until 2030. We asked ourselves several key questions about sustainable growth and supply. We are still working on the roadmap, since it consists of several elements, such as diversification and renewables, for example. Today we are looking to diversify our gas supply. Emirates LNG is building the largest receiving facility in the world, with a capacity of 9 million tons of LNG, double that of the one in Dubai. Combining the two, the UAE will be one of the most significant players in the world when it comes to importing liquid LNG, re-gasifying it, and channeling it to the grid. To ensure this, Abu Dhabi alone is planning to spend $25 billion on gas development. We are looking to maximize our development to ensure sufficient domestic gas production to complement our imports.

What does rising oil production entail in terms of increased workforce and project spending?

We have a duty as an OPEC member to provide sufficient volumes of hydrocarbons and crude oil in the market to cater for future growth. Increasing our capacity is the right step to ensure the balance of demand and supply. Our role is not to produce constantly, but only when required. We believe that the increased capacity we have planned will satisfy global medium-term needs. For example, many countries during the crisis maximized output to keep prices sustainable for consumers. We don’t want the prices of our products to rise prohibitively. When crisis occurs, prices usually spike. We wish to avoid this by having an additional reserve capacity. As the domestic use of hydrocarbons increases, part of the increased production will fuel growth within the UAE, whether it is liquid, refined products, or otherwise. That is the plan; we are investing and moving ahead with this project. By 2017, we will be able to produce 3.5 million barrels per day (bbl/d).

What does the commissioning of the solar power plant, Shams 1, mean for the country?

It is a demonstration of what the government of Abu Dhabi is capable of. It is testament to our commitment to promoting renewable energy, not only in the UAE, but also globally. We have completed several projects, whether through commercial deals or grants in developing countries. We have completed a project in Mauritania that contributes 10%-12% of the country’s total power supply through solar energy. This project was realized through a grant similar to that of those we have completed in the Seychelles and other countries. My view of renewable energy is that it is complementary, and not a replacement energy resource for gas. However, we need to promote such projects to reduce costs such that renewables become more affordable in the future, and can compete with natural gas. We progressively see that the cost of solar energy is declining compared to that of liquid fuels, which are expensive today. With diesel, the dilemma is that we cannot know its future price. These projects demonstrate our commitment and keenness to develop technology through R&D. I am optimistic that the price of renewable technology will fall, even though we see some challenges in the sector in Europe. Initially, it needs to be subsidized, and we must invest today in order to reap the benefits tomorrow. We also need to remove the barriers that make it difficult for investors to operate. Striking a balance is therefore rather difficult.

“ Abu Dhabi is planning to spend $25 billion on gas development. “

Can you talk about the UAE’s ambitious target to generate 25% of Abu Dhabi’s power through nuclear energy?

Today, Abu Dhabi is the largest national generator of electricity, supplying the Federal Electricity & Water Authority (FEWA). It is also partially meeting Sharjah’s electricity demand. We anticipate a nuclear capacity of 5,600 MW by 2020, with each reactor providing 1.4 GW in capacity starting from 2017. However, even an initial ratio of 18% to 20% of national supply is a very ambitious plan. Russia, for example, targets 20%-25% of its total generating capacity coming from nuclear power, and has been investing in and developing this technology for years. This crucial nuclear project has bought us some valuable breathing space for future planning. We selected the location very carefully to minimize seismic risk.

How do you see the Western Region transforming as a result of these energy projects?

Historically, the majority of people in Abu Dhabi come from the Western Region. Even though it has very limited water resources, the Liwa Oasis has sustained our Bedouin ancestors in the past. The oil industry also started there, and the bulk of the country lies in that region. Even our agricultural sector began there. Visiting tourists are surprised to see the farms and the 120-kilometer green belt that lies beyond the desert. The government of Abu Dhabi is working to create jobs. There are in fact many more nowadays, and the oil sector, the main employer, is well developed. The new rail link, intended for industrial purposes, will make the region more accessible to the whole country. Today, it is attracting more people to live there, as new infrastructure, public services, and educational opportunities, among other considerations, make it much easier than before. The government has invested heavily in infrastructure to make the Western Region a major energy hub—and not just in nuclear power. Indeed, the region is an example of diversification, where three forms of energy are in use: nuclear, oil and gas, and solar.

How is the Ministry looking to develop the UAE’s human resources in the energy sector?

Human resources have been the country’s major historic concern. Even though we always had capital, we lacked a qualified workforce. And while we have a small population, we prefer not to solely rely on expatriates. Accordingly, we commenced a system of scholarships enabling our youth to attend some of the best universities worldwide. I, and many others, have been beneficiaries of these scholarships. Today, the challenge is still to develop the young people who will join our ministries and assume the responsibility of delivering results. We need to compete on both a regional and global scale. We are building a specific industry, and do not seek to compete in every field, which is unwise. One of our selective areas, energy, requires the formulation of a reliable, long-term strategy for diversification. You will find that very few countries have diversified efficiently.

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