With the Saudi Aramco initial public offering set to debut on international markets in 2018, the oil world is watching closely as the OPEC leader transforms its economy under Crown Prince Mohammad bin Salman’s Vision 2030 plan. But the KSA isn’t the only Gulf nation gearing up for a radical change in its energy formula.
The United Arab Emirates is setting its sights on nuclear power to ensure the small nation can meet demand in the coming years, energy minister Suhail Al Mazroui told reporters this week.
The Middle East’s first nuclear power plant should go live in the UAE in 2018, as the nation prepares to host an international ministerial summit on the power source at the end of next month. The International Atomic Energy Agency (IAEA) conference in the UAE signifies global “recognition” of the country’s “successful efforts” in developing a peaceful nuclear power program, Al Mazroui said. The main components of the Barakah 1 reactor completed construction back in May, but operating Nawah Energy Company is still waiting on final licensing approvals from regulators before operating commercials. Basically, they just need to cross the t’s and dot the i’s.
By the time the remaining three units of the Barakah complex is complete, a full quarter of the UAE’s electricity will be derived from the plant. Related: Is It Time For OPEC To Turn The Taps Back On?
Currently, natural gas powers roughly all of the UAE’s energy needs. The UAE Energy Plan 2050 will lower the contribution of gas to 38 percent, while that of clean fossil fuels, nuclear and renewable energy will be raised to 12 percent, 6 percent and 44 percent, respectively, by 2050. Technical assistance from Iran and France and financial investments from Gulf partners allowed the project to come to fruition, according to The Daily Caller.
France is a known international leader in nuclear energy because the country meets three-fourths of its energy demand with the power source. Iran is an unlikely ally for the UAE on the nuclear power front, considering the latter sides with Saudi Arabia on all sectarian issues. In the Gulf’s current dispute against Qatar—which is based on a rejection of Doha’s lukewarm stance on Iran—the UAE stands by its Sunni allies, kicking Qatari LNG ships off Emirati docks.
Qatar, the largest exporter of liquefied natural gas in the world, probably has a decade or so left before it really needs to worry about alternative sources of income. In developed countries, natural gas is seen as a gateway fossil fuel, meaning its demand will rise as oil sinks in popularity.
The Gulf nations’ efforts to steer away from fossil fuels can be traced back decades with side projects that have had limited scope and success. The desert status of the Arabian Peninsula puts a high priority on water security for the area’s residents. The chemical process of desalination consumes high levels of electricity that must be fed to treatment plants in a swift and stable manner, and wind and solar energies are not known for their reliability.
For decades, the Gulf Cooperation Council nations have reaped millions in oil profits, which they have leveraged for two main end goals: subsidizing the lifestyles of their citizens and empowering large sovereign wealth funds to buy market-proof investments worldwide.
Now, as a wave of climate change awareness and peak oil fears sweeps across the world, the biggest benefactors of the oil game have all made public commitments to end their reliance on fossil fuels as an economic backbone. Kuwait did it in its 2030 blueprint published back in 2010, which sets a renewables goal of 15 percent by the end of the plan’s term. Its population of 4.4 million requires 350,000 barrels of oil per day to generate electricity and desalinate seawater.
One by one, the fortresses of oil wealth on the Persian Gulf will fall, forcing those nations to kick their reform plans into high gear. Though Saudi Arabia has been the loudest voice for economic diversification in the region, its sidekicks are just as eager to see a future independent of fossil fuels for their countries.
By Zainab Calcuttawala for Oilprice.com
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