Saif Humaid Al Falasi, Group CEO, Emirates National Oil Company (ENOC): Interview

Interview: Saif Humaid Al Falasi

Will Dubai’s current production levels be enough to supply increasing energy consumption rates?

SAIF HUMAID AL FALASI: Population increases and infrastructure development are indeed driving increased energy demand within the emirate. Dubai’s population, for instance, is expected to increase 32% over the coming years, from 2.5m in 2017 to 3.3m by 2021 and to 5.2m by 2030. Some segments in particular — automotives, electricity generation and water production — are already showing signs of greater demand for fuel than in the past. ENOC is working to ensure that the energy infrastructure can supply the necessary amount of product to sustain continued growth in the emirate.

Dragon Oil, our recently acquired exploration and production arm, already produces 100,000 barrels per day (bpd) and is being used as a platform to pursue further production. In addition, the capacity expansion at the Jebel Ali refinery will increase volumes from 140,000 bpd to 210,000 bpd by 2020, and will also add several new products to our portfolio, both for local consumption and export. On the retail side, ENOC is expanding its network of service stations, adding 54 new outlets within the UAE.

What trends have you seen in the demand for refined products within the greater GCC region?

AL FALASI: The populations within the GCC and MENA regions currently stand at 54m and 430m, respectively, and both regions are continuing to grow. The economic outlook for the MENA region is favourable, with real GDP forecast to expand by 2.5-3% annually until 2020. Growth in the GCC is expected to be even slightly higher. These factors will likely result in increasing energy demand across all levels and segments in the region, from industry to private consumers. In general, economic expansion, for example, typically results in higher vehicle ownership numbers, thereby increasing demand for gasoline. Indeed, regional gasoline consumption, which is already robust, is forecast to rise by 3-5% annually to 2020. Diesel fuel consumption, which is linked to industry, may also experience demand growth over the next few years as higher crude prices help stimulate industrial activities. Demand for jet fuel also continues to be supported by the successful expansion of the regional aviation sector. Dubai’s passenger handling capacity is expected to double by 2045, reaching a total of 200m passengers per year.

Dubai is ideally suited to take advantage of these growing demand levels due to the availability of competitively priced feedstock and its well-established and efficient downstream infrastructure in storage and logistics. Advantages such as these mean that once domestic demand is met, surplus products can be exported competitively to other markets in the region and overseas. The global convergence of product specifications further supports this position, since the local advantages for refineries in other countries will gradually be removed, and overall demand will increasingly be able to be met by imports from other, more competitive production markets.

How would you characterise the future of international export markets with regard to increasing demand for Dubai’s petroleum products?

AL FALASI: In most markets the transportation sector accounts for the majority of oil product demand. Therefore, it is useful to look for markets in which strong demand trends for vehicle usage exist, such as those with large populations that are currently experiencing rapid rates of economic expansion. China and India – which have a combined population approaching 2.5bn people, and which are both seeing healthy annual growth rates in their respective economies – fit very well into this category. Right now both countries average just 10-20 vehicles per 1000 inhabitants, compared to more than 500 per 1000 in OECD countries, indicating significant potential for increased amounts of future fuel consumption.