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1、ENERGY MARKETS,TRADE AND TRANSITION23TABLE OF CONTENTSExecutive summary and key findings 4Oil market dynamics and outlook 7Middle East energy landscape 16Energy transition:Scaling up ambitions 22 at the global levelEnergy transition:Hydrogen in focus 38Energy transition:Middle East and UAE 46Key rec

2、ommendations 605This publication serves as the first in-depth DMCC thought leadership report on the global and regional energy sector.Building on unique business insights and analysis from leading experts in the field,this Future of Trade special edition delves into the central forces shaping the wo

3、rld of energy today from market trends and prices,oil and gas movements,the rise of low-carbon and renewable energy technology,and the global energy transition.It looks at the main drivers of the transition assessing through the use of cutting-edge modelling techniques,different scenario pathways an

4、d their outcomes.In particular,this report looks at the role of the MENA region,and specifically the UAE,evaluating the emergent competitive advantages in this highly dynamic landscape.The main findings of this report:The global energy sector remains in a period of flux,with high oil prices and supp

5、ly constraints creating uncertainty in markets and for consumers.Meanwhile major industry players,including international and national oil companies,continue to navigate the energy transition with major investments in clean energy technologies.Competitive advantages are crystallising at the regional

6、 level,namely in the Middle East,which benefits from abundant natural energy reserves and a favourable policy climate.Despite clear challenges,there are considerable growth opportunities in key energy market segments,especially clean hydrogen and low-carbon technology spaces.EXECUTIVE SUMMARY467ADDI

7、TIONALLY:The Middle East remains one of the few areas worldwide that continues to boast strong upstream oil and gas as well as energy transition advantages.Low-cost,low-carbon resources in the Gulf continue to provide significant competitive advantages when it comes to upstream investment,which will

8、 grow as markets become even more carbon conscious.Key regional players such as Saudi Arabia and the UAE have signalled strong support for renewables which will be sustained in the coming decade and beyond COP28.The UAE continues to lead the Middle East in installed capacity for renewable and low-ca

9、rbon forms of energy,though Saudi Arabia is expected to make considerable gains in this category towards the middle of the decade.Major hydrogen projects continue to advance and will likely place the Middle East among the most prolific of global hydrogen-producing regions.Efforts to drive a booming,

10、export-oriented hydrogen industry in the region remain achievable,strategically positioning major trade hubs like Dubai,but will take time to come to fruition.In the absence of global hydrogen demand in the short term,domestic consumption of hydrogen will be channeled towards decarbonisation of key

11、industrial sectors.GLOBAL OIL MARKET DYNAMICS AND OUTLOOKWHILE THE OIL MARKET IN 2023 HAS SEEN EXTREME VOLATILITY AND RISING QUESTIONS AROUND DEMAND,$80+PER BARREL IS STILL THE MULTI-YEAR VIEWTHE NEW NORMAL OF$80+PER BARREL98As the world continues to navigate the uncertainty of the 2023 oil market,o

12、ne thing that is abundantly clear is what was once considered the$60/bb-$70/bb range is no longer the yardstick for pricing.Despite the near-term concerns that have cast a shadow of volatility and questioned demand,the multi-year view confidently points towards$80+per barrel.Short-term outlook and k

13、ey variables:The immediate future of oil prices hinges on the resilience of the macroeconomic environment and the actions taken by central banks around the world.While these factors weighed on the oil market in the first half of 2023,the second half expects to consolidate an upswing in demand,albeit

14、 with supply restraints poised to counterbalance any potential weaknesses and keep prices afloat.Demand and supply balancing act:A shift from an average of approximately 101 million b/d was witnessed in the first half of the year,with an average of over 102 million b/d expected to consolidate in the

15、 latter half of the year.Although there is still a degree of uncertainty,particularly concerning China,an overall improvement in demand is anticipated.Supply side support:The major OPEC+members voluntary production cuts coupled with Russias unilateral reduction of 500,000 b/d are primed to bolster p

16、rices.The OPEC+group,with a preference for at least$80/bbl,will need the cooperation of the wider macroeconomic environment.Beyond 2023:Looking further ahead,the outlook for oil demand remains robust,and a limited supply pipeline is poised to sustain prices of at least$80/bbl.Source:Energy Intellige

17、nceBRENT PRICE FORECAST VS.CONSENSUS VS.FORWARD CURVE($/BBL)$98$76$74$78$80$80$82$82$99$89$82$83$83$83$78$86$86$86WTI PRICE FORECAST VS.CONSENSUS VS.FORWARD CURVE($/BBL)$82$951011OIL MARKET BALANCES:TIGHTENING EXPECTED AMID MACRO UNCERTAINTY LONG-TERM SUPPLY AND DEMAND:A SHIFTING LANDSCAPE While eco

18、nomic questions continue to linger,the prospect of demand recovery persists as OPEC+cuts counter macro unknowns.The surprise OPEC+cuts introduced a potential supply buffer that can counterbalance the demand backdrop,offering support to prices,if not a push towards higher territory.A scenario of$80+/

19、bbl is likely to prevail,though prices surpassing the$85-$90/bbl range may prove elusive and challenging to sustain.Russia and Saudi Arabia will play a pivotal role in shaping supply dynamics moving forward,with uncertainty surrounding Moscows next 500,000 b/d reduction and the duration of Saudi Ara

20、bias voluntary 1 million b/d cut.The world will continue to see an annual peak of around 105 million b/d,with adequate supply to meet the trajectory.The long-term outlook presents a shifting landscape,with peak demand anticipated towards the end of the current decade,followed by a gradual decline in

21、to the 2030s and beyond.While electrification is a key driver of demand reduction,the petrochemical sector is expected to extend the plateau after peak demand is reached.Some of the key variables moving forward are the trajectory of Chinese demand,the pace of the United States demand with slower ele

22、ctrification than other major markets and the resilience of supply from Russia and other more minor OPEC+members.FORECAST:GLOBAL OIL SUPPLY-DEMAND(MILLION B/D)Source:Energy IntelligenceTotal DemandTotal Supply1312OUTLOOK:GLOBAL OIL SUPLY AND DEMANDSource:Energy IntelligenceOPEC+SUPPLY AND DEMAND DYN

23、AMICS OPEC+continues on its path to add 3.6 million b/d in new capacity by 2027,although this may not fully offset potential declines and quota disputes in the future.The bulk of this new supply will originate from the Gulf,driven by production expansions in Saudi Arabia and the UAE,each expanding c

24、rude capacity by 1 million b/d.Some portions of upcoming capacity additions may help offset declines elsewhere as major producers like Nigeria,Iraq and others struggle to attract new upstream investments.The most sought-after barrels in this evolving landscape are characterised by lower costs,reduce

25、d carbon emissions and swift monetisation.The Middle East Gulf,US Gulf of Mexico,and Brazil are deemed highly advantageous in this context.MIDDLE EAST GULF EXPANSIONS WILL DRIVE THE BULK OF OPEC+UPSTREAM GROWTH1514OPEC-PLUS:UPSTREAM CAPACITY ADDITIONS THROUGH 2027(000 B/D)Source:Energy IntelligenceC

26、ONCLUSIONAlthough uncertainty surrounding the global macroeconomic outlook will be a key driver of oil demand into 2024,OPEC+has demonstrated that it is highly likely to remain proactive in its market balancing strategy again during the coming year.The extension of Saudi Arabias unilateral,one milli

27、on b/d cut to the end of 2023,though always subject to change,reinforces this outlook.The concentration of new supply additions in more powerful OPEC+members also supports this outlook as upcoming supply will potentially be subject to constraints from the alliance,depending on its strategic directio

28、n.1617MIDDLE EAST ENERGY LANDSCAPEThe Middle East stands at the apex of the global energy stage,strategically positioned to harness the long-term development of its vast oil and gas reserves while committing major investments into renewable forms of energy.Within this dynamic landscape,major industr

29、y players are meticulously shaping their upstream portfolios to prioritise projects that promise the lowest costs and risks and the swiftest path to revenue generation.Global investors are increasingly seeking out players that prioritise opportunities in areas with distinct advantages.These encompas

30、s key factors such as favourable costs,short development timelines,reduced carbon emissions,access to lucrative markets,integration opportunities and lower susceptibility to aboveground and geopolitical risks.Evidence suggests that capital allocations and project investments are gravitating towards

31、regions possessing these attributes,with the Middle East taking centre stage,but also including the US Gulf of Mexico,Permian Basin,offshore Brazil,and the Guyanas Basin.ADVANTAGED RESOURCES AND UPSTREAM PORTFOLIO POSITIONINGThe Middle East stands out due to its low-cost and low-carbon intensity oil

32、 production.National oil companies(NOCs)play a pivotal role in project advancement across the region.In contrast to other regions that boast similar cost and carbon credentials,such as the US Gulf of Mexico or the North Sea,the Middle East offers greater policy consistency.This stems from robust gov

33、ernment support for upstream expansion,which is set to persist as long as oil and gas production remains central to national strategies in countries like Qatar,Saudi Arabia and the UAE.Upstream growth is progressing steadily across the region,with expansion efforts consistently meeting or exceeding

34、targets.Meanwhile,NOC-backed infrastructure has in recent years attracted world-class investors and boosted the advantages for shorter development cycles and improved access to markets.1819STRONG ALL-AROUND OUTLOOK FOR MIDDLE EAST LNGREGIONAL DOWNSTREAM GROWTHThe Middle East demonstrates a robust ou

35、tlook in the global liquefied natural gas(LNG)market.Regional players are securing offtake agreements for new LNG capacity and replacing expiring contracts.ADNOC LNG,for instance,has engaged in new deals with Indian Oil and Japex,with varying contract durations indicating flexibility towards shorter

36、-term agreements.Its expanding international upstream strategy suggests a sustained interest in penetrating European gas markets,potentially positioning it advantageously given the European preference for shorter-term agreements.QatarEnergy and Oman LNG continue to engage in broader deal activity,un

37、derscoring that,despite speculation about a shift towards European LNG markets,South Asia remains a focal point for long-term demand growth,leveraging the geographic proximity of the Gulf.Gulf-based NOCs and their partners continue to drive downstream growth in the region.Their efforts are bolstered

38、 by robust government support for diversification of the oil sector,explicit capex guidance from NOCs and strong demand for liquids driven in part by European desires to reduce reliance on Russian refined products.Meanwhile key petrochemical projects continue to advance,with NOCs expanding their int

39、ernational footprint.2021DUBAI AND DMCCComprehensive economic partnerships with emerging and advanced economies propelled the UAEs non-oil trade to a record$338 billion in the first half of 2023,with industrial and precious metals making up a significant portion of this volume and only pointing to a

40、 greater role for Dubai as a major hub for commodities.This has bolstered the role of key players such as DMCC,whose status as the largest free trade zone in the UAE,and strategically important geographical location opening and connecting East and West trade routes,has attracted several thousand ene

41、rgy companies to its business district.Companies registered in DMCC include a broad range of energy companies and products both traditional and renewable including crude oil,natural gas,solar panels,wind turbines,geothermal systems,biofuels,hydrogen,and energy storage solutions.It counts on its rost

42、er NOCs like Saudi Aramco,as well as multinational trading giants Glencore,Mercuria,AS GLOBAL ENERGY TRADE EVOLVES IN MULTIPLE WAYS,THE MIDDLE EASTS TRADE HUBS ARE EXPECTED TO REMAIN PROMINENT,WITH DUBAI IN PARTICULAR WELL-POSITIONED TO GROW AS A CRITICAL DESTINATION FOR ENERGY COMMODITY FLOWS FROM

43、THE REGION AND BEYOND Petronas,and Trafigura underscoring the centrality of its position as one of the most important energy trade hubs in the world.Moving forward,Dubais gravitational pull is expected to get stronger as the UAE expands and matures its ties with the worlds major economies and the ge

44、opolitical landscape for energy evolves.Centralised trade hubs with supporting ecosystems such as those provided by DMCC will remain highly attractive to global energy companies,its established commercial networks providing net importers with energy resources and enabling net exporters to expand the

45、ir global reach in energy markets.2223ENERGY TRANSITION:SCALING UP AMBITIONS AT THE GLOBAL LEVELAt the global level,the scale and ambition of energy transition policies are growing,often in response to international political dynamics and new climate laws at the domestic and regional levels.Key poli

46、cies have come into force such as the United States 2022 Inflation Reduction Act(IRA),a major piece of legislation that has broad implications for trade,security and climate.Crucially,the IRA represents a boon to the US renewables market,providing major tax incentives and subsidies to US-made produc

47、ts,with Washington predicting a 40 per cent reduction in US emissions by 2030.In Europe,the colossal Green Deal is the flagship policy of the European Union,a legally-binding framework that commits the EUs 27 members(minus the UK)to emissions reductions of at least 55 per cent by 2050.A raft of new

48、industrial policies has followed,namely REPowerEU which aims to increase uptake of clean energy across the bloc and reduce reliance on Russian oil and gas.The EU has expanded its Emissions Trading System for domestic industry,capping the level of carbon emissions and credits European companies are a

49、llowed to emit and trade.From Japan to India,similar packages and measures are being replicated across the world,which are often tied to clean energy production,industrial incentives,and emissions reductions targets.In the Middle East,the situation is equally dynamic with new and ambitious framework

50、s coming into play that will bear on the regional,and global,energy landscape.As will be further explored in the following sections,these developments carry significant implications for trade and global competitiveness whilst the overall outlook for the energy transition remains uncertain overall an

51、d with multiple pathways still possible.2524GLOBAL TRANSITION POLICY-DEVELOPMENTS,2023Source:Energy Intelligence.Note:*JETP=Just Energy Transition Partnership.2726ENERGY TRANSITION PATHWAYS In our exploration of the energy transition trajectory,expert analysts Energy Intelligence chart four main sce

52、nario pathways below,each offering a unique perspective on the evolving landscape.At the forefront is the core Accelerate scenario(47%probability),reflecting the growing momentum behind transition efforts driven by technology adoption and global policy support.The Boost scenario(30%probability)prese

53、nts a faster transition path,bolstered by potential policy support.While the possibility of a slower transition still lingers,the Blowout scenario(19%probability)could gain prominence should obstacles hinder technology deployment.The chances of a Net Zero scenario unfolding remain slender(4%probabil

54、ity).ENERGY TRANSITION SCENARIOS TO 2040Source:Energy Intelligence2928ENERGY TRANSITION SCENARIOS TO 2040Source:Energy IntelligenceSource:Energy IntelligenceENERGY TRANSITION SCENARIOS AND LONG-TERM IMPLICATIONSDelving deeper into each scenario,we uncover key dynamics and implications that shape the

55、 energy transition landscape.3130The trajectory of the energy transition,particularly its impact on oil demand,is of paramount importance.The synthesis of external scenarios and in-house long-term models offers a varied picture of oil demand across each transition scenario.In the most likely Acceler

56、ate scenario,peak oil demand is anticipated in the late 2020s,propelled by the mounting momentum for clean energy adoption,despite some headwinds.The Boost scenario envisions an even earlier peak in demand.However,a crucial inflection point beckons soon after 2025,demanding substantial low-carbon in

57、vestments for accelerated realisation.At the other end of the spectrum,the Blowout scenario suggests a slower pace of change,potentially peaking in oil demand in the mid-2030s or beyond due to technology and policy obstacles.Meanwhile,the Net Zero scenario hinges on an abrupt and intense shift,which

58、 currently appears highly unlikely.ILLUSTRATIVE OIL DEMAND,BASED ON ENERGY TRANSITION SCENARIOS(MILLION B/D)Source:Energy Intelligence.Scenarios from IEA,EIA,IPCC,OPEC,WEC,BP,Exxon,Total,DNV,EquinorChart shows ilustrative pathways,based on synthesis analysis of 20 industry scenarios(from companies a

59、nd agencies).In line with Blowout Scenario,2050 demand 95 mmb/dIn line with Accelerate Scenario,demand peaks before 2030In line with Boost Scenario,demand falls fast post-2030In line with Net Zero Scenario,2050 demand 40 mmb/dEnergy InteligenceDemand Scenarios120100806040200201020192030204020503233D

60、RIVING THE ENERGY TRANSITION:INVESTMENTS IN CLEAN ENERGY AND LOW-CARBON TECHNOLOGYFOR OIL AND GAS FIRMS,RENEWABLES SHARE WILL SHRINK AS INTEREST IN HYDROGEN AND CARBON CAPTURE AND STORAGE SURGESIn 2022,the world witnessed a significant surge in low-carbon investments,as oil and gas giants collective

61、ly committed to allocate over$100 billion toward sustainable initiatives.Since 2015,34 companies in the oil and gas industry have announced more than 1,200 investments aimed at reducing their carbon footprint.As the year progressed,other maturing technology sectors also saw an uptick in activity.Not

62、ably,investments in hydrogen and low-carbon fuels and gases soared to a substantial$27 billion,reflecting the growing interest in these cutting-edge solutions.The field of carbon capture and storage(CCS)and carbon removal also attracted investments totaling$11 billion,underlining the increasing impo

63、rtance of carbon management strategies in the global energy landscape.While renewable power generation remains a pivotal driver of the low-carbon revolution,its dominance has somewhat receded.This shift is indicative of the rising significance of other low-carbon sectors,signalling a diversified app

64、roach to sustainability across the industry.Leading the charge in the realm of low-carbon spending are European majors,including Shell,BP and TotalEnergies who have set the pace with an investment total of$74 billion in 2022.3534LOW-CARBON INVESTMENT VALUE BY CATEGORY($BILLION)LOW-CARBON INVESTMENT

65、COUNT BY CATEGORY(#)Source:Energy Intelligence;Note:L-C=Low-Carbon.3637HIGH-IMPACT AND MATURING TECHNOLOGIES LIKE RENEWABLES AND ELECTRIC VEHICLES ARE SET TO DRIVE THE ENERGY TRANSITIONThe rapid advance and implementation of low-carbon technology has emerged as the main driver for the global energy

66、transition.This transformation is not uniform,however,in particular as it relates to the maturity of technologies and the degree of certainty surrounding their adoption.Another factor is competition.Some regions retain advantages,notably the Middle East,where the transition enjoys a significant boos

67、t due to a combination of abundant natural gas reserves and renewable energy resources,positioning it favourably on the path to sustainability.Robust policy support underpins the widespread deployment of these innovative technologies within the Middle East,solidifying a clear regional advantage in t

68、he global clean energy landscape.The Middle Easts role is further explored in more detail in this report.Numerous other factors are contributing to the successful dissemination of clean energy technologies.Among these are steadily declining costs associated with their implementation and increasing,i

69、f inconsistent,national policy support.These factors converge to create a favourable environment for the adoption of sustainable energy solutions on a global scale.There still remain distinct challenges related to security of energy supply and the escalating costs of critical materials.Furthermore,t

70、he sluggish development of markets for clean hydrogen,a pivotal component of the low-carbon ecosystem,remains a concern that will require careful national consideration and strategic planning to ensure continued progress.CLEAN ENERGY TECHNOLOGIES:UNCERTAINTY AND IMPACTSource:Energy Intelligence3839E

71、NERGY TRANSITION:HYDROGEN IN FOCUSHydrogen production costs could fall sharply,but questions persist on infrastructure and demand.The hydrogen sector has garnered significant attention from various industries,but despite the enthusiasm,the production of clean hydrogen and its subsequent applications

72、 remains constrained.A number of challenges persist,including costs,infrastructure limitations,and slow demand.Numerous projects have been proposed with the aim of producing both“green”and“blue”hydrogen.However,progress further along the value chain appears less distinct and more uncertain.Projectio

73、ns for the use of clean hydrogen in 2050 paint a varied picture,with estimates ranging from under 45 million tonnes per year to a vastly more ambitious 450 million tonnes per year.These diverse forecasts underscore the unpredictability surrounding the pace of hydrogens development and integration in

74、to the global energy landscape.Energy Intelligence take a levelised cost of hydrogen(LCOH)approach,which shows potential production costs experiencing a significant decline by 2030.This is particularly evident in the case of green hydrogen,driven by the decreasing costs of renewable power generation

75、 and more affordable electrolyser technologies.In contrast,the costs associated with blue hydrogen production remain closely linked to fluctuations in natural gas prices,offering limited room for capex gains.The development of the hydrogen sector looks set to unfold at a measured pace.Throughout thi

76、s decade,progress is expected to be primarily concentrated on projects that offer greater certainty in terms of local demand,thus reflecting the cautious and pragmatic approach to hydrogens role in the energy transition.4140CLEAN HYDROGEN DEMAND GROWTH*,SELECTED SCENARIOS(MILLION TONNES)GLOBAL HYDRO

77、GEN PRODUCTION COSTS LCOH*ANALYSIS($/KG)Source:BP,DNV GL,IEA,Shell,Equinor,Total,Energy Intelligence;*Note:Projections include hydrogen as an energy carrier but exclude current use as an industry feedstockSource:Energy Intelligence.Note:*LCOH=Levelised Cost of Hydrogen.8765432102020203020402050Green

78、 HydrogenSlowBlue HydrogenMidFast$1/MMBtu5$/MMBtu$10/MMBtu$20/MMBtu50040030020010002020202520302035204020452050BP-AcceleratedBP-Net ZeroIEA-STEPSDNVIEA-APSEquinor-WallsEquinor-BridgesTotal-MomentumTotal-Rupture4342Global hydrogen trade:Middle East poised for competitive edge,but costs are key.The pr

79、ospect of a global hydrogen trade is enticing and one that could transform the energy landscape on a global scale.There is significant economic allure to the potential of blue and green hydrogen,along with ammonia,particularly in low-cost regions such as the Middle East.A competitive edge could emer

80、ge for Gulf producers,pricing out higher cost regions and fuelling their economic incentive for international hydrogen trade based out of major trade hubs such as Dubai,laying the foundation for a truly global hydrogen exchange.Key import markets for hydrogen would include Europe and East Asian nati

81、ons like Japan.These regions are already heavily reliant on energy imports and face limitations in their domestic hydrogen production capacity.Meanwhile producers with substantial reserves of low-cost natural gas,such as the Middle East and the United States,hold the potential to emerge as competiti

82、ve blue hydrogen exporters.The stage is also set for a diverse array of regions to step into the role of green hydrogen exporters,with countries in the Middle East,Africa,Latin America,and even Australia expressing keen interest.However it should be noted that this may take time to fully materialise

83、.The cost considerations for trade are substantial and encompass not only production but also the intricate web of transportation and(re)conversion processes.The accompanying charts offer a glimpse into possible future scenarios,and examples of the potential for hydrogen exports.EUROPE HYDROGEN IMPO

84、RT COSTS*,BY EXPORTER AND CARRIER 2030 ESTIMATES($/KG)JAPAN HYDROGEN IMPORT COSTS*,BY EXPORTER AND CARRIER 2030 ESTIMATES($/KG)Source:Energy Intelligence.Notes:*Estimated 2030 costs for production,(re)conversion and transportation,shown for a limited selection of possible export countries/regions an

85、d transport/carrier methods only.Ammonia shown without reconversion costs.4544Source:Energy IntelligenceKEY TECHNOLOGY DEVELOPMENTS:HYDROGEN GLOBAL TRADE4647ENERGY TRANSITION:MIDDLE EAST AND UAE The Middle Easts energy transition trajectory is becoming clear with recent developments in renewable pow

86、er and hydrogen projects.In the UAE,strong economic growth will foster even more demand for power,which will be met partly with significant growth in solar photovoltaic capacity.Estimates vary between 25-50%growth in peak electricity demand in Abu Dhabi and Dubai by 2030,likely accounting for the he

87、avy emphasis being placed on industrial decarbonisation efforts in these two emirates.Masdars selection as the preferred bidder for the 1.8 GW Phase 6 development of Mohammed bin Rashid Al Maktoum Solar Park in Dubai emirate shows that it continues to serve as the UAEs renewable power developer and

88、investor of choice.Its expected completion in 2026 will boost the solar parks total installed capacity to 4.23 GW.In Abu Dhabi,EWEC continues to advance the decarbonisation of the power sector with both renewable and nuclear power generation.The Barakah nuclear power plant started its third 1.4 GW r

89、eactor in February 2023,and its fourth and final reactor has completed operational readiness.Renewable growth in Abu Dhabi is set to continue with the 2 GW Al-Dhafra plant due online in 2024,as well as expected tendering for an additional 3 GW of solar PV to be developed by 2029.In Saudi Arabia,new

90、investments in natural gas and renewable power generation are now expected to reach$293 billion by 2030.Projects currently in the pipeline are expected to provide a 6 GW boost by 2025,with Saudi Aramco likely to announce additional investments that build on its target of 12 GW of net renewables capa

91、city by 2030.Both Saudi Arabia and the UAE are leading the region in their early-stage development of carbon markets.Policy support and clarity will be a key factor in building out these markets,and this appears to be coalescing in the UAE.Abu Dhabi Global Market(ADGM)launched its scheme in 2022 in

92、partnership with the Air Carbon Exchange(ACX)of Singapore.A financial regulatory framework was launched in July 2023,with a comprehensive regulatory framework under development.Saudi Arabia has made similar moves through a partnership between the local Tadawul stock exchange and the Public Investmen

93、t Fund(PIF)in order to found the Regional Voluntary Carbon Market Company(RVCMC).Its inaugural auction sold 2.2 million tonnes of credits to 15 Saudi companies.4849Although there has been considerable enthusiasm for hydrogen projects during the last couple of years,bold ambitions are coalescing into

94、 realistic policy frameworks,and the UAEs national hydrogen strategy,released earlier in 2023,sets targets of 1.4 million tonnes of clean hydrogen per year by 2031.Some 500,000 tonnes of this total have been designated for capacity to be developed outside of the UAE,while ADNOC is expected to contri

95、bute another 400,000 tonnes towards the annual target,indicating that at a minimum,these volumes are likely to be represented by blue hydrogen.Other than Saudi Arabias flagship Neom Green Hydrogen Company project,Oman has made considerable advances establishing the regulatory framework for its green

96、 hydrogen sector,which the International Energy Agency expects could make it the largest green hydrogen producer in the region and the sixth-largest worldwide by 2030.Middle East NOCs driving large-scale renewables,CCS and hydrogen projects in the regionThe Middle Easts national oil companies(NOCs)h

97、ave assumed a prominent position within their peer group when it comes to low-carbon investments.A significant portion of these is concentrated within CCS and carbon removal,while investments in hydrogen and other low-carbon power segments have remained more constrained.While many NOCs in the region

98、 have set ambitious targets for hydrogen production and are involved in flagship blue ammonia projects,current low rates of demand will continue to place emphasis in the near term on expanding CCS infrastructure and making incremental investments in new renewable power capacity.Clean hydrogen initia

99、tives in the Middle East will nevertheless continue to build momentum.Detailed plans are beginning to emerge,shedding light on offtake arrangements and export strategies.Leading green hydrogen and ammonia projects in the region often involve a diverse array of partners,encompassing national utility

100、companies,industrial and fertiliser firms,global industrial gas corporations,and trading entities.Presently,NOCs such as ADNOC and Saudi Aramco appear more inclined to prioritise blue ammonia exports over the production of green hydrogen or ammonia through renewables.However,this dynamic could evolv

101、e should these NOCs expand their role in renewable power generation.The prospects for domestic use of clean hydrogen in the region are gradually taking shape.Collaborative endeavours like the partnership between Germanys Hydrogen Rise and a local Omani steel producer,exploring green hydrogen for“gre

102、en steel”production,highlight this evolving landscape.For Western international oil companies(IOCs),the emergence of large-scale clean hydrogen projects in the MENA region represents both a potential threat and an opportunity.As rivals in this future energy market begin to take shape,some IOCs,like

103、BP,Eni,and TotalEnergies,are actively seeking partnerships and engagements within the region to secure their position in this transformative sector.5150Middle East in prime position to advance clean hydrogen productionGas-rich regions like the Middle East are strategically positioning themselves to

104、leverage their natural advantages by venturing into the hydrogen market,targeting markets in Europe and Asia.Recent geopolitical developments,particularly the Ukraine conflict,have also unleashed a profound impact on gas prices globally.This has elevated the opportunity cost associated with producin

105、g blue hydrogen,whose production is tethered to gas pricing,amplifying the significance of pricing dynamics in the equation.The Middle East,a key player in the blue hydrogen landscape,stands to benefit from favourable gas prices,bolstering its competitiveness on the global stage.Forecasts for 2030,a

106、s outlined in this report,paint an enticing picture,estimating the levelised cost of blue hydrogen to hover at approximately$1 per kg within the Middle East.In contrast,the journey for green hydrogen is more uncertain,marked by relatively high production costs.A silver lining emerges with the promis

107、e of falling electricity rates,more cost-effective electrolyser technologies,and supportive policy measures.These combined forces are expected to gradually narrow the cost differential between green hydrogen and its counterparts.LOW-CARBON INVESTMENT VALUE BY COMPANY&CATEGORY,2015-22($BILLION)LOW-CA

108、RBON INVESTMENT BY COMPANY&CATEGORY,2015-22(#)Source:Eneray Intelligence:Note:L-C=Low-Carbon:Pemex is included in our coverage but has not announced any low-carbon investments in 2015-225352The cost drivers for green hydrogen predominantly revolve around two factors:the expense of electricity as a f

109、uel source and the capex associated with electrolyser deployment.In this context,the Middle Easts green hydrogen production costs are poised to occupy the lower end of the global spectrum by 2030,primarily owing to the regions access to cost-efficient renewable power sources.This augurs well for the

110、 Middle Easts prospects in the evolving hydrogen landscape.BLUE HYDROGEN PRODUCTION COSTS,BY REGION LCOH($/KG)GREEN HYDROGEN PRODUCTION COSTS BY REGION(2030)LCOH($/KG)Source:Energy Intelligence5455UAE IN FOCUSUAE CLEAN HYDROGEN STRATEGY:A CORNERSTONE OF TRANSITIONThe UAEs preferred approach to the t

111、ransition has come under focus in 2023.Ahead of the COP28 summit in Dubai,the UAE rolled out its updated energy strategy,building on the overall transformation of its energy sector with added detail and specifics to key policies and technology.The UAE National Energy Strategy aims to triple the cont

112、ribution of the renewable energy over the next seven years,and invest between USD 40-54 billion during the same period.It outlines new emissions reduction goals,a significant portion of which will come from revised power mix targets,which sees an enduring role for natural gas with substantial growth

113、 in renewables by 2050.The new strategy also contains updated targets for clean energy,emissions reduction,hydrogen production,energy efficiency measures,and a greater rollout of EVs and charging infrastructure.As part of its updated energy strategy,the UAE will look to balance economic growth in th

114、e industrial sector its largest power consumer with efforts to boost its decarbonisation aims and green industry economic opportunities.This will include new production of renewable forms of energy,namely nuclear and hydrogen,with supply channeled to key industrial and commercial segments to further

115、 boost their decarbonisation efforts.In 2023,the UAE unveiled its National Hydrogen Strategy 2050 which it sees as a cornerstone to its longer-term decarbonisation,transition and economic diversification goals,whilst enhancing the UAEs position as a global producer and exporter of low-emission hydro

116、gen within the next decade.INDUSTRIAL DECARBONISATION AND BUILDING OUT THE HYDROGEN SECTOR ARE CENTRAL TO THE UAES LONG TERM ENERGY STRATEGY5657THE UAES NEW HYDROGEN STRATEGY CONTAINS A NUMBER OF TARGETS,NAMELY A 25%REDUCTION IN EMISSIONS IN KEY SECTORS,PRODUCTION OF 1.4 MILLION TONNES OF HYDROGEN P

117、ER YEAR,THE LAUNCH OF AN EXTENSIVE HYDROGEN R&D CENTRE AND THE DEVELOPMENT OF TWO HYDROGEN OASES(PRODUCTION HUBS)It also foresees the development of two hydrogen“oases”(production hubs),with a further three to be completed by 2050.Such hubs foster industrial clustering,making it easier for global co

118、mpanies to establish commercial networks through which wider trade and investment can be channeled.This is a format familiar to regional players such as Dubais DMCC,which have in recent years successfully pioneered a number of commodities-specific ecosystems,including in energy,precious metals,preci

119、ous stones and high-value service industries,with hydrogen now an area of significant potential.COP28 in focus:COP28 gathers world leaders,governments,industry and thousands of stakeholders for the worlds biggest climate summit.In its position as host for 2023,the UAE has committed to guide discussi

120、ons,providing political leadership,momentum and renewed calls to action the global climate agenda.In the build-up to the summit,COP28 President Dr Sultan Al Jaber released a four-pillar action plan to structure the negotiations.One of these was fostering a“responsible”energy transition,which called

121、for a tripling of renewable energy production,a doubling of hydrogen production by 2030,and pushing oil and gas companies to diversify into clean energies.Dr Al Jaber also emphasised the need to take an“integrated approach”that considers supply and demand a nod to the ongoing economic uncertainty en

122、gendered by supply and trade constraints on the global energy trade landscape.Whilst there is scope for progress at COP28,there are also a number of key challenges outlined in more detail below and the UAE presidency will need to dexterously leverage its powers of negotiation and diplomacy to the fu

123、llest in order to drive its desired outcomes.5958COP28:KEY DRIVERS AND AREAS TO WATCHSource:Energy IntelligenceIn a fluid energy landscape,what is clear is the central role the Middle East will continue to play across all segments.Upstream oil and gas growth across the region and in the UAE in parti

124、cular will be required to meet demand across the world.At the same time,investment in clean energy driven by Gulf states contributes to supplying new forms of demand and decarbonisation,as well as driving down costs of technologies critical to the energy transition.KEY RECOMMENDATIONSFirms should de

125、velop acute awareness of how shifting geopolitical and geoeconomic landscapes impacts traditional energy supply chains as well as efforts to prepare for the energy transition,in order to both identify challenges for instance,reshoring of industrial operations or requirements to meet economic targets

126、.To mitigate risks,firms should undertake supply chain audits and critical assessments to better manage their own supply chains.This includes reshoring efforts for industrial operations.REIMAGINE THE TRADITIONAL SUPPLY CHAINThe energy sector should identify risks such as the potential for regulatory

127、 volatility due to political upheaval,changing national strategies and policies towards energy consumption,and the ways in which the energy value chain may also be impacted.The diverse and volatile landscape of energy policies around the world means firms should brace for sudden shifts in regulation

128、s to the energy sector which could swing widely between greater or more limited market access in relatively short spaces of time.PREPARE FOR POLITICAL AND REGULATORY VOLATILYUncertainty should be minimised by firms by avoiding the adoption of a single“house view”and considering a range of perspectiv

129、es on potential market outcomes that better prepare and insulate against unexpected developments,especially in periods of elevated volatility.ADOPT BROAD MARKET PERSPECTIVESMaintaining a predictable and transparent investment climate from all stakeholders in the energy sector is crucial for attracti

130、ng capital,fostering innovation,and ensuring sustainable energy development.This includes clear and stable national energy policies and regulations,streamlined processes that facilitate ease of investment,and greater access to relevant data such as energy demand forecasts in key markets.MAINTAIN A P

131、REDICTABLE INVESTMENT CLIMATEEnsuring continued access to conventional energy supplies during the transition is essential to maintain energy security and a smooth transition to cleaner energy sources.Whilst not without risks,governments should maintain a diverse energy portfolio to provide resilienc

132、e against supply disruptions and fluctuations in renewable energy generation.ENSURE SECURITY OF ENERGY SUPPLYLocal partnerships including public-private partnerships should be actively encouraged as they play a significant role in fostering innovation.In the Middle East,strategic partnerships with l

133、ocal players,especially NOCs,are key to establishing market credibility and facilitating the transfer of advanced energy technologies.Emphasis on local content regulations is only likely to grow stronger,making firms which choose greater localisation better positioned.FOSTER LOCAL AND REGIONAL PARTN

134、ERSHIPSRenewable energy sources and low-carbon technologies must become more accessible and economically viable in order to fully realise the energy transition.Large-scale investments must be made in R&D and the development of knowledge and production hubs,for instance through the UAEs“hydrogen oases”,which will facilitate industrial clustering and a multiplier effect on production,innovation,efficiency and trade.PROMOTE INNOVATION THROUGH INDUSTRIAL CLUSTERING DMCC 2023