Saturday, 23/11/2024 | 17:42 GMT+7
The European Union is seeking to
re-regulate Europe’s energy sector to improve security of supply,
sustainability and competitiveness. Energy transformation in Europe has exposed
the shortcomings of over-regulation and national-centric policy, providing the
Middle East with valuable lessons to manage supply, competition and future
investment in its own market.
Supply Diversification
Shale
gas development in North America has exemplified supply diversification. Yet
opinion on shale remains divided in Europe as environmental concerns are often
perceived as outweighing diversification gains. The EU has enabled countries to
pursue their own national policy on unconventional resource development by
publishing environmental requirement guidelines earlier this year. The Middle
East is host to the world’s largest energy producers and exporters with
abundant conventional reserves. Yet with supply, export relations and policy
impacted by the unprecedented growth in unconventional resource development,
Middle East energy stakeholders may begin to explore their own unconventional
deposits or invest in global shale plays.
Regional Integration
Historically, the EU has approached energy targets and supply mix from a
national perspective. Yet an integrated and regional approach would be more
sustainable and would allow the region to tap into generation and distribution
capacity where it is located. Similarly, the Middle East has not demonstrably
integrated its national energy markets with GCC states independently pursuing
development and distribution projects to reach their own national targets.
However, the GCC Interconnection Authority (GCCIA) is currently developing an
interconnection grid, a project often referred to as the backbone of GCC energy
cooperation.
Energy Assets
As the EU
continues to face significant market uncertainty, Europe’s energy leaders are
shifting their strategy to focus on core geographic markets and core business
operations. This has resulted in the sale of certain network (distribution and
transmission) and generation assets. To date, these assets have typically been
repatriated and sold back to states (for example, Hungary is nationalizing
assets) or being acquired by funds that are capitalizing on Europe’s distressed
energy assets. As such, Europe’s key energy companies scale back their
operations, expansion opportunities are being created for cash-rich Middle East
energy stakeholders with global ambition.
Do you want to know more about
unconventional resource development?
Please join Latham & Watkins and AmCham Abu Dhabi at our
complimentary seminar, The Energy Revolution on the 24 September 2014 at the
Rosewood, Abu Dhabi.
Al-misal.com