Full Steam Ahead

In an exclusive interview, the global CCO of GE Steam Power, Dr. Sacha Parneix, dissects the complex world of energy diversification – and why the GCC’s strategy looks promising

- Aarti Nagraj

It’s no exaggeration to say the energy sector has served as the key engine that has powered the rapid rise of GCC economies in the last few decades. Holding almost 30 per cent of the world’s proven crude oil reserves, and approximately a fifth of global gas reserves, the GCC countries have fuelled robust economic growth by developing and exporting fossil fuels.

But with industrialisation and an exponential rise in population, the demand for energy has also risen dramatically in the region. During the 2000s, regional energy consumption grew at an average of 5 per cent per annum, faster than India, China and Brazil, according to the International Renewable Energy Agency (IRENA). Domestic consumption grew to about 28 per cent of production in 2014, compared with 17 per cent in 2000.

Meanwhile macro-economic factors have also had an impact on the balance of the oil market and prices. The collapse of oil prices in mid-2014 contracted the region’s oil revenues, and with continuing volatility in the market due to slowing global demand amidst geopolitical uncertainty, an urgent need emerged for energy diversification. Driven by the need for greater energy security, GCC economies have developed strategies for a broader energy mix, including nuclear, coal and renewable options such as solar and wind. “When it comes to diversification, there is no ‘one size fits all’”, explains Dr. Sacha Parneix, chief commercial officer of GE Steam Power. “Every country needs to find its individual energy mix, which may depend on a number of factors. One of them is the available fuel sources: existing gas or oil reserves, but also the wind conditions, as well as the hours of sunshine and available land space for solar power plants. Other factors may include access to project financing, foreign exchange reserves, and political considerations.”

Tackling diversification