By Peter Alagos
Business Reporter



Gulf countries should invest in nuclear and solar energy to cushion the impacts of growing domestic oil consumption costs for power generation and water desalination, an industry expert said.
Dr Mamdouh G Salameh, director of the Oil Market Consultancy Service, made the statement in a forum entitled “The Iranian Nuclear Agreement: Regional and Global Repercussions” organised by the Arab Centre for Research & Policy Studies at the Ritz-Carlton Hotel in Doha yesterday.
In his presentation, Salameh said, “Arab Gulf countries consumed 6 million barrels per day (mbpd) of oil or 31% of their oil production to generate electricity and power water desalination plants.”
He noted that there are currently 199 desalination plants of varied capacities in the Gulf Co-operation Council (GCC) region. Most of these desalination plants are powered by oil, and there are plans to add 38 more facilities in the future, Salameh added.
“This means that the GCC countries will have to cut their domestic oil consumption drastically or replace oil by nuclear power and solar energy in electricity generation and water desalination.
“Failing to do either would result in their relegation to minor crude oil exporters by 2030 or ceasing to remain oil exporters altogether by 2032,” Salameh stressed.
According to Salameh, “Arab Gulf countries could be a formidable economic bloc” with proven reserves of 645bn barrels or 39% of the world’s proven reserves and a combined GDP exceeding $1.9tn (at current prices).
“Their Achilles heel is their continued dependence on the oil export revenues to the tune of 85% to 90% and their vulnerability to any decline in oil prices.
“However, the greatest threat to their oil-dependent economies actually comes from the steeply-rising domestic oil consumption for power generation and water desalination and a lack of diversification,” Salameh explained.
To prevent this, he stressed that Gulf countries should accelerate the diversification of their economies.
Speaking to Gulf Times on the sidelines of the event, Salameh further explained that diversification “also means heading towards that direction as a unit and not as a single GCC country. All of them must go together because that gives them more strength.”
Salameh clarified that his definition of diversification does not refer to industrialisation or “investing in hotels, casinos, and real estate.”
Instead of competing with leading industrial nations, he suggested that Gulf countries should invest in food production projects in countries like Sudan by transforming it into the region’s food basket.
“The world is already heading towards a future food shortage on a global scale. In the future, food prices could rival, if not, exceed those of crude oil.
“Why not then invest in Sudan, which has the land and water resources not only to become the food basket of GCC countries but also a great source of food export revenues for them,” Salameh said.
Asked for other suitable countries for food security, Salameh cited China and North Korea as some of the countries that have already invested on agricultural lands in Africa.
“But Sudan is an Arab country. It is a poor country but at the same time, it has the third biggest Arab land in the world with a good source of water from the Nile River, making it the ideal place for Arabs to invest in food security,” Salameh added.


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