Dana Gas CEO: Sector must turn to privatisation

GCC must embrace privatisation to remain prime energy supplier.

Private investment is crucial for the Gas sector, says the Dana Gas CEO
Private investment is crucial for the Gas sector, says the Dana Gas CEO

The gas exploration sector in the GCC must be opened to privatisation if the region is to maintain its position as the world’s prime energy supplier, as the feedstock becomes more important in the face of increased demand for power, said the chief executive of Dana Gas.

“Countries in the region will have to prioritise gas production in order to meet demand and to retain the region’s position as prime energy provider,” said Ahmed Al-Arbeed, CEO of Dana Gas, the Gulf's largest listed energy company.

Currently, the GCC is home to 45 percent of known gas reserves, according to the CEO. The rapid rise in demand for power necessitates a timely and cost effective extraction of gas, which can only be achieved through private sector participation.

“If the region doesn’t develop, there will be others to fill the gap, and that would be a massive missed opportunity” said Al-Arbeed. “We have to turn to privatisation to ensure the region’s position.”

Greater competition will lead to greater efficiency and cost effectiveness, and national oil companies (NOCs) in the GCC will have to accept a growing importance of private companies, said the CEO.
“The role of the NOC must change, and is changing. They must be subject to competitive pressures, which will make them better and lead to a more efficient use of capital and resources.”
Al-Arbeed pointed to Norway, where NOC have been part privatised, and Egypt, which has more than tripled its gas output after opening up to the private sector.

"Norway, Russia and Brazil have all partially privatised their national companies and these now need to compete," he added.

"In regions where state domination has been removed, the industry has flourished."

The biggest hurdle for private investors looking to enter the gas exploration sector is an inadequate regulatory framework: “A stable legal and regulatory environment is crucial. Most policy makers don’t provide adequate protection to investors.”


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