Save for later Print Download Share LinkedIn Twitter The acceleration of the energy transition is adding urgency for Mideast Gulf oil producers to address stranded asset risk. Producers are pushing to diversify, invest in low-carbon technologies, and promote greener policies. But they are also seeking to hike oil production capacity, sell stakes in state firms, and monetize hydrocarbon assets while they can. Tensions inherent to such strategies have already been felt within Opec-plus, whose members face production curbs until April 2022 under their current deal. Opec-plus is in the process of easing output cuts, which, along with oil prices above $60 per barrel, made its most recent meeting a straightforward affair (PIW Apr.30'21). But the United Arab Emirates and Russia last year challenged Saudi leadership -- successfully -- by pushing to increase output (PIW Dec.11'20). Emirati officials have questioned whether the UAE’s Opec membership actually benefits its longer-term interests. Opec-plus tensions have subsided for now, but underlying tensions could resurface if Iran returns to the market or global oil demand falters. Radical new emissions targets recently announced by the US, EU, UK, Canada and Japan are the latest reminder of the massive changes energy markets are set to see in the coming decade (PIW Apr.23'21). Saudi Arabia, the UAE and Qatar stand out in accelerating development of their hydrocarbon resources, after effectively abandoning the long-standing policy of saving resources for future generations. Saudi Aramco recently resumed plans to expand the crude production capacity of its offshore Zuluf field, from 800,000 barrels per day to 1.4 million b/d -- part of a broader five-year project to raise Aramco's maximum sustained capacity by 1 million b/d to 13 million b/d. Abu Dhabi is raising its own production capacity by 1 million b/d to 5 million b/d by 2030, and Qatar plans to select partners for the massive 32 million ton per year LNG expansion later this year (PIW Apr.23'21). Qatar Petroleum is expected to sanction a second phase taking capacity to 126 million tons/yr sooner rather than later to avoid seeing assets stranded. All three countries are driven by the assumption that their low-cost, low-carbon production gives them a competitive advantage over rivals. Qatar's Energy Minister Saad al-Kaabi has stressed “clean” credentials of the expansion project, which include new flaring and methane emissions reduction technologies, carbon capture and storage, and solar powering of operations. Abu Dhabi’s recent launch of the Murban crude futures contract is another modernizing move aimed at making its main export more competitive (related). Even Iraq, which lags far behind its peers in terms of diversification and upstream developments, is going big with its gas capture and production drive (PIW Mar.5'21). The sale of hydrocarbons assets and infrastructure to outside investors has also hastened. Saudi Crown Prince Mohammed bin Salman revealed last week that Riyadh is in talks to sell a 1% stake in Aramco, underlining how central the policy is in raising funds for economic diversification plans (PIW Apr.30'21). But success here will depend on how wisely countries spend the proceeds. The news followed Aramco’s recent agreement to sell a 49% stake in its pipelines to a consortium led by Washington-based EIG Global Energy Partners. Abu Dhabi National Oil Co. (Adnoc) is considering listing two affiliates on the local stock market -- the latest in a fundraising strategy that has also seen it sell shares in another subsidiary, Adnoc Distribution (PIW Apr.16'21). Oman has also been divesting noncore hydrocarbon assets to raise funds and restructure its oil sector, selling its stake in India's Bina refinery last year for $326 million. While renewables cannot compete with hydrocarbons as a revenue source for Mideast Gulf producers, they will increasingly factor in investment plans. Some 1.5 gigawatts of renewable power was installed in the region in 2020, while another 3 GW should be added this year and almost 20 GW over the next five years, with solar accounting for most of the increase, according to Arab Petroleum Investments Corp. It sees renewables accounting for 40% of an estimated $250 billion of investment in the region's power sector through 2025. Saudi Arabia and the UAE are also seeking to position themselves in emerging technologies like blue and green hydrogen (PIW Apr.9'21).