(MENAFN- The Peninsula) By Satish Kanady / The Peninsula
Energy reforms has adversely affected domestic fuel consumption growth across most of the GCC, and in some cases even led to negative growth.
Saudi Arabia, the region's largest fuel consumer, saw a 10 percent decrease in demand for diesel in 2016, while petrol demand flatlined.
Qatar, Kuwait and Bahrain have also experienced a drop in fuel consumption since major reforms were introduced in 2016. Lack of transportation alternatives has resulted in greater fuel switching, as consumption of premium grade petrol in Oman declined and was offset by larger volumes of the lower grade fuel.
Having implemented energy liberalisation plans in August 2015 leading to lower domestic prices and falling global crude prices the UAE is the only country where demand for both petrol and diesel increased in 2016, Apicorp's energy research report noted yesterday.
Apicorp (Arab Petroleum Investments Corporation) is the multilateral development bank of the Organisation of Arab Petroleum Exporting Countries (Oapec) established to foster the development of the Arab world's oil and gas industries. According to Apicorp,
Qatar's demand growth for petrol averaged 13 percent between 2010 and 2015, despite having inflated fuel prices by 25 percent in 2011. In January 2016, Qatar announced an additional 30 percent hike in petrol prices, taking regular unleaded up to $0.31/l. In May of the same year, the government decided to liberalise prices.
Petrol demand in 2016 declined by 12 percent, while retail prices, in line with international prices, continued to increase in 2017 as compared to the previous year, reducing demand by 7 percent for the first half of 2017.
Rapidly growing demand for petroleum products has long been typical for the GCC countries.
High population growth, robust economic performance until recently, and low fuel prices led to rising demand for gasoline and diesel in the transportation sector, and in the case of Saudi Arabia and Kuwait, rising demand for liquids in the power sector.Governments therefore prioritised the expansion of the downstream sector, adding 1.2m b/d of refining capacity in the last five years, with diesel representing more than half the additions and 350k b/d of gasoline.
In early 2016, the GCC introduced energy price reforms that led to a hike in domestic prices, including gasoline and diesel. Whilst prices remained relatively low by global standards, the region began to experience a slowdown in demand growth and in some cases negative growth.
Annual fuel demand growth averaged 6.2 percent between 2010 and 2015 but shrunk to 0.4 percent in 2016. The change in diesel demand was even more significant, going from an average of 4 percent growth between 2010 and 2015 to a 6 percent decline in 2016. Beyond the impact of the reform, the slowdown in economic activity also contributed to lower demand growth, and as these economies recover, some of this demand growth will gradually return.
MENAFN2009201700630000ID1095879270
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.