Global Energy Politics at a Crossroads | Dr. Justin Dargin on Gulf States & Climate Diplomacy
Are Gulf nations reshaping the global energy order?🌍
In this powerful panel discussion hosted by the Middle East Council on Global Affairs, leading energy and climate expert Dr. Justin Dargin explores the rising geopolitical influence of Gulf states in the context of a changing energy world.
🎙️ Topics Covered:
🔹 The return of hydrocarbon strategies amid shifting U.S. energy policies
🔹 How energy nationalism is influencing global diplomacy
🔹 Strategic positioning of Gulf nations in LNG markets
🔹 The emergence of a "carbon counter-coalition"
🔹 Climate geopolitics, energy security & economic diversification
🧭 Key Insight: Gulf states are no longer just energy exporters — they are strategic power players shaping the direction of global energy and climate diplomacy.
📺 Watch Now to understand the evolving dynamics of climate leadership, energy transition, and economic resilience in a multipolar world.
💬 What role should the Gulf play in global climate solutions? Share your thoughts in the comments.
📢 Don’t forget to Like, Comment, Share, and Subscribe for more in-depth conversations on energy, equity, and empowerment.
#EnergyGeopolitics #ClimateDiplomacy #GulfEnergy #CleanEnergyTransition #ClimateFinance #EnergyPolicy #JustTransition #LNG #CarbonMarkets #MiddleEastEnergy #GlobalSouth #GreenEconomy #USPolicy #ClimateLeadership #Tangelic #JustinDargin #StrategicEnergy
Are Gulf nations reshaping the global energy order?🌍
In this powerful panel discussion hosted by the Middle East Council on Global Affairs, leading energy and climate expert Dr. Justin Dargin explores the rising geopolitical influence of Gulf states in the context of a changing energy world.
🎙️ Topics Covered:
🔹 The return of hydrocarbon strategies amid shifting U.S. energy policies
🔹 How energy nationalism is influencing global diplomacy
🔹 Strategic positioning of Gulf nations in LNG markets
🔹 The emergence of a "carbon counter-coalition"
🔹 Climate geopolitics, energy security & economic diversification
🧭 Key Insight: Gulf states are no longer just energy exporters — they are strategic power players shaping the direction of global energy and climate diplomacy.
📺 Watch Now to understand the evolving dynamics of climate leadership, energy transition, and economic resilience in a multipolar world.
💬 What role should the Gulf play in global climate solutions? Share your thoughts in the comments.
📢 Don’t forget to Like, Comment, Share, and Subscribe for more in-depth conversations on energy, equity, and empowerment.
#EnergyGeopolitics #ClimateDiplomacy #GulfEnergy #CleanEnergyTransition #ClimateFinance #EnergyPolicy #JustTransition #LNG #CarbonMarkets #MiddleEastEnergy #GlobalSouth #GreenEconomy #USPolicy #ClimateLeadership #Tangelic #JustinDargin #StrategicEnergy
Category
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LearningTranscript
00:00:00Good morning everybody. My name is Najee Abiyad. I'm really pleased to moderate this very
00:00:23interesting panel today at the very exciting times in the U.S., a panel assessing the American
00:00:34energy independence vis-à-vis the oil dominance of OPEC and OPEC+. We have today three prominent
00:00:44speakers, starting with Dr. Harold Zior, a non-resident fellow in energy and global oil in the
00:00:52center of energy studies in Rice University Baker Institute for Public Policy. Our second speaker
00:01:01is Dr. Justin Darjan, a senior visiting fellow at the Middle East Council on Global Affairs,
00:01:12specializing in the intersection of the Middle East energy markets, geopolitics, and climate change.
00:01:20And the third speaker is Ms. Rachel Ziemba, I hope I pronounce it well, founder of Ziemba Insights,
00:01:30a microeconomics and policy due diligence advisory firm. We start now with Dr. York, who shall talk
00:01:39mainly about the key components of President Trump's energy policy and then their implications on OPEC and
00:01:50on the Gulf Cooperation Council member states. Dr. York, you have seven minutes, seven to eight minutes.
00:02:00Please, please be punctual. Thank you.
00:02:04Well, thank you very much for inviting me. I think what I can do is talk that there's really kind
00:02:10of four components to President Trump's energy policy. The first one is, if you think back to
00:02:16his presidential campaign in 2024, he clearly has the philosophy that cheap energy is a weapon against
00:02:26high inflation rates in the United States. The challenge that he's going to have around
00:02:31oil or gas prices as that weapon against inflation is that what is the sweet spot in the oil price
00:02:40that will keep the U.S. consumer happy? Because he promised them cheap energy, promised to reduce
00:02:46energy costs by 50% by the end of the first year of his term. And then, and also a price at which the
00:02:52U.S. oil and gas industry continues to do exploration development and drilling and production. And
00:02:58that's turned out to be a bit of a sticking point for him. And it'll probably become a reoccurring theme
00:03:04throughout my comments is there just seems to be there's a lot of policy uncertainty around exactly
00:03:11what the end state is of some of the things that he's doing. The second element of his energy policy
00:03:17is a return to the empowerment of oil and gas. And if you've noticed, since the election in November,
00:03:24the oil industry has been much more vocal and much less apologetic about its business and its
00:03:30continuous need to invest and the role that it plays in the economy. Now, there's a lot of discussion
00:03:38about how they want to be more active and more productive. But there's a difference between that
00:03:44rhetoric of what they want to do, and then what the market realities allow them to do.
00:03:49And the main driver for investment remains the oil price. And so that goes back to that cheap energy
00:03:55is a weapon against inflation. It's good for consumers, but at some point prices get too low.
00:04:02And then it doesn't work for the producer's side. And then you create a supply demand imbalance.
00:04:08And then I think sort of the third positive element, because I'm going to come back to something that
00:04:15his energy policy is not, is permitting reform. And I think that's finally after for about we're now in
00:04:21probably year three of the discussion, where there is consensus across the political spectrum in the
00:04:27United States that there needs to be dramatic reforms in the efficiency and effectiveness of how
00:04:32regulations are promulgated, and in particular, how projects are permitted. And to give you an example of
00:04:40specific to the oil industry, the backlog of federal onshore permits has increased by over 110 percent
00:04:47during the Biden administration. Now, that sounds like a dramatically large increase, slowdown in
00:04:53activity. But it's important to remember that federal lands only account for about five to seven percent
00:04:59of U.S. oil production. So the backlog is not a positive from from an activity standpoint, but from
00:05:06a volumetric standpoint, it really hasn't impacted onshore production very much. The bigger impact on
00:05:16permitting delays in the United States has really been in the offshore and in the Gulf of Mexico or the
00:05:22Gulf of America, depending on which term you want to use, approval times for offshore permits increased by
00:05:2912 percent overall. But for new wells, which is critical for growing and sustaining production in the
00:05:36in the offshore in the offshore in the offshore resource base, those permit times increased by 70 percent
00:05:45during the Biden administration. So although there was still leases that they were required to hold by
00:05:51court order and they're executing these lease sales in the background, there was a slowdown at the rate at
00:05:58which they developed. They permitted the wells from those leases. And as a result, we've actually seen sort of,
00:06:04you know, we've seen the Gulf of Mexico or Gulf of America. We've seen offshore growth struggle in the in the
00:06:11United States for the last four years. That's going to be, you know, probably where we might see the biggest change in the
00:06:17oil industry. But overall, the biggest issue for all forms of energy, and this is where we get the the the the political
00:06:25consensus is around infrastructure permit approvals, pipelines, transmission lines, storage facilities.
00:06:33Every energy source is now facing some sort of infrastructure bottleneck. And that's preventing them, you know,
00:06:39assets from coming into, you know, commissioning and going into service. And there there is a universal view that
00:06:46we need to reform that infrastructure permitting process. And he's made that a big part of his campaign.
00:06:53And that goes back to his lowering energy costs, because one of the ways you lower energy costs
00:06:58is by is by bringing new supply to market. And you can't bring that new supply to market unless the
00:07:04infrastructure is in place to allow that energy to reach consumers. Now, what is not in the hit part of
00:07:13his policy is that it is this is not an end to the energy transition in the U.S. It's rather simplistic to
00:07:20assume that because President Trump is going to emphasize traditional energy sources, that that
00:07:26means he's going to force the country to make a U-turn on the energy transition investments.
00:07:33And the reason why that's a bit naive is because many of the renewable energy requirements and a lot of the
00:07:38renewable energy capacity we see being added in the United States is stemming from state, not federal
00:07:44regulations. So those state regulations aren't really changing. And as long as they don't reverse course,
00:07:51there's there's going to be this continued activity in this continued drive in the renewable end.
00:07:58Now, there are some places where the Inflation Reduction Act or the IRA has started has provided federal
00:08:05incentives and we have seen some accelerations. But I don't think you're going to see an entire
00:08:10repeal of that legislation. And mostly because a lot of the investment that's taken place since the IRA
00:08:18was passed in August of 2022 has been in states that President Trump won in the 2024 election. And so
00:08:26it's unlikely politically that he's going to want to unwind the benefits that those states are receiving
00:08:32from those incentives. What I think we will see is some rationalization and and more targeted
00:08:39incentives that are coming. I think there is a there's a there is a political acceptance across
00:08:46the political spectrum. I think there are some incentives that are palatable like carbon capture
00:08:51credits and the hydrogen tax credits. I think those will will remain. And then in this for the sake of
00:08:57political compromise, I think we'll see some of the other incentives that were in the IRA will start
00:09:02to fade away. Probably the most notable will be the EV tax credits. And the reason why the EV tax
00:09:08credits are likely to go away is because quite frankly, they just weren't being used during the time
00:09:12that we had the IRA was in place over two and a half over the last two and a half years. We you know,
00:09:18there's been about 3 million electric vehicles sold in the US, but less than 100,000 of those vehicles
00:09:25have qualified for the tax credits. So I think we'll see that go away. And I guess we'll get into
00:09:31a bit more about what this means about energy independence. But let me just close by making
00:09:36a comment that I think the the biggest hindrance to energy to Trump's energy policy right now is the
00:09:42uncertainty around it. We just saw in the Dallas Federal, the Dallas Federal Reserve Bank released a
00:09:48survey yesterday. And a lot of the comments among energy producers and midstream companies was that
00:09:55the mercurial tariff policy that he's put in place has just introduced a lot of uncertainty around their
00:10:01planning. And without planning, they can't make investments without those investments. They can't
00:10:05grow energy supply without growing energy supply. You can't put downward pressure on energy costs like
00:10:11he's promised the consumers. I think that's probably the big issue right now within the industry is,
00:10:18you know, the craving for policy certainty from the administration.
00:10:22Dr. York, thank you so much for your interesting insights. Now, we will go to our second speaker,
00:10:34Dr. Jarjan, who aims to talk about the interaction between the US, Saudi and Russian oil policies.
00:10:44Dr. Jarjan, you have also seven minutes, please, for your talk. Thank you so much.
00:10:51Great, great. Thank you very much. And I appreciate the opportunity to address all of you today.
00:10:55I think one thing that I would like to impress upon everyone is that we are at an inflection point.
00:11:00So there are three dynamics that we're seeing at the moment. We're seeing an acceleration of energy
00:11:05nationalism, which is occurring not just in the US, but we're also seeing it arise in other areas.
00:11:11And we're also seeing a type of rollback of climate oriented policies, regulations, and then,
00:11:17of course, a revival of hydrocarbon production expansion, more or less. So for the Gulf countries,
00:11:24what they must do is navigate this with tactical acuity and strategic restraints. So with the
00:11:31American first policy that is dominating right now, this is not merely domestic. What we're seeing is
00:11:36that this is reverberating across the arteries of global oil diplomacy. Now, I would say that the
00:11:42lessons of 2020, they were quite significant in terms of how Russia and Saudi Arabia perceived it.
00:11:49Saudi Arabia perceived that market share power is not merely a structural issue of supply and demand,
00:11:57but what they recognize is that it requires a type of choreography across geopolitical cycles.
00:12:05Now, in terms of Russia, Russia recognized that its leverage has limits without any type of sustainable
00:12:11price floor or a type of a strategic or, excuse me, like a structural flexibility. So as a result,
00:12:18we are seeing a transactional, the rise of a transactional convergence across the board and
00:12:25both sides of Russia and Saudi Arabia, they recognize that they can no longer engage in zero-sum
00:12:31standoffs, that it is not for the benefit of anyone. And indeed, this was not the first standoff
00:12:36between Russia or in the form of the Soviet Union and then Saudi Arabia. The 1986 price collapse, oil
00:12:45price collapse, this was extremely significant. And many people think that this played a role
00:12:51in the ultimate dissolution of the Soviet Union. And also, of course, the Soviet Union was engaged in
00:12:57overreach in Afghanistan, and also the fiscal pressures of attempting to keep up with American
00:13:02rearmament during the Reagan administration. So I would say that these echoes were heard, actually,
00:13:09even if faintly during the 2020 standoff. So what I see is that President Trump's second term, I mean,
00:13:18this has the aspect of attempting to reduce domestic gasoline prices, of course. And then again, as I
00:13:26mentioned, we're seeing a regulatory rollback for various ESG and climate-oriented policies, LNG expansion.
00:13:35And then also, and I think that this is quite critical, we're seeing the, how can I say, the combining
00:13:44of hydrocarbons and foreign policy. So with the Trump administration's statements that it would
00:13:54launch tariffs or that it would implement tariffs against many of its trading partners, actually,
00:14:00it has been successful in many cases, we can see that with a multi-billion dollar investments that
00:14:07have been announced by many multinationals. And then also, some of the trading partners of the US have
00:14:15indicated that they will invest quite significantly in US hydrocarbon assets, and also purchase American LNG,
00:14:24and we see this happening with Korea. Now, what does this mean for the Gulf? In particular,
00:14:28Qatar. Qatar is concerned that the US is going to pull away some of its traditional customers.
00:14:35So I can get into that a bit later. But again, I would like to stress that the US is not the only
00:14:41jurisdiction which is implementing or threatening to implement trade restrictions as it relates to the
00:14:48energy sector. The European Union has climate related trade restrictions that it might expand
00:14:55in the future. If we look at CBAM, for instance, carbon border adjustment mechanism, and then also
00:15:01methane regulations and other regulations that impose trade restrictions or will impose trade restrictions
00:15:08upon exports, hydrocarbon exports from the Gulf. So I just want to make clear that the US is not
00:15:14the only jurisdiction that is implementing that. But for the outlook moving forward for OPEC plus, I see
00:15:21in the short term, we will witness tighter policy coordination, which is a hedge against US policies.
00:15:30Medium term, I would see that there are going to be divergent strategies between many of the OPEC plus
00:15:37countries, in particular Russia and Saudi Arabia, as they pursue regional hedging, so to speak,
00:15:43in particular with the GCC. And then more long term, there's going to be renewed urgency
00:15:49to further entrench macroeconomic diversification to create alternative revenue streams. And this is
00:15:57especially the case in the GCC. But the Gulf states are adapting. For instance, the Saudi Arabia of LNG,
00:16:05Qatar, we are seeing that it is gearing up for quite significant price war globally. So it is doubling
00:16:16its LNG production by expecting to reach that, I think 142 million tons per year by 2030. Saudi Arabia is
00:16:28quietly preparing for, quote unquote, a post oil future. So it is leveraging Aramco's massive arsenal
00:16:36of capital to invest in assets globally. And the United Arab Emirates, the UAE is also seeking a hedge
00:16:43of the renewable energy investments, nuclear and also climate diplomacy. So just to kind of tie
00:16:50everything up now. And I think this is very interesting. We are witnessing the age of climate
00:16:57geopolitics. So potentially what could arise from the hydrocarbon maximalist policies of the Trump
00:17:05administration, it may give the Gulf states much more room to resist climate trade restrictions and
00:17:12carbon border adjustment pressures from the EU and other jurisdictions. And we may see and it could be
00:17:20quite likely the emergence of a carbon counter coalition. And this is indeed not out of the question.
00:17:26And I end here. Thank you very much. Thank you so much. Thank you so much for your enticing comments.
00:17:34Let us move to the last but not yet speaker, Mrs. Yemba, who will address us now about the impacts of the US energy
00:17:48policies on the economics of the six member countries of the Gulf Cooperation Council.
00:17:55Mrs. Yemba, you have another seven minutes, please. Thank you so much.
00:18:16Mrs. Yemba, you have another seven minutes, please.
00:18:26Administration policies, Dr. York in particular, how there's a disconnect between Trump's focus on reducing
00:18:33the cost of energy and also building more energy capacity. We've also talked about how the shift has
00:18:39been back towards fossil fuels and and the like, as well as nuclear policy, an area that's of interest
00:18:47to the GCC countries. So when thinking about the impact of these policies on the GCC, I think there's
00:18:53a couple of different areas. There's the impact on their economies and energy sector that stems from
00:19:01that stems from sort of US production. There's also a question mark about the security environment and how
00:19:08that feeds through to the economic resilience. And finally, I think there are questions about how the
00:19:13US environment reshapes GCC investment interests, all of which I think are quite relevant. The Trump
00:19:21administration interests in adding production and lower prices, those put more pressure on Oak Plus,
00:19:28perhaps, but only if the US is really able to add supplies. The sort of price environment we're in,
00:19:34as Dr. York mentioned, you know, we're not seeing US oil producers likely to add a lot of production.
00:19:41Natural gas is a different story, but Qatar aside, the GCC is gas poor and would actually welcome
00:19:49the opportunity to add more supplies onto the market. We've seen ADNOC, for example, investing in US
00:19:58chemicals and gas production. That's something that could continue. But overall, we're looking at an
00:20:03environment where the tariff policy is arguably going to weigh on global growth. And we're seeing
00:20:10a shift in the type of growth that we're seeing out of China, all of which add up to sluggish demand
00:20:16growth for oil. And that's challenging both for the oil sectors of the GCC countries, but also the
00:20:23non-oil sector, because those other sectors benefit from the revenue that comes from the energy sector.
00:20:30That's still the case. And it's particularly, it's contributing, for example, to a refocusing
00:20:37of which investments will go ahead in Saudi Arabia, for example. So this is a challenge,
00:20:43but there also are opportunities for the GCC countries as well. US sanctions policy, which we've
00:20:49alluded to, also is a challenge to be managed for the GCC producers. The administration is increasing
00:20:57pressure on Iran a little bit for now, maybe more in the future. They're also tightening up on Venezuela.
00:21:03This might create a little more market share for some of the GCC producers, but it also,
00:21:10in Iran's case, could come with some security risks. And finally, we're also seeing this question of
00:21:18dynamics vis-a-vis Russia and what will happen as sanctions are enforced to a lesser extent.
00:21:25The reduction in the role, perhaps, of the shadow fleet that has been serving Iran, Russia, and Venezuela
00:21:32might actually be beneficial for the GCC. But going forward, this, along with tariffs,
00:21:43adds to the uncertainty and makes it somewhat difficult even for the state companies of the GCC to plan.
00:21:50Now, finally, I want to talk about GCC investment in the energy sector in the US. This is actually a
00:21:56potential plus for the GCC. The Trump team will probably be more open to investment in the US than
00:22:04the Biden team was. GCC investors might benefit from a proposed new CFIUS review process and streamlined
00:22:12environmental review. As Dr. York said, we haven't seen permitting reform yet, but we wait and see.
00:22:20GCC links with China, though, are a potential deterrent here. And also, of course,
00:22:26the question marks about the IRA incentives might limit the types of energy investments that the GCC
00:22:33investors can make. I continue to see those GCC links with China being maybe more of a deterrent for
00:22:41technology investments and less so perhaps in the energy sector. Overall, I think what we'll see
00:22:50going forward is GCC investors still looking for opportunities, but the broader challenges of the
00:22:58Trump administration shift probably will only increase the urgency for countries like Saudi Arabia to
00:23:05invest more at home in their non-energy sectors. And that's going to mean less capacity internationally.
00:23:12But this is a transactional time. It is one in which I think the Gulf countries see themselves relatively
00:23:20well positioned to try to take advantage of it. And I'm sure we'll talk more about how that might play out.
00:23:30Thank you so much. Thank you so much, Dr. Zimba, first for your talks, second for being assured and concise.
00:23:41Thank you so much. I wanted to leave time for questions.
00:23:44Thank you so much. Now I open the floor for questions and answers, but I use also my position
00:23:54to ask two questions to the panelists. The first is about, as Dr. Darjean said, about the LNG competition
00:24:08between the US and the Gulf, especially Qatar, especially in an oversupply situation expected
00:24:18for the second half of this decade. The end result will be catastrophic for both. We will have a market
00:24:27share war, a negative impact on the prices, which will be bad for the investment, for the revenue,
00:24:36and everything. I don't know if there is any possible solution for this impasse.
00:24:48And maybe we can see, and this is what is noticed now more and more in the Gulf countries,
00:24:59we will see more investment by the Gulf countries in LNG projects in the US itself. We saw it from Saudi Arabia,
00:25:08from Saudi Aramco, from ADNOC, similar to the Golden Pass of Qatar and ExxonMobil. This could be a solution
00:25:18in the future. I would like to hear your view about that. My second question is about the impact of low oil
00:25:29price strategy, implicitly adopted by Washington DC, on the economies of the Gulf states, knowing that some countries
00:25:39countries have or require a certain level of oil price in order to survive. This will be also bad for the,
00:25:50not only the economies of the states, but also for the political survival of the states. Thank you.
00:26:07Thank you very much, Dr. Jarjan.
00:26:12Maybe Dr. Jarjan can turn?
00:26:20Hello? Uh, yes. My mic is muted here.
00:26:29We can hear you now. Dr. Jarjan. Oh, hi. Hi. Can you hear me now?
00:26:33Yes. Oh, okay. Okay, great. My mic was muted. So those are very, very good questions that you
00:26:39asked. I would say that, and of course, as you correctly indicated, that there is room for
00:26:44competition, but also potential collaboration when we look at equity stakes that are being,
00:26:50let's say the Gulf states are investing in a certain equity stakes in the US. But I would say for Qatar,
00:26:55this could potentially represent an existential challenge because Qatar's economy depends on
00:27:01quite significantly upon LNG exports. So we can see that Qatar has accepted the reality that there is
00:27:08going to be some type of market share competition in the future. And this is undeniable. Qatar out
00:27:15competes every single LNG producer when we look at price or cost of production, excuse me. So
00:27:22Qatari LNG production is much less than the US, much less in Australia and much less than
00:27:28any other emergent LNG producers. But the only thing that has been holding back Qatar thus far has
00:27:35been its adherence to long-term, its long-term contractual model. So we're starting to see pushback
00:27:40against long-term contract, which is, for instance, from Korea. And then we're also seeing a resistance
00:27:47from Europe and then also other customers. So what's going to have to happen is that Qatar would
00:27:53have to be much more flexible in terms of its contractual model. And then if Qatar is able to
00:27:59do that and also beginning to enter much more significantly in the spot market, then I would say
00:28:06that Qatar would be able to secure and be able to emerge quite dominant within the global LNG market.
00:28:14Now, at the same time, we see Qatar hedging its position by investment in natural gas assets overseas.
00:28:23And as you indicated, Saudi Arabia as well has been quite interested in investing in US LNG assets. So
00:28:31we see mid-ocean, for instance, Saudi Arabia has purchased an equity stake in that. So the Gulf states
00:28:38are taking somewhat a very pragmatic view, but Qatar would have to be able to be much more flexible in
00:28:44terms of its overall LNG contractual model. But on the horizon, we're seeing that the tariffs from the
00:28:51Trump administration are starting to pull away some of Qatar's traditional customers. So Korea and Japan,
00:28:59they have announced that they are going to invest in the $44 billion Alaskan LNG project.
00:29:05This is quite significant. And if this happens to proceed apace, then we can see that Qatar might
00:29:11have difficulty in keeping many of its long term customers. And then I believe your second question,
00:29:19did you want me to answer that now about the low price environment?
00:29:21Yes. Even Russia can also give us insight.
00:29:31Yes. So, I mean, quite, quite briefly, I'll just say in terms of the low price environment,
00:29:34you correctly mentioned that the Gulf states, in particular Saudi Arabia, they have a break even
00:29:41price, a budgetary break even price, which means that the price that they must have for a barrel of oil
00:29:47in order to generate enough revenue to remain solvent. For Saudi Arabia, that has been increasing
00:29:54nearly every year. So on the eve of the American invasion of Iraq, the break even price for Saudi
00:29:59Arabia was roughly, I believe $20 to $30, something along those lines. Now it's plus 80. So that means
00:30:07that Saudi Arabia, as it's engaging in its massive economic diversification plans, mega projects,
00:30:12and so on and so forth. And as it's restructuring its subsidization, domestic subsidization policies,
00:30:19it has to have this revenue to be able to sustain that. And it can have a significant impact on
00:30:25social political stability moving forward. But we must not forget though, that Saudi Arabia,
00:30:32in terms of its technical break even price, which means that the price of oil that it must receive for
00:30:38its extraction of oil from its reservoirs for Aramco, that's lower than any, nearly anyone in
00:30:45the world, that's only about $5 to $10, perhaps per barrel. When you look at US shale reserves,
00:30:50which are about 30 to 50, or it can even go higher. I mean, so if we look at technically, Saudi Arabia
00:30:57outproduces everyone, but because of its major expansion, its major expansion, expansionary projects,
00:31:02in particular with oil extraction, and so on and so forth, it's going to have some issues. And I
00:31:06would just leave this food for thought. Domestic oil consumption in Saudi Arabia has been increasing.
00:31:13So its spare capacity is actually declining, it's actually reducing. So the Saudi Arabia of today is
00:31:20not the Saudi Arabia of 20 years ago. And spare capacity is what makes Saudi Arabia relevant in
00:31:26the international energy sector. So we may not see Saudi Arabia with ability to be able to leverage the
00:31:32international energy market if its domestic oil consumption continues to increase.
00:31:38Dr. Darjan, I fully agree. But don't forget that they are trying really very hard to
00:31:48substitute oil by natural gas, especially for the power sector.
00:31:52Dr. They're trying. Yes, I agree.
00:31:56Dr. Darjan, do you want to add something on this?
00:32:01Dr. Sure, I'll add something just in addition to what I said in the other remarks. And I would agree
00:32:07with Professor Darjan's comment there at the end on, you know, spare capacity, perhaps evolving. I think
00:32:14right now, though, I'm less worried about the spare capacity, just because so much is being kept off,
00:32:18you know, sort of offline. But I think in the medium term, that is something we need to consider,
00:32:23how much spare capacity. I just think that the dynamics of the several levels of voluntary
00:32:29cuts that have been done in the last several years mean that that's probably not the same sort of
00:32:34near term risk. Yes, Saudi Arabia is definitely a country that under weak, you know, sort of weaker
00:32:41oil prices is challenged other non GCC countries, places like Iraq, in particular, very vulnerable.
00:32:48And any rock also very much in the crosshairs with maximum pressure on Iran, I think we'll see
00:32:54additional sort of challenges there. So Iraq is sort of facing it on on multiple sides from a
00:33:00financing perspective. You know, Saudi Arabia sort of has been leveraging its balance sheet in a variety
00:33:06of ways to, you know, expand and tap the credit markets. And so the pace of new debt is quite
00:33:14astonishing. They are alone one of the largest issuers of hard currency debt in the emerging world
00:33:20last year and on track to do it again this year. And so there is, I think, this risk as interest rates
00:33:27remain high. Right now, there's there's plenty of scope there. But but it is, I think, a medium term
00:33:33concern. And we're already seeing the authorities, as I said, sort of pull back other countries in the
00:33:40Gulf, the UAE and Qatar in particular, even Kuwait, more resilient to this lower price environment.
00:33:47The other factor we have to think about when we think about fiscal break evens is to think about
00:33:52what the production level is. And so at the current price points, even if Saudi Arabia pumps a bit more,
00:33:59the fiscal position is still weak. But I think they're also looking around and saying at this
00:34:05price point, they might not face as much non-OPEC competition. Right. And I take us back to some of
00:34:12you know, Dr. York's comments at our at our starting point today. So the the the dynamic this this
00:34:20increase in U.S. production or attempted is is a concern. But I think if anything, from the Gulf
00:34:26perspective, it's other aspects of U.S. economic policy right now that might be even more of a concern,
00:34:32the investment uncertainty relating to tariffs, other things like that, that if anything, I would
00:34:38say are not great for global growth and global demand. But, you know, just to leave it on a positive
00:34:45note, I would also wonder to what extent as the U.S. is shunning solar and wind, whether there's maybe some
00:34:53opportunities to, you know, as China dumps some of those products on the market. So try to have
00:34:59some positives and negatives in this uncertain time. Good. Thank you so much. Dr. York, do you want
00:35:08to add something on it before moving to the next question? Yeah, the the the only comment on my side,
00:35:16I think, doctor, I think both both Rachel and Justin got this and made some really excellent
00:35:22points. The only thing that I would add is that, you know, there's the there's the the geopolitics
00:35:28of investing in different countries. So like Qatar or Saudi Arabia, investing in gas in the U.S. for
00:35:33geopolitical reasons. But there's also commercial strategic reasons to do that. I mean, LNG portfolio
00:35:39theory suggests that the optimal portfolio is one in which you have as many source locations as you
00:35:46have sink locations. So if you're a GCC gas producer and you're selling into Asia and in, you know, North
00:35:53Asia, South Asia and into Europe, then you would like to have three supply sources you could draw from
00:36:00and the U.S. becomes one or or Canada. But the you know, the Americas becomes a place where you could
00:36:05create one another one of those supply sources that helps you optimize your commercially optimize your
00:36:12your LNG portfolio, both from a shipping and a, you know, consumer reliant, you know, security of
00:36:19supply standpoint for your customers. By all means, if I can add that there is another factor to be taken
00:36:30into consideration. Here is that the gas energy producer would like to have some capacity outside
00:36:37the state of hormones itself, which is also a very strategically oriented motivation. Anyway,
00:36:47let me move now to the to a another question raised by Dr. Zaffer, who asked if the Ukraine war
00:36:58where to end? What is the chance of Russian hydrocarbons, especially gas, I mean, to fully return
00:37:05back to the market? And how would that affect demand for GCC hydrocarbon? The question is for all of you.
00:37:20I'm happy to throw in a brief comment and then turn to others. So I think it depends very much
00:37:26the oil story and the gas story here. You know, at the end of January, we have and the point being,
00:37:32I think the challenge is much greater on the natural gas side. For for Qatar, for example,
00:37:38especially in the long term, Dr. Darjun sort of mentioned that Qatar would have to be more flexible
00:37:44about their term contracts. So like the consumers in that context, there's a lot of Russian pipe gas
00:37:52that can't find a market, they're now buying LNG, they're thinking about LNG, they want to diversify.
00:37:58If there were to be a return of pipe gas to Europe, which is the only place that can take more of it,
00:38:04then that would be sort of a game changer, I think, both for future purchases of Qatar LNG,
00:38:10but also US LNG, right, there is a real competition element between US and and Russian LNG long term,
00:38:17which is I think why a lot of market actors have been a little puzzled by the Trump administration's
00:38:22focus on all the great economic cooperation potential that line. But we'll see how that plays
00:38:29out. On the oil side, we have seen some Russian oil come offline, we've seen Russian products come
00:38:36offline, particularly after after bombings of refineries by the Ukrainians, that that may ease if
00:38:43this energy infrastructure ceasefire plays out. But on the oil side, the policy goal was always keep
00:38:51the oil on the market, but pay Russia less for it. So in a sense, what we might see is two things,
00:38:58one, a bit more Russian oil coming online, right, so Russia getting paid a bit more. But also that
00:39:06there would be less of this sort of discounting pressure from the shadow fleet coming through,
00:39:12and it might allow OPEC plus to maintain a little more pricing pressure. But we really talking about
00:39:19more like 500, you know, sort of 1000 may less than a million that's come offline. So there's not a lot
00:39:25more oil to come online. What I will say, I think echoing some things from the rest of the rest of the
00:39:32panel is that it's been very important for Saudi Arabia, and others to keep Russia in the OPEC plus group,
00:39:40right, and to really sort of make to try to avoid the kind of market share war that materialized in
00:39:50in 2020. And so I think that's something that's going to be quite important going forward. And
00:39:55I'm sure one of the things talked about on the sidelines with all of these diplomatic meetings
00:40:01between the Russians, Americans and Ukrainians in Riyadh and Jeddah.
00:40:07Thank you so much. Dr. Jarjan, any comments?
00:40:10Yeah, just a couple comments. I think that the EU, even if there's a peace agreement between
00:40:17Ukraine and Russia tomorrow, the EU is never going to go back to being dependent on Russian
00:40:22natural gas. And I will put myself on the line and state that. One reason, of course, is political.
00:40:27Another reason is structural because the EU has been able to expedite carbonization plans,
00:40:32energy efficiency and so on, and been able to build up to a certain degree LNG import infrastructure
00:40:38with more investment plan. So as a result, I think that your Russian gas is going to have to go east.
00:40:44And that's going to be a region of increased competition, of course, between the US, Australia,
00:40:49Qatar and what have you. We see that China is leveraging its position as the customer of last resort
00:40:56for Russia. So it has been able to push Russia to accept lower prices. And then again, as has been
00:41:06mentioned by Rachel, we can see that for Russia, it's extremely important to try to find customers for
00:41:17its energy and for its oil in order to fund its modernization plan. But we have to understand
00:41:24that modernization has been the key word of the Russian government since Peter the Great, and it
00:41:30hasn't been able to successfully do that for hundreds of years. I mean, so that is a problem. And then we're
00:41:36also seeing overall, and I think that this guides Russian strategic vision is that there's a demographic
00:41:42decline in Russia, a very stark demographic decline. So if Russia is not able to entrench itself
00:41:48geopolitically from a position of strength, we can see perhaps for the next century, perhaps Russia
00:41:54is always going to be at, let's say, in a very subordinate position. And then also, there's the
00:42:02issue of, of course, we've heard the allegations for many years of collusion between the Trump
00:42:09administration and Russia, although there hasn't really been evidence of that. But regardless, even if
00:42:13there are personal proclivities, let's say, of President Trump, let's say, for President Putin,
00:42:21however, structurally speaking, an American first policy cannot exist, cannot coexist with a Russia
00:42:29first policy, structurally speaking. So when we see the increase in American hydrocarbons and also,
00:42:36let's say, President Trump attempting to position American LNG as being, let's say, without rivals
00:42:46internationally, this is going to put enormous pressure upon Russia, in particular with this LNG
00:42:53plans as well, and then even with potential competition between the US and Russia in the Arctic.
00:43:00And yep, so those are pretty much the only points I'd like to state.
00:43:04Thank you so much. Permit me here to say a word about the EU itself. We have to see, to look which
00:43:14EU we are talking about. There are so many different points of view within the EU about Russian
00:43:20guerre. You know that Hungary, Austria, and so on, they would love to import again Russian guerre, which is
00:43:28much cheaper than the US or other LNG. And this will be, will be changing the whole picture. I believe
00:43:36also we have to see, as Russian rightly said, we have to see the policy of Trump related to the possible
00:43:48competition between Russian guerre and U.S. LNG. They must be fine tuning here for the future.
00:43:59But anyway, the situation could change dramatically if part of the U.S. gas export is paid for war
00:44:08compensation to Ukraine, for example, which has been in rumors lately. We have to wait and see. Anyway,
00:44:17Dr. York, do you have any comments on this?
00:44:20The one comment I'll point out is on the oil side in Russia and the sanctions is the industry,
00:44:30from the oil perspective, the fields are getting very mature and technically more complicated.
00:44:35I think a lot of people were surprised that we didn't see a dramatic drop off in production
00:44:40at the beginning of the, after the sanctions dropped after the Ukraine war. But I think the reason,
00:44:46but all of that sustained production were in existing fields that are maturing. And so they,
00:44:52what they've done is they've basically, they're pulling future production forward. They're not adding
00:44:57new productive capacity. And they do sit on a lot of shale reserves, just like the U.S. does.
00:45:07But Russia in a very real way is like where the U.S. was in the 1990s with a very rapidly maturing
00:45:14production base. And it's not mature production that's growing in the U.S. It's the shale production
00:45:20that's growing. Russia has that opportunity, but they've not been able to demonstrate either
00:45:25a willingness to adopt Western technology or the ability of Russian oil field services firms to
00:45:31develop the necessary technology. So I think, you know, if you roll off the sanctions,
00:45:38there, you could get back to something about, well, I think Rachel's right. The, there's a limited
00:45:43volume that came offline. It comes back online, but you get towards the end of the decade and there
00:45:48becomes a new issue for Russia that's independent of the sanctions, which is, you know, how,
00:45:54how are they going to develop and sustain production when they need to change to a completely new
00:45:59resource base that they don't have experience in, which would be shale.
00:46:04Thank you so much. Good. Let me move for
00:46:11another question by Matthew. We will talk about China. It seems this is very interesting now,
00:46:19the Chinese effect. Will there be an influence for China on the dynamics between the U.S.
00:46:26and OPEC plus in the coming years or two?
00:46:37Yep. So I can just pop in. I would say that China has been increasing its influence in the GCC.
00:46:43We have seen this since the Obama administration. So the U.S. has been somewhat withdrawing,
00:46:52creating a vacuum in the Middle East with the pivot towards China, but also there are internal
00:46:58dynamics as well. So with the Arab Spring, many of the traditional more conservative leaders in the
00:47:06Middle East, they feel that the Obama administration through Arab leaders who are quite stalwart,
00:47:12let's say, and quite loyal in their view, partners with the U.S. through them underneath the bus
00:47:19within just a very short period, even though that they were working with the U.S., collaborating for
00:47:23decades. So that soured many of the leaders on the U.S. and the view was that the U.S. is quite fickle,
00:47:29a fair weather friend, that you cannot depend on them for the long term. Whereas if you look at,
00:47:34let's say, China, if you look at Russia, they tend not to care so much about international human rights
00:47:41and so on and so forth, at least a rhetoric of that, and they care more about sovereignty. So
00:47:46with that internal dynamic and then external dynamic of the U.S. withdrawing from the Middle East,
00:47:52geopolitically, we can even say just in terms of rhetoric, and we see China beginning to enter,
00:47:58we're also seeing Chinese military bases actually within the region, which we had never even seen
00:48:02before, which isn't stated quite loudly, but we're actually seeing these bases beginning to be
00:48:09constructed. So China is going to have quite a significant role within the GCC moving forward,
00:48:16in particular the Strait of Hormuz. This is extremely important because there's a significant amount of
00:48:22oil that transits that area. And China's strategists are students of history. They recognize that the
00:48:31first oil embargo that was implemented in history was actually from the U.S. against Imperial Japan
00:48:37in order to choke it off from the necessary oil to fuel its war machine. So the Chinese know that the
00:48:44American Fifth Fleet, in case of any conflict, can quite quickly embargo it and choke off that critical
00:48:50chokehold. So China is going to be much more involved in trade, military energy within the region.
00:48:58So I see that moving forward.
00:49:02Michelle, any comments from your side?
00:49:05Yes, I think just adding to those very good comments from Justin, I think I would just add that
00:49:13China is obviously a key player both in the region, but also China as the major buyer of sanctioned
00:49:19crude and sanctioned fuel is an important player in this way. We've seen within the last week, or maybe
00:49:27it was earlier this week, I have trouble keeping track, so much is happening, so many announcements
00:49:31are coming fast and furious. But the U.S. talking about tariffs on purchasers of Venezuelan crude,
00:49:39you know, 25% tariff, that effectively means China, because I think the other buyers
00:49:44would have already stopped because we've seen the sanctions waivers lifted. Could that happen with
00:49:50Iran? China is definitely the big buyer there. So I think that China is definitely a factor,
00:49:56as a demander, as the largest consumer of many of the GCC countries, how willing they are to, for example,
00:50:03push back and use some of those military, you know, sort of participate in any efforts to
00:50:08secure shipping lanes is still really an open question. But I think they're a factor. And then,
00:50:17of course, there's just a dynamic here where dynamics in the region play into overall U.S.-China competition,
00:50:26not only in the ways that Justin just mentioned, but also as the U.S. is looking to use leverage,
00:50:33economic leverage to change policies, as I say, particularly on Iran. So I think it might not
00:50:42impact OPEC decisions directly, but OPEC is having to sort of think about what the demand, you know,
00:50:48what the demand dynamics are. But I think it is worth noting that the composition of demand in China
00:50:56for energy is shifting much more towards a power sector, much and China is a much less petroleum
00:51:05driven growth model than it used to be even a decade ago. And so that has its implications. It's
00:51:10still a very big demand. But I also think going forward, we'll start to talk more about also where
00:51:16India fits in, right? India has been a major sort of buyer of Russian crude and reducing the market share
00:51:25of some of the GCC countries. Will that start to shift if Russian oil is less discounted? Perhaps.
00:51:31So I think these big Asian buyers, they're, of course, going to be important in the next year,
00:51:36and even more so, I think, when we look beyond the next year.
00:51:41Thank you. Dr. Bjorn?
00:51:42Yeah, I think I want to leverage off of Rachel's comments about the changing demand profile in China.
00:51:49And, you know, there's a growing view, and we'll see, but there's a growing view that transportation
00:51:55fuel in China will peak this year, next year, in the very, very near future. We actually saw a decline
00:52:01in diesel demand or gas oil demand last year. We think there'll be a recovery this year, very much
00:52:07and a very slow growth in gasoline demand. Where the growth in oil demand is in China is in petrochemical
00:52:14feedstocks. And in that standpoint, the U.S. offers a, you know, shale crude tends to set up better as a
00:52:21petrochemical feedstock than some of the middle gravity crudes that come out of the middle out of
00:52:26the GCC. Now, you can address that through capital. You can make a middle grade crude a petrochemical
00:52:35feedstock, but you're going to have to invest more capital in the petrochemical plant in order to do that.
00:52:40But I wonder if this is inducing an uncertainty, is that we do know that the Chinese do feel that
00:52:46they are now overly exposed to U.S. ethane imports because they built, because of the massive build
00:52:53out in petrochemical plants over the last, through the last decade, they now think they're overexposed to
00:52:59the U.S. But I think that, so there is this uncertainty, but it comes back to, I think, what Rachel
00:53:05was saying about India. Does India now become a key player for transportation fuels? And is that sort of
00:53:12now, does the GCC look at investing capital in China to grow, to create petrochemical feedstock
00:53:20facilities, or do they pivot into India if transportation fuel, if India becomes the next
00:53:28source of transportation fuel growth?
00:53:30I think it's, so I kind of like Rachel points before, I think there's uncertainties around
00:53:35China's demand profile, but in those uncertainties for GCC countries, there might be opportunities.
00:53:40They just may not be in China.
00:53:41Okay. Yeah, good. Thanks so much. I have three more questions. I will be first. The first one,
00:53:55with the U.S. reducing or dropping even their energy transition plans and the clean energy plans,
00:54:04do you think that this could affect the Gulf states clean energy plans or projects?
00:54:14I'm not sure that it changes the domestic projects that are already underway or those that are,
00:54:21you know, we see UAE entities among those investing quite heavily in renewable projects
00:54:28around the world and emerging economies, right? I think sort of some of those investments will go
00:54:34ahead and that's a function of the cost of, you know, the sort of the relative cost per kilowatt hour
00:54:41and sort of especially in the power sector. I'm thinking about dynamics in Morocco and other dynamics.
00:54:46So, and domestically, you know, to, you know, Justin's point earlier about, you know, Saudi Arabia's
00:54:54petroleum demand. One of the elements, you know, was a broader policy is trying to find other sources,
00:55:02particularly for power demand and desalinization and the like to avoid just drawing on a sort of more
00:55:10inefficient, you know, sources. So I think some of the projects will go ahead. Now, they will likely
00:55:17face a lot less scrutiny from foreign financial institutions when they're issuing bonds at a
00:55:24variety of other issues. So I think that the global scrutiny perhaps of GCC sovereigns, GCC government,
00:55:35you know, sort of energy companies might become a little less as you no longer have the sort of U.S.
00:55:41pushing as much on the decarbonization front. I will say that most of the big sovereign investors
00:55:50in the Gulf are still holding to their desire to think about, you know, sustainable projects. And,
00:55:58you know, there's still a lot of interest in electric vehicle production domestically as part
00:56:04of advanced manufacturing. So I think it's a mixed, I think it's a mixed story.
00:56:11Justin? Yeah, so I just put off of Rachel's statement that's entirely on point. I mean,
00:56:19the Gulf states did not become environmentalists overnight. Okay, they were clear. I mean, they
00:56:27did not become Greenpeace. Okay, I mean, there were clear strategic macroeconomic strategic interest for
00:56:33them to embrace clean energy. And as Rachel pointed out, it's basically to reduce their domestic hydrocarbon
00:56:40demand. Up until about 2008, even the early 2010s, what we see is that Gulf natural gas demand,
00:56:49which is the principal linchpin of their industrialization plans, I mean, since the 1990s
00:56:57or so, it was increasing by about six to eight percent per annum. And by 2008, every single energy rich
00:57:04country in the MENA region, with the exception of Qatar, was experiencing natural gas allocation
00:57:11shortfalls. I mean, so even Dubai had blackouts, for instance, and they didn't know how they could
00:57:16adequately allocate their natural gas in either to the retail sector or to the industrial sector,
00:57:22manufacturing or what have you. So they were having a crisis. By 2012, we see a type of
00:57:29significant change. We see that they agreed to the German platform. And then they became quite
00:57:37proactive, if resistant parties and international climate negotiations. But this merely the what they
00:57:43recognized by 2012, was that decarbonization equals a decline in domestic hydrocarbon uses. So you could
00:57:52capture that opportunity cost from supplying your domestic market by whatever the transfer price is,
00:57:58it's a dollar and 20 cents per MMB2 for natural gas, then you could sell that externally and reap the
00:58:04international market price or for oil is a transfer price is five to $10. And you could get the prevailing
00:58:12global oil price for that. So they recognize that. So I would say that domestically, they are not going
00:58:19to go back from their plans to decarbonize, because that is something that's necessary. Although what we do see
00:58:25is, I think quite quickly is what they call the green paradox. The green paradox is that when you have
00:58:32any international climate negotiations, and regulatory structure that is born from that,
00:58:39it operates as an announced expropriation. So what does that mean? That means that it actually creates
00:58:45an incentive when you elongate, let's say climate or decarbonization regulations at a global scale,
00:58:52such as with the climate treaties and what have you, then the Gulf countries understand that we
00:58:56actually have to increase the tempo of our hydrocarbon extraction, because it's quite soon going to
00:59:02become a stranded asset. So we can potentially see an increase in carbon emissions over the short to
00:59:07midterm, due to the elongation of climate, global climate change policy. So actually, you would have to,
00:59:15if you want to actually reduce climate change, or if you want to implement climate change mitigation,
00:59:20you should actually do it immediately, so that they don't feel that there's a depreciation
00:59:24of their main assets. So I think I end there. Thank you.
00:59:27Yeah, you are right. On the long term, if everybody will go for clean energy, then
00:59:36what we will do with hydrocarbons in the Gulf, then it is better for them to use them now or in the
00:59:43future. That's it. For what to go clean if we have so much oil and gas? You see? Anyway, Dr. Rior,
00:59:53any comments? Yeah, the one comment is, I think there might be an opportunity here for GCC countries
00:59:58in terms of partnering. I think you have US firms that the energy transition isn't going to end in
01:00:04the US, but it might slow. But you have firms that have built capability, and they're going to want to
01:00:09keep those capabilities sharp. And so they may be looking for opportunities. They could be in GCC
01:00:15countries, or they could be GCC countries partnering with them, and you're going to some place in Africa
01:00:21to do projects. But I think they're going to want to keep those capabilities sharp. I'm thinking
01:00:25specifically to wind, but to a greater extent in hydrogen. I think you've got some companies that
01:00:30they're on the precipice of starting to actually do some commercial scale projects. If those projects
01:00:37don't happen in the US, they're going to be looking for some place to do hydrogen projects,
01:00:41so they can prove out the technology and the techniques. So there could be opportunities here
01:00:46for more for partnerships than there would have been in the absence than without the pivot back to
01:00:56traditional fuels in the US. Great. Thanks. We are approaching our
01:01:06controlling time, but let me ask a final geopolitical question. Hans asked if the tensions in Babel
01:01:17Mandib or the Red Sea can have any impact on OPEC energy policy or on the US policies in general?
01:01:34Any comments from your side?
01:01:36I would just say that President Trump's policies of, let's say, encouraging more of its strategic
01:01:49allies to increase their security, to increase the burden of security investments and military
01:01:54investments and so on and so forth, that is expediting European coordination and collaboration
01:02:00in the military and security sphere. So we're going to see a much more robust China militarily
01:02:06intervening within these areas. China has joined, for instance, the international anti-piracy coalition,
01:02:13for instance, within the Red Sea. We're going to see a more robust European presence as well,
01:02:19and then these are going to play a role in terms of security and military diversification efforts as well
01:02:24within the GCC. So they just don't rely upon the US as the only security partner. But frankly, I mean,
01:02:32for the near to midterm, there's no other military force that has the capability that the US does in
01:02:37terms of force projection, which is how your country is actually powerful. So I would say we would just see
01:02:43it like that. In terms of OPEC plus overall, I don't really think it has so much of an impact except
01:02:50for the short term spikes in terms of the fear premium, whenever the Houthis make an announcement
01:02:55or whenever they launch a missile or something along those lines. Thank you.
01:02:59Dashaad? On that last point, I think, you know, what we've seen in terms of the market response being
01:03:07relatively muted, even in the last, you know, kind of couple days, I mean, oil prices moved up a little
01:03:13bit. I think that the sort of, you know, half-life or sort of dynamics of that market risk has maybe
01:03:20dissipated in part because even though it's much more costly, market actors have figured out some
01:03:26some workarounds, right? Now, that being said, I think there are sort of escalatory
01:03:31cycles and risks, especially if we could start seeing an acceleration of pressure, not only in the
01:03:37Babel Manda, but also perhaps threats to tankers in the Strait of Hormuz. I'm not talking about a big
01:03:44sort of blockage, but if we see sort of military sort of attacks that lead to Iranian or, you know,
01:03:51Yemeni actors deciding to sort of break some of the Iran-Saudi Arabia agreements,
01:03:59then we might see sort of more, you know, impact in that regard. But I do think the fact that there's
01:04:06still a lot of surplus capacity, that there's these sort of demand pictures, I don't think that this
01:04:14renewal necessarily changes OPEC policy that much, you know, but we'll see. I think the sort of
01:04:21getting towards the spring and summer period, I think there's going to be some important
01:04:26diplomatic and geopolitical dynamics vis-a-vis, as I say, Iran in particular, but also,
01:04:33and I think that that could be something to watch.
01:04:35I think the only thing I'll add is that, you know, there's just the old financial adage that
01:04:44diversification is a good thing. So as you get more secure, as more countries take on more
01:04:50responsibility for their security, that just diversifies the security capabilities, which
01:04:56should induce, you know, create more stability. And then you think about specifically around,
01:05:01you know, the UTIs in the Red Sea is rather than them thinking they're taking on the US or the UK,
01:05:06you could get to a point to Dr. John's Nord, it's down the road, right? But you could get to a
01:05:11point where you're not taking on one country, you're taking on a coalition of countries. And
01:05:16that might encourage people to not take steps that they, you know, that they have been taking,
01:05:21that they have taken more recently, because they do think it's more of a bilateral, I'm taking on this
01:05:26one country. And I think that, you know, they're half a world away. If I'm taking on a coalition of
01:05:32countries, I might be less inclined to, you know, to be a provocateur.
01:05:36Good. Thanks so much. We still have five minutes. And I would like to kindly ask each of the panelists
01:05:49to give a one to two minutes concluding remark. And then let us start with Dr. York.
01:06:00I think what I want to conclude is I think I'd like to convey the message that although we see a lot of
01:06:07change in, you know, Trump is becoming much more domestically focused in terms of his energy policy.
01:06:13I don't think this means, well, I don't think this is the rise of energy independence in the US.
01:06:19And, and it depends on what you mean by it. If you mean the energy independence means
01:06:24the US imports no crude oil, no petroleum products, no natural gas, that's never going to happen.
01:06:30And the reason why it's not going to happen is because we have refineries that are configured to run
01:06:35heavy Canadian crude, those deep conversion refineries cannot run on the light shale oil
01:06:42crude. And so we're going to be importing crude oil that certain grades of crude oil to fit certain
01:06:47refinery configurations. Same thing is going to happen on the product side, we will import petroleum
01:06:52products into Europe and into the West Coast for the foreseeable forever. And for the foreseeable future,
01:06:58if not forever, for logistics reasons, there just isn't the ability of the US to move product
01:07:03to a sufficient product to those coastal regions. And they'll rely on international volumes in order
01:07:08to do it. If you think that energy independence means that I'm a net, on net, I'm an exporter,
01:07:16I'm balanced. Well, the US is already there, the US has been a net exporter of hydrocarbons since 2020.
01:07:23So and no sign that that's going to change in the foreseeable future. What I don't think the
01:07:28administration is going to get out of this. And you hear this term a little bit, I'm actually
01:07:34starting to hear it less and it's energy dominance. And I think the notion that the United States has
01:07:38such a massive cost advantage over other energy producing countries in the world, that it can use
01:07:45energy as an economic or geopolitical weapon. I think we're going to see that that just isn't,
01:07:50that's just not going to play out that way. The United States does have a cost advantage,
01:07:57like in LNG, and there will be markets where the United States will be able to take advantage of
01:08:02that. But could the energy United States actually have such a large cost advantage that they could
01:08:07dominate the global gas market? No, they just don't won't have the cost advantage or the volume to
01:08:12do that. Thank you so much. Justin. Yes, absolutely. And I just want to say that I agree with
01:08:19your skip right there. I mean that the US in terms of pound for pound for cost, it really can out
01:08:24compete many of the Middle Eastern producers. Although what I see though, is not that the US
01:08:30is using energy as a foreign policy tool, but also it's using foreign policy in order to encourage
01:08:37customers to purchase or invest in the US. And we're seeing this with Korea and Japan and so on. So we're
01:08:42going to see if this is successful for the midterm. But overall, I see, or I'm starting to see the
01:08:49beginning fractures of what was the Western dominated or oriented rule based system since World War II.
01:08:56Okay, since 1945. And then also in particular, let's say after the dissolution of the Soviet Union,
01:09:01the New World Order, what we're seeing now is many of these fissures that are starting to arise.
01:09:07And my question, and this is something that we're going to see answered perhaps pretty soon,
01:09:12is that if the American hydrocarbon policies and let's say disinclination to pursue many climate
01:09:22oriented agendas, if this proceeds as it is in its core current form and decarbonization retreats,
01:09:30at least from let's say the Atlantic side of the Western world order, whether the Gulf countries are
01:09:36going to use that to double down that policy space that is developing, right? Are they going to use
01:09:42that to double down on hydrocarbons, right? Or are they actually going to become arbiters that say
01:09:49have a much more pluralistic and pragmatic energy order? Because what we see is that the Gulf countries,
01:09:55when you speak to them, when you hear many of the announcement, it is not the same as it was 15 years
01:09:59ago. What we're hearing is that they want to be strategic architects, they want a seat at the table,
01:10:04they want to build, they want their own input into, let's say the global climate architecture or
01:10:11climate finance or, or so on, so forth, and just not the structural aspects of being the world's last
01:10:17resort for the supply of hydrocarbons. So we're going to see this answer fairly soon, whether they're
01:10:24actually going to be able to do so, whether they have a coherent policy to do so, and what's going to
01:10:28happen when the current incoherence of the global order starts to settle, we're going to see who's left
01:10:33standing. Thank you so much. That's it. Yeah, I think that's, I think that's right. And, you know,
01:10:42just to sort of pick up on the things that sort of Justin and Skip mentioned, we very much, I think
01:10:48this, this question mark is not only about whether the US has cost advantages, but also this balance
01:10:55between what price domestically people are willing to pay, right? I think one of the other challenges is there
01:11:01might be an absolute cost advantage. But you might not but but that concern about how LNG costs going
01:11:10up in the United States might limit that export potential. You know, I think Justin is right that
01:11:16the US is looking to involve LNG and other resources in potential trade negotiations. And maybe we'll see
01:11:24more of that in actuality. After you know, next week, we have a lot of new tariffs are going to be introduced. And
01:11:31maybe that will be a window, the administration will start negotiating and saying maybe there's some sort of new
01:11:37agreement to come with some of these countries. And maybe natural gas is part of that. But in the United States, it's
01:11:43private companies that are doing these sort of projects, the government can provide, you know, sort of, you know,
01:11:48incentives, the government can do a variety of things or can be tax credits. But this isn't a dynamic where it's a national
01:11:55part of the net of the government balance sheet that is is sort of running the the the hydrocarbon industry. So I think how that
01:12:03actually comes to pass remains to be seen. I think, you know, we've all highlight. And so I think as we look in the next months, some of the key signposts I'm
01:12:10watching for are what those negotiations look like, but also whether some of the big announcements from corporations, from countries in the Gulf, how, how much of the announcements actually make their way into into investments. And that I think, in the energy sector and beyond, and that I think is going to be reliant on whether, you know, sort of how the bureaucratic processes work, whether the
01:12:40there are real expedited and streamlined sort of elements, but I think we do see an environment where the rules are changing. And that there's some scope for producers in the Gulf to look for some new opportunities in that context, there's a shift within the energy sector of what's prioritized.
01:13:01But that countries that are really focused on supporting all of the above energy are probably going to be better positioned in this in this dynamic, as well as those that are a bit more flexible, domestically that that don't have sort of too much, you know, sort of debt that's going to become a constraint on a new investment.
01:13:26And that includes some of the countries in the Gulf. But I look forward to carrying on the conversation with you all.
01:13:33Thank you so much. We reach the end of this panel. I would like really to extend my sincere thanks again and again for our prominent panelists for the valuable contribution for all the questions and comments.
01:13:54And with that, I would like to conclude the panel with many thanks for all of you. See you next time, inshallah.
01:14:03Inshallah.
01:14:04Thank you very much.
01:14:05Thank you very much.
01:14:06Thank you very much.