The shift to new leadership of the UAE’s energy sector is a strategic move that has been in the works for some time, even though the new generation must quickly step in and demonstrate an ability to chart a course through a volatile global landscape.
An economic and political shake-up of sorts has happened this month, including a younger group taking the reins at some of the country’s key energy assets.
The industry is now undergoing a sea change as oil prices languish near US$30 a barrel, having plummeted about 70 per cent during the past 18 months, and as international companies shelve hundreds of billions of dollars of upstream projects.
The upheaval caused by the slump in oil prices has triggered economic and fiscal reforms in the region, with efficiency top of the agenda in an era of low growth. Sultan Al Mansouri, the Minister of Economy, said yesterday that with oil prices where they are it will be difficult for the UAE’s economy to grow by more than 3 per cent this year.
He said the Government is ramping up its diversification efforts to cut its reliance on oil revenues to about 20 per cent in five years, down from 30 per cent at present.
Suhail Al Mazrouei, who was appointed as the Energy Minister in 2013, is in his early 40s, far younger than his counterparts in Qatar and Saudi Arabia. Typical of his generation, he has experience outside the UAE, notably with oil major Royal Dutch Shell in the North Sea, Africa and Asia.
The most recent changes include Sultan Al Jaber’s appointment as the director general of Abu Dhabi National Oil Company (Adnoc) this month. Mr Al Jaber holds many roles, including Minister of State and the chairman of Masdar and Abu Dhabi Ports Company, but he began in the country’s hydrocarbon sector nearly two decades ago – starting at Adnoc, as Mr Al Mazrouei did, before branching out on to the global stage.
Mr Al Jaber’s appointment at Adnoc has also seemingly paved the way for another of his generation to take over the energy portfolio at the investment company Mubadala.
Homaid Al Shemmari is expected to be named the acting chief executive of energy at the group, replacing Mr Al Jaber. Mubadala’s investments include Dolphin Energy and the renewables unit Masdar. However, Mr Al Shemmari will retain his position and responsibilities as the chief executive of Mubadala’s aerospace and engineering services division.
These changes, however, have been planned for a while, according to Gary Ward, the regional operations director for recruitment firm Hays. “I think it will offer a fresh look but [the new energy leaders] have been coached for quite some time now,” he said.
Mr Ward said that times are now different from when the country’s oil sector began to take off over four decades ago. Younger Emiratis have had the time to prepare for these senior roles while their grandfathers were simply thrown in to them because it was a new industry.
However, that should not change the overall strategy of the UAE’s energy sector.
Mr Ward pointed to companies such as Adnoc and Mubadala where policies are dictated by the Government’s long-term vision, which includes increased oil and gas production targets and broadening the energy mix to give renewables a bigger share of output.
He said that the new blood at the top would offer more ideas, but the organisation policies and operations would remain, as rigid structures are already in place.
“Gone are the days of people being thrown into it and just making money. Now it’s structured, people are groomed and policies are being adhered to as there’s a common goal – particularly in Abu Dhabi,” he said.