Gulf states will struggle to meet domestic gas demand

Significance Saudi Arabia, Kuwait and the United Arab Emirates (UAE) are pursuing ambitious natural gas plans that depend on relatively high-cost non-associated gas developments. Impacts The cost of gas in Saudi Arabia, Kuwait and the UAE will rise, creating further pressure to reform domestic markets. Hoped-for LNG export opportunities are unlikely to be realised in the short-to-medium term. Initial phases of assessment will determine whether the targeted prospects are genuinely commercial. Gas production will be intimately linked with refinery and petrochemical expansion plans.

Subject Hydrocarbons in Bahrain’s economy. Significance A potentially game-changing offshore oil and gas discovery could offer fresh hope for Bahrain’s weak public finances and broader economic woes. The find, announced in April, comes at a time when -- although its recent economic performance has been stronger than anticipated -- there has been medium-term stagnation in some of the sectors at the heart of Manama’s diversification efforts. Impacts Renewed gas production could render obsolete the liquefied natural gas import terminal due for completion in 2019. The hope of new oil wealth could support an upgrade in Bahrain’s credit rating and lower borrowing costs. Neighbouring Gulf states may be increasingly less inclined to make valuable grants, after reports of newfound oil wealth.


Subject Prospects for the Gulf states to end-2017. Significance Gulf Cooperation Council (GCC) countries agree on the need to check Iran’s regional aspirations, but differ radically on how to achieve this goal -- pushing Saudi Arabia, Bahrain and the United Arab Emirates (UAE) to open confrontation with Qatar and leaving Kuwait and Oman caught uncomfortably in the middle. At the same time, they face the major challenge of adjusting their economies to long-term expectations of lower oil revenue.


Subject The Gulf 's cybersecurity agenda. Significance Offensive cyber capabilities are technological tools for intruding into external digital networks to delete, steal or manipulate data. All six states of the Gulf Cooperation Council (GCC) – Bahrain, Kuwait, Oman, Saudi Arabia, the United Arab Emirates (UAE) and Qatar -- are developing these capabilities in the face of multiple threats. Impacts There is currently no indication that the GCC states are preparing cyberattacks against critical infrastructure. GCC states will continue relying on Western and Israel private firms for advanced surveillance tools. Efforts to nationalise the cybersecurity sector will advance slowly. Cyber espionage is almost certainly a fourth, covert GCC goal.


Subject Prospects for the Gulf states in 2022. Significance The six member states of the Gulf Cooperation Council (GCC), especially Saudi Arabia, are enjoying the windfall from a tight global energy market that has pushed up oil and natural gas prices. They have also coped effectively with the healthcare challenges of the COVID-19 pandemic, laying the groundwork for positive economic prospects in 2022.


Significance As a key ally of Saudi Arabia and the owner of the Arab world's largest armed forces, Egypt is a core member of the coalition campaign fighting the Huthi rebels and loyalists to former Yemeni President Ali Abdallah Saleh. Egyptian planes and naval vessels have already played a key role in the aerial campaign and naval blockade. However, the conflict appears likely to drag on, raising the risk of deeper -- and higher-risk -- Egyptian involvement. Impacts Ground involvement in Yemen would stir popular sensitivities about Egypt being regarded as a client of Gulf states. Egypt's foreign policy will become increasingly aligned with Saudi Arabia and the United Arab Emirates. Intervention in Libya would be more acceptable to the Egyptian public, who view the conflict there as a more immediate threat. Extended deployment would degrade the capabilities of the Egyptian military. Egyptian participation provides vital pan-Arab legitimacy to the Saudi intervention in Yemen.


Subject Oman-Iran relations Significance Oman is the only Gulf Cooperation Council (GCC) member that maintains formal relations with all states in the region, including Iran, which has fallen out with the two most powerful GCC states, Saudi Arabia and the United Arab Emirates (UAE). Oman’s diplomatic channel to Tehran enables it to play the role of mediator between the United States and its Arab allies on the one side and Iran on the other. Indeed, US Secretary of State Mike Pompeo called Sultan Qaboos on May 16 to discuss alleged Iranian threats. Impacts An outbreak of hostilities between the United States and Iran would leave Oman isolated from other GCC states. Oman would reap economic benefits as a transshipment centre for Gulf states if Saudi Arabia and the UAE fight with Iran. A worsening Gulf crisis would increase smuggling between Iran and Oman, with Tehran eager to keep supplying Huthi rebels in Yemen.


Subject Outlook for Mauritania's ties with the UAE and Saudi Arabia. Significance President Mohamed Ould Ghazouani has recently sought to reaffirm the strong partnerships with Saudi Arabia and the United Arab Emirates (UAE) that were cultivated by his predecessor, Mohamed Ould Abdel Aziz, even as he pursues a markedly more liberal approach to domestic political affairs. Prominent exiles were allowed to return home earlier this month. This raises an apparent contradiction, given the two Gulf states’ endorsement of Ould Abdel Aziz and his repressive internal policies. Impacts Riyadh and Abu Dhabi will remain key sources of financial support for Nouakchott. A 2-billion-dollar aid package from the UAE will likely be disbursed over many months or perhaps several years. As the new chair of the G5 Sahel, Ould Ghazouani will seek to sustain hitherto inconsistent Emirati and Saudi support for the bloc.


Subject Prospects for the Gulf states in 2018. Significance The Gulf Cooperation Council (GCC) saw dramatic political changes in 2017. Mohammed bin Salman advanced to become Saudi crown prince. The GCC also split in a way not seen since its foundation in 1981, after three members -- Saudi Arabia, the United Arab Emirates (UAE) and Bahrain -- launched a boycott of Qatar in June.


Significance This comes as Gulf Cooperation Council (GCC) states begin serious reforms to adapt to a new period of low oil prices. The United Arab Emirates (UAE) led the way in August 2015 by ending fuel subsidies, and Saudi Arabia has just reduced its own. Spending plans are being re-examined and new revenue-raising measures are being discussed seriously for the first time. Impacts Growth will stall in most sectors, particularly those that depend on government spending. Commercial opportunities may arise for companies that can help make efficiency savings or fill capacity gaps. Pressure will grow to end the Yemen war which is a drain on Saudi and UAE finances.


Significance The summit is the focus of rising speculation that the 30-month rift between Qatar and fellow GCC members Saudi Arabia, the United Arab Emirates (UAE) and Bahrain may be nearing an end. Security concerns after the September 14 attacks on Saudi oil installations attributed to Iran are motivating GCC rulers to de-escalate regional tensions. Impacts Improved relations may re-energise the regionwide implementation of value-added tax, originally planned for 2018. A GCC revival will strengthen but not transform defence cooperation, which continued under the US-led Middle East Strategic Alliance. Gulf states' concerns about Iran could also help to resolve aspects of the conflict in Yemen.


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