Long queues stretched around Cairo petrol stations on Thursday evening as motorists rushed to beat rising fuel prices. In tandem with the sharp devaluation of the Egyptian pound, the government has cut subsidies again. But with the country’s indicators blinking on zero, Egypt badly needs to recharge its energy strategy.

The Egyptian pound fell by almost a third as the central bank said on Thursday that it was letting the currency float. Devaluation had become inevitable as a requirement for securing an essential IMF loan and easing a drought of foreign currency that had led to shortages of sugar.

Problems with energy have been an important part of undermining Egypt’s budget and trade balance. Even after cuts earlier this year, subsidies account for nearly half the forecast budget deficit of 9.8 per cent for the 2016-17 fiscal year. The drop in subsidies was mostly because of falling global oil and gas prices, not internal reforms. The price of gas has gone up, but electricity tariffs have not been raised proportionately, shifting the subsidy burden rather than removing it.

Overdue payments to oil companies, which were meant to be cleared by the end of this year, have been rising again, reaching US$3.58 billion. The companies cannot invest in new production without being paid, so drilling has slumped to half the level of two years ago. Oil production, which had been quite stable since 2008, has declined sharply this year, further cutting revenues. Refining output has also dropped, requiring more imports of oil products, at a time when Saudi shipments have been cut.

Egypt was a significant LNG exporter until 2013, but rising domestic demand and a collapse in production have abruptly turned it into a major importer of gas. While the government has allowed Shell to export a few cargoes recently to meet contractual commitments, the country imported some $1.1bn of LNG at current prices this year up to August.

Gas production has improved this year on the back of new field developments, but underlying output remains in steep decline. Shell is holding off on the important next phase of its West Nile Delta project until it receives some of what it is owed.

The country, of course, is looking to ENI’s giant Zohr offshore field, meant to start production by the end of next year. But given likely delays and sharply rising domestic demand as new power plants are commissioned, it is doubtful whether even Zohr will be enough to close the supply-demand deficit. Although a great, and lucky, success, its discovery seemed to encourage irrational exuberance and complacency in the government.

Gas to factories continues to be cut off unpredictably, undermining important export industries. Meanwhile the electricity supply has improved, but renewable energy plans have been mired in bureaucratic disputes.

The latest fuel price rises will boost already high inflation, but they barely cover for the devaluation. Local currency prices are up from 30-47 per cent, so the subsidy burden in dollars has at best narrowed slightly.

The government now needs to build quickly on the loan and the large, politically risky devaluation. It needs to move swiftly to abolish most remaining subsidies to protect its budget and control demand. High inflation requires compensation to low-income Egyptians, but this is hard for the bureaucracy to manage without waste and corruption.

The greater availability of foreign currency should allow the government to pay down debts to oil companies and stabilise production levels. Raising gas prices uniformly to a market ­level – the equivalent price for LNG imports – would encourage investment in offshore and tight gasfields.

The Egyptian energy economy has been running on empty for too long. It should now get a short-term boost, but only major maintenance will keep the whole show on the road.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

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Silicon Sand Dunes a vital cog in energy development

At the Women in Science and Technology conference in Dubai last week, the talk on start-ups was packed; the simultaneous session on energy was sparsely attended. If the region is to create the jobs it needs, it has to regard the energy industry not as a cash cow but as the driver of economic growth and innovation.

Of course, there are some excellent start-ups in the Middle East. But imitating Silicon Valley-style tech firms and adapting services such as Uber to the local context does not leverage the region’s strengths to generate enough new export-oriented globally competitive businesses.

Instead, imagine what the Arabian Gulf’s energy sector could look like by 2040.

Supercomputers determine the underground location of oil and gas, and a dense network of wells like tree roots extracts it. Highly efficient power plants burn the gas, trap all the pollutants and dispose of them safely in depleted oil reservoirs underground or use them to make eco-friendly cement and other building materials.

Solar panels, optimised for hot weather, are integrated into every new building and installed on desert land by robots. Along with mini-nuclear reactors, their abundant cheap power makes the Gulf the world’s heavy manufacturing and chemicals hub. Surplus electricity generates hydrogen to fuel ships and aeroplanes, or is exported along transcontinental high-voltage direct current cables.

Homes adjust themselves intelligently to their residents’ needs, providing cool air and hot water directly with solar thermal systems. Desalination driven by renewable energy provides drinking water and irrigates desert farms. Hyperloop systems whisk tourists and goods between Gulf cities in minutes.

How could such a vision become reality? There are two main pillars: profit, and people.

A recent MIT study found that the traditional US venture capital model for conventional “tech” products and health care does not work for energy. The long lead times and capital intensity of the energy industry do not allow impatient investors a quick profit. A fire in a Samsung phone or a hacked internet-connected toaster is a problem; for an oil rig or nuclear power plant, a fire or hack would be a catastrophe. And it is hard for individual companies to capture profits: the solar and shale revolutions have generated tremendous value, but most has gone to the consumer.

Instead, energy research and deployment needs patient capital. Government institutions, such as the newly merged Petro­leum Institute, Masdar Institute and Khalifa University in Abu Dhabi are doing some excellent fundamental studies. Saudi Aramco has an extensive network of technology centres.

But most non-state companies do not spend enough on innovation, and the bold financing to turn promising ideas into billion-dollar start-ups is absent. Sovereign wealth funds with long-term outlooks should play a greater role but need to be more willing to take risks and move faster.

People in this region do not have the anti-oil and gas prejudice becoming more prevalent in Europe and North America. As Andrew Gould, formerly chairman of BG and Schlumberger, now a Saudi Aramco board member, said in the Financial Times last week: “If the West loses the ability to attract the brightest minds into the oil industry, it is going to gradually skew control towards Asia and the Middle East, where there is no problem attracting talent.”

Just like Silicon Valley, or the UK’s “Silicon Fen” at Cambridge, the region needs more world-class, research-oriented universities to provide technological brainpower and serendipitous breakthroughs. Science, technology and engineering need to be prestigious, luc­rative, exciting professions. As Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, said last week: “We work today to develop a generation of UAE scientists able to compete for the Nobel Prize in the next decades”.

The Gulf enjoys an abundance of hydrocarbons, sun, land and capital. But sustainable economic growth and job creation has to move beyond simple extraction and processing. Create the conditions for en­ergy innovation, and the Silicon Sand Dunes will guarantee the region’s future.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis.

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Deepwater Horizon film a grim lesson on safety for Middle East drillers

Imagine the Egyptian-American heart-throb Rami Malek playing the earnest engineer on a doomed oil rig, as a sinister Ghassan Massoud, the company man, tells him to ignore safety concerns. Deepwater Horizon, Hollywood’s take on BP’s 2010 Macondo disaster in the Gulf of Mexico, is a gripping reminder of the industry’s risks. As it shows in cinemas here, Middle East oil executives will want to avoid ending up on the big screen themselves.

The film itself stars Mark Wahlberg as the decent blue-collar technician Mike Williams, Kurt Russell as the respected veteran rig boss “Mr Jimmy” Harrell and John Malkovich as the snarling BP representative Don Vidrine.

[embedded content]

We should not look to Hollywood for nuance or scrupulous adherence to facts, particularly when it comes to depicting big oil companies. Deepwater Horizon makes some necessary simplifications. It shows moments of heroism, some real, some invented – such as Mr Williams’s rescue of the navigator Andrea Fleytas, as Ed Crooks’s excellent review in the Financial Times notes.

Most gallingly for a BP audience, all the blame is pinned on them, with Malkovich the ideal actor to menace the Transocean staff with the size of his company and the budget overruns their delays are causing. In reality, the official US government report found that Transocean and Halliburton were also partly responsible.

But Deepwater Horizon does a decent job of explaining the accident to a non-technical audience and conveying something of how the offshore drilling industry is organised, with an oil company such as BP hiring a rig from a drilling contractor, in this case Transocean.

It conveys the visceral power and terror of the explosion and fire. And – as the crew ignores anomalous pressure readings, turns off over-sensitive fire alarms and complains about but doesn’t fix malfunctioning phones – it shows the truth behind almost every serious industry accident. Such disasters are almost never the fault of villains but arise from a long chain of minor errors.

Other than in the eastern Mediterranean, there is little deepwater drilling in the Middle East and a disaster like in the Macondo Prospect might seem unlikely. But the region’s oil industry has suffered serious accidents in the past. In 1995, a well blew out spectacularly in Shell’s El Isba field in Syria. Five men died in the battle to contain the fire, whose flames could be seen from aircraft more than 400 kilometres away.

A leaking pipeline led in 2002 to a massive conflagration that destroyed a gathering centre at Kuwait’s Raudhatain oilfield, with four workers dead and 600,000 barrels of oil production knocked out. And in 2004, a massive explosion destroyed three of the six processing units at Algeria’s Skikda liquefied natural gas plant and killed 29 people.

Most recently, Iran has suffered a worrying series of accidents to petrochemical plants and pipelines. While raising suspicions of cyberattacks, these incidents seem more likely to be because facilities were built and operated shoddily under the pressure of sanctions.

A blowout of high-pressure sour gas, containing deadly hydrogen sulphide, could cause mass casualties if it occurred near a populated area. The Arabian Gulf, a sixth the size of the Gulf of Mexico, has suffered numerous oil spills, mainly from tankers. A serious leak would devastate coral reefs and dugong breeding grounds and could threaten the intakes of vital water desalination plants.

Even taking the film’s specifics with a pinch of popcorn, the Middle East’s petroleum leaders can benefit from its overall message. Safety must come first: even minor breaches cannot be tolerated and those who raise concerns have to be listened to. The best tribute to the 11 men who died is to ensure nothing like Deepwater Horizon happens here.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis.

business@thenational.ae

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Deepwater Horizon film is a grim lesson on safety for Arabian Gulf rigs

Imagine the Egyptian-American heart-throb actor Rami Malek playing the earnest engineer on a doomed oil rig, as a sinister Ghassan Massoud, the company man, tells him to ignore safety concerns. Deepwater Horizon, Hollywood’s take on BP’s 2010 Macondo disaster in the Gulf of Mexico, is a gripping reminder of the industry’s risks. As it shows in cinemas here, Middle East oil executives will want to avoid ending up on the big screen themselves.

The film itself stars Mark Wahlberg as the decent blue-collar technician Mike Williams, Kurt Russell as the respected veteran rig boss “Mr Jimmy” Harrell, and John Malkovich as the snarling BP representative Don Vidrine.

We should not look to Hollywood for nuance or scrupulous adherence to facts, particularly when it comes to depicting big oil companies. “Deepwater Horizon” makes some necessary simplifications. It shows moments of heroism, some real, some invented – like Mr Williams’ rescue of the navigator Andrea Fleytas, as Ed Crooks’ excellent review in the Financial Times notes.

Most gallingly for a BP audience, all the blame is pinned on them, with Malkovich the ideal actor to menace the Transocean staff with the size of his company and the budget overruns their delays are causing. In reality, the official US government report found that Transocean and Halliburton (which does not feature in the film) were also partly responsible.

But Deepwater Horizon also does a decent job of explaining the accident to a non-technical audience, and conveying something of how the offshore drilling industry is organised, with an oil company such as BP hiring a rig from a drilling contractor, in this case Transocean.

It conveys the visceral power and terror of the explosion and fire, the worst fear for every oil worker in the field. And – as the crew ignore anomalous pressure readings, turn off over-sensitive fire alarms, and complain about but don’t fix malfunctioning phones – it shows the truth behind almost every serious industry accident. Such disasters are almost never the fault of villains, but arise from a long chain of minor errors, breaches of safe procedures that become routine and ignoring warning signs.

Other than in the Eastern Mediterranean, there is little deepwater drilling in the Middle East, and a disaster like Macondo might seem unlikely. But the region’s oil industry has suffered serious accidents in the past.

In 1995, a well blew out spectacularly in Shell’s El Isba field in Syria. Five men died in the battle to contain the fire, whose flames could be seen from airplanes over the Mediterranean more than 400 kilometres away.

A leaking pipeline led to a massive conflagration that destroyed a gathering centre at Kuwait’s Raudhatain oilfield, with four workers dead and 600,000 barrels of oil production knocked out. And in 2004, a massive explosion destroyed three of the six processing units at Algeria’s Skikda liquefied natural gas plant and killed 29 people.

Most recently, Iran has suffered a worrying series of accidents to petrochemical plants and pipelines. While raising suspicions of cyber-attacks, these incidents seem more likely to be because of facilities built and operated shoddily under the pressure of sanctions.

A blowout of high-pressure sour gas, containing deadly hydrogen sulphide, could cause mass casualties if it occurred near a populated area. The Arabian Gulf, only a sixth the size of the Gulf of Mexico, has suffered numerous oil spills, mainly from tankers. A serious leak would devastate delicate coral reefs and dugong breeding grounds, and could threaten the intakes of vital water desalination plants.

Even taking the film’s specifics with a pinch of popcorn, the Middle East’s petroleum leaders can benefit from its overall message. Despite tight budgets, safety must come first; even minor breaches cannot be tolerated, and those who raise concerns have to be listened to. The best tribute to the eleven men who died is to ensure nothing like “Deepwater Horizon” happens here.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

business@thenational.ae

Follow The National’s Business section on Twitter

Deepwater Horizon film a grim lesson on safety for Arabian Gulf rigs

Imagine the Egyptian-American heartthrob actor Rami Malek playing the earnest engineer on a doomed oil rig, as a sinister Ghassan Massoud, the com­pany man, tells him to ignore safety concerns. Deepwater Horizon, Hollywood’s take on BP’s 2010 Macondo disaster in the Gulf of Mexico, is a gripping reminder of the industry’s risks. As it shows in cinemas here, Middle East oil executives will want to avoid ending up on the big screen themselves.

The film itself stars Mark Wahlberg as the decent blue-collar technician Mike Williams, Kurt Russell as the respected veteran rig boss “Mr Jimmy” Harrell, and John Malkovich as the snarling BP representative Don Vidrine.

[embedded content]

We should not look to Hollywood for nuance or scrupulous adherence to facts, particularly when it comes to depicting big oil companies. Deepwater Horizon makes some necessary simplifications. It shows moments of heroism, some real, some invented – such as Mr Williams’s rescue of the navigator Andrea Fleytas, as Ed Crooks’s excellent review in the Financial Times notes.

Most gallingly for a BP audience, all the blame is pinned on them, with Malkovich the ideal actor to menace the Transocean staff with the size of his company and the budget overruns their delays are causing. In reality, the official US government report found that Transocean and Halliburton, which does not feature in the film, were also partly responsible.

But Deepwater Horizon also does a decent job of explaining the accident to a non-technical audience and conveying something of how the offshore drilling industry is organised, with an oil company such as BP hiring a rig from a drilling contractor, in this case Transocean.

It conveys the visceral power and terror of the explosion and fire, the worst fear for every oil worker in the field. And – as the crew ignores anomalous pressure readings, turns off over-sensitive fire alarms and complains about but doesn’t fix malfunctioning phones – it shows the truth behind almost every serious industry accident. Such disasters are almost never the fault of villains but arise from a long chain of minor errors, breaches of safe procedures that become routine and ignoring warning signs.

Other than in the eastern Mediterranean, there is little deepwater drilling in the Middle East and a disaster like in the Macondo Prospect might seem unlikely. But the region’s oil industry has suffered serious accidents in the past.

In 1995, a well blew out spectacularly in Shell’s El Isba field in Syria. Five men died in the battle to contain the fire, whose flames could be seen from airplanes over the Mediterranean more than 400 kilometres away.

A leaking pipeline led in 2002 to a massive conflagration that destroyed a gathering centre at Kuwait’s Raudhatain oilfield, with four workers dead and 600,000 barrels of oil production knocked out. And in 2004, a massive explosion destroyed three of the six processing units at Algeria’s Skikda liquefied natural gas plant and killed 29 people.

Most recently, Iran has suffered a worrying series of accidents to petrochemical plants and pipelines. While raising suspicions of cyber-attacks, these incidents seem more likely to be because facilities were built and operated shoddily under the pressure of sanctions.

A blowout of high-pressure sour gas, containing deadly hydrogen sulphide, could cause mass casualties if it occurred near a populated area. The Arabian Gulf, only a sixth the size of the Gulf of Mexico, has suffered numerous oil spills, mainly from tankers. A serious leak would devastate delicate coral reefs and dugong breeding grounds and could threaten the intakes of vital water desalination plants.

Even taking the film’s specifics with a pinch of popcorn, the Middle East’s petroleum leaders can benefit from its overall message. Despite tight budgets, safety must come first: even minor breaches cannot be tolerated and those who raise concerns have to be listened to. The best tribute to the 11 men who died is to ensure nothing like Deepwater Horizon happens here.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

business@thenational.ae

Follow The National’s Business section on Twitter

Gas industry has a great story to tell – but doesn't

Fracking for natural gas does not enjoy good press: 53 per cent of Americans oppose it, only slightly better than the 57 per cent who are against despised coal-mining. The United Kingdom’s opposition Labour Party has pledged to ban fracking in the (unlikely) event it wins power. The industry is delivering more gas at lower prices than ever before, but it is losing the battle for public opinion. And it does not seem to care.

In newspaper articles and at industry conferences, gas companies makes their case in fact-heavy, logical presentations. On television, in pursuit of media “balance”, an impassioned environmentalist or concerned local resident is interviewed alongside a grey-suited, earnest corporate executive.

The gas industry has a great story to tell. Largely because of hydraulically fracturing shale rocks, North American production has boomed and consumers have enjoyed a windfall from sustained low prices. US exports of liquefied natural gas are now turning up around the world, including in Dubai, Kuwait, Jordan and Egypt.

As the UK’s own gas production runs down, it has stepped up imports. In September, the chemicals firm Ineos received a shipment of US ethane – probably mostly derived from shale gas – at its Grangemouth industrial centre in Scotland. According to Ineos, Grangemouth generates 3 per cent of Scotland’s GDP and employs 1,300 people. Last week, the UK firm Cuadrilla was given permission to hydraulically fracture four wells in Lancashire in the north of England.

Gas, clean and highly efficient, is far better for the environment than coal – its main competitor. It does not displace renewable energy sources, such as wind and solar, but works alongside them. Local environmental impacts of shale gas extraction can be managed with careful regulation and responsible operatorship.

These facts, enshrined in dozens of peer-reviewed scientific papers and independent reports, have failed – and will continue to fail – to convince shale gas opponents. Hardline environmentalists and climate change deniers shout at each other over the heads of the moderate majority, vulnerable to emotive fearmongering.

The US gas companies have not helped themselves. They have failed to call out a few cowboy operators who tarnished the shale business in its early days. Reflexively fighting any regulation, even reasonable ones, they create the impression of having something to hide.

The gas companies and their home states, such as Texas and Oklahoma, are strong backers of Donald Trump. But his energy “policy” – inasmuch as any coherent programme emerges from a mishmash of campaign asides – would promote coal, in practice at the expense of gas. This approach will not win much sympathy from a likely president Hillary Clinton.

Instead, gas companies could rebuild a coalition with moderate environmental groups, as between 2007 and 2010 when Chesapeake Energy, one of the largest shale drillers, donated to the Sierra Club. But this has to avoid “greenwashing” and undue corporate influence.

Demonstrating carbon capture on gas-fired power would undercut the argument that shale gas is incompatible with long-term action on climate change.

Russia has sought to protect its own gas exports by backing eastern European anti-shale groups, and has sought a rapprochement with the US Green Party presidential candidate Jill Stein. National security hawks appreciate that lower European dependence on Russian gas is a good thing.

Local communities should benefit from economic development and jobs, as Ineos has stressed for Grangemouth. As shale gas operations proceed, tax revenue and employment arrive, and negative impacts are seen to be minor, future projects may go ahead more smoothly. The GMB Union, the third-largest donor to the UK Labour Party, praised the government’s decision on Cuadrilla as “pragmatic” and said Labour’s proposed ban was “madness” and “nonsense”.

Madness and nonsense it may be, but the gas industry is winning the argument too slowly to be a commercial and environmental success. It needs a radical change in its media, public and political outreach to make its case on both sides of the Atlantic.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

business@thenational.ae

Follow The National’s Business section on Twitter

Gas industry has a great story to tell – but doesn't

Fracking for natural gas does not enjoy good press: 53 per cent of Americans oppose it, only slightly better than the 57 per cent who are against despised coal-mining. The United Kingdom’s opposition Labour Party has pledged to ban fracking in the (unlikely) event it wins power. The industry is delivering more gas at lower prices than ever before, but it is losing the battle for public opinion. And it does not seem to care.

In newspaper articles and at industry conferences, gas companies makes their case in fact-heavy, logical presentations. On television, in pursuit of media “balance”, an impassioned environmentalist or concerned local resident is interviewed alongside a grey-suited, earnest corporate executive.

The gas industry has a great story to tell. Largely because of hydraulically fracturing shale rocks, North American production has boomed and consumers have enjoyed a windfall from sustained low prices. US exports of liquefied natural gas are now turning up around the world, including in Dubai, Kuwait, Jordan and Egypt.

As the UK’s own gas production runs down, it has stepped up imports. In September, the chemicals firm Ineos received a shipment of US ethane – probably mostly derived from shale gas – at its Grangemouth industrial centre in Scotland. According to Ineos, Grangemouth generates 3 per cent of Scotland’s GDP and employs 1,300 people. Last week, the UK firm Cuadrilla was given permission to hydraulically fracture four wells in Lancashire in the north of England.

Gas, clean and highly efficient, is far better for the environment than coal – its main competitor. It does not displace renewable energy sources, such as wind and solar, but works alongside them. Local environmental impacts of shale gas extraction can be managed with careful regulation and responsible operatorship.

These facts, enshrined in dozens of peer-reviewed scientific papers and independent reports, have failed – and will continue to fail – to convince shale gas opponents. Hardline environmentalists and climate change deniers shout at each other over the heads of the moderate majority, vulnerable to emotive fearmongering.

The US gas companies have not helped themselves. They have failed to call out a few cowboy operators who tarnished the shale business in its early days. Reflexively fighting any regulation, even reasonable ones, they create the impression of having something to hide.

The gas companies and their home states, such as Texas and Oklahoma, are strong backers of Donald Trump. But his energy “policy” – inasmuch as any coherent programme emerges from a mishmash of campaign asides – would promote coal, in practice at the expense of gas. This approach will not win much sympathy from a likely president Hillary Clinton.

Instead, gas companies could rebuild a coalition with moderate environmental groups, as between 2007 and 2010 when Chesapeake Energy, one of the largest shale drillers, donated to the Sierra Club. But this has to avoid “greenwashing” and undue corporate influence.

Demonstrating carbon capture on gas-fired power would undercut the argument that shale gas is incompatible with long-term action on climate change.

Russia has sought to protect its own gas exports by backing eastern European anti-shale groups, and has sought a rapprochement with the US Green Party presidential candidate Jill Stein. National security hawks appreciate that lower European dependence on Russian gas is a good thing.

Local communities should benefit from economic development and jobs, as Ineos has stressed for Grangemouth. As shale gas operations proceed, tax revenue and employment arrive, and negative impacts are seen to be minor, future projects may go ahead more smoothly. The GMB Union, the third-largest donor to the UK Labour Party, praised the government’s decision on Cuadrilla as “pragmatic” and said Labour’s proposed ban was “madness” and “nonsense”.

Madness and nonsense it may be, but the gas industry is winning the argument too slowly to be a commercial and environmental success. It needs a radical change in its media, public and political outreach to make its case on both sides of the Atlantic.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

business@thenational.ae

Follow The National’s Business section on Twitter

Gas industry needs to rethink its media approach

Fracking for natural gas does not enjoy good press: 53 per cent of Americans oppose it, only slightly better than the 57 per cent who are against despised coal-mining. The United Kingdom’s opposition Labour Party has pledged to ban fracking in the (unlikely) event it wins power. The industry is delivering more gas at lower prices than ever before, but it is losing the battle for public opinion. And it does not seem to care.

In newspaper articles and at industry conferences, gas companies makes their case in fact-heavy, logical presentations. On television, in pursuit of media “balance”, an impassioned environmentalist or concerned local resident is interviewed alongside a grey-suited, earnest corporate executive.

The gas industry has a great story to tell. Largely because of hydraulically fracturing shale rocks, North American production has boomed and consumers have enjoyed a windfall from sustained low prices. US exports of liquefied natural gas are now turning up around the world, including in Dubai, Kuwait, Jordan and Egypt.

As the UK’s own gas production runs down, it has stepped up imports. In September, the chemicals firm Ineos received a shipment of US ethane – probably mostly derived from shale gas – at its Grangemouth industrial centre in Scotland. According to Ineos, Grangemouth generates 3 per cent of Scotland’s GDP and employs 1,300 people. Last week, the UK firm Cuadrilla was given permission to hydraulically fracture four wells in Lancashire in the north of England.

Gas, clean and highly efficient, is far better for the environment than coal – its main competitor. It does not displace renewable energy sources, such as wind and solar, but works alongside them. Local environmental impacts of shale gas extraction can be managed with careful regulation and responsible operatorship.

These facts, enshrined in dozens of peer-reviewed scientific papers and independent reports, have failed – and will continue to fail – to convince shale gas opponents. Hardline environmentalists and climate change deniers shout at each other over the heads of the moderate majority, vulnerable to emotive fearmongering.

The US gas companies have not helped themselves. They have failed to call out a few cowboy operators who tarnished the shale business in its early days. Reflexively fighting any regulation, even reasonable ones, they create the impression of having something to hide.

The gas companies and their home states, such as Texas and Oklahoma, are strong backers of Donald Trump. But his energy “policy” – inasmuch as any coherent programme emerges from a mishmash of campaign asides – would promote coal, in practice at the expense of gas. This approach will not win much sympathy from a likely president Hillary Clinton.

Instead, gas companies could rebuild a coalition with moderate environmental groups, as between 2007 and 2010 when Chesapeake Energy, one of the largest shale drillers, donated to the Sierra Club. But this has to avoid “greenwashing” and undue corporate influence.

Demonstrating carbon capture on gas-fired power would undercut the argument that shale gas is incompatible with long-term action on climate change.

Russia has sought to protect its own gas exports by backing eastern European anti-shale groups, and has sought a rapprochement with the US Green Party presidential candidate Jill Stein. National security hawks appreciate that lower European dependence on Russian gas is a good thing.

Local communities should benefit from economic development and jobs, as Ineos has stressed for Grangemouth. As shale gas operations proceed, tax revenue and employment arrive, and negative impacts are seen to be minor, future projects may go ahead more smoothly. The GMB Union, the third-largest donor to the UK Labour Party, praised the government’s decision on Cuadrilla as “pragmatic” and said Labour’s proposed ban was “madness” and “nonsense”.

Madness and nonsense it may be, but the gas industry is winning the argument too slowly to be a commercial and environmental success. It needs a radical change in its media, public and political outreach to make its case on both sides of the Atlantic.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

business@thenational.ae

Follow The National’s Business section on Twitter

Real challenge of the Algiers agreement will be deciding who cuts back

After April’s debacle in Doha, Opec countries will be relieved that last week’s meetings passed without a battle of Algiers. Instead, they reached an unexpected agreement on limiting production. But it will take diplomatic mastery to turn this deal into a full accord with a real impact on oil markets at its congress in Vienna in November.

Opec agreed to limit its production to 32.5 million to 33 million barrels per day, down from a Reuters estimate of 33.6 million bpd in September. Iran, recovering from sanctions, and Nigeria and Libya, whose outputs have tumbled because of insecurity, would be allowed to produce at “maximum levels that make sense”.

The difficult bargaining is yet to come. Will Saudi Arabia, along with its Gulf allies the UAE and Kuwait, be expected to shoulder all the required cuts? Or will they be more evenly distributed? The organisation has not had formal per-country quotas since 2011. A lot has changed since then – Venezuelan production has slumped, Iraq has surged, Iran has been in and out of sanctions, and the GCC has ramped up to fill gaps elsewhere.

Saudi output would normally fall in winter anyway, as demand for oil to power air conditioning drops, but the kingdom will have to up production again next summer. But with Libyan production recovering in September as oil ports reopened, who will accommodate a recovery from Libya or Nigeria?

Non-Opec Russia could also be part of a deal, but its output is also likely to rise sharply in coming months, perhaps by as much as 400,000 barrels per day, as new fields enter service. The idea of roping in Oman and Mexico seems to have faded. And historically, Opec compliance has tended to wane following deals, as the temptation to cheat becomes irresistible.

Oil prices gained about 5 per cent on the news of the agreement, sketchy though it remains. Any lasting impact will depend on concluding and implementing an effective deal in Vienna. But announcements so far leave the impression that Saudi Arabia has conceded on two fronts.

The Doha talks foundered on Saudi insistence that Iran be part of the freeze, but the Saudis have now agreed that Iran would be exempt from cuts. This concession to Iran may be mostly symbolic – Iranian output has been flat at about 3.6 million barrels per day since May, well short of Tehran’s aspiration of 4 million to 4.2 million bpd, and does not seem likely to rise much in the short term, until it can attract new international investment. In return, Iran agreed to use third-party estimates of production rather than its own reported figures, but there is little difference between these over the past four months.

Iraq, one of the biggest gainers in Opec in recent years despite its fragile economy and politics, is also a sticking point. The combative new oil minister Jabbar Al Luaibi has implied Iraq’s oil output is underestimated by about 300,000 barrels per day.

The concession to shale oil producers is more serious. Opec’s decision in late 2014 not to limit production even as prices fell heralded a strategy of smoking out shale companies. But despite losses and bankruptcies, the drop in US production has been much slower, the fall in costs more dramatic, the continued appetite of financiers greater, than anticipated. American output is still higher than it was in 2014 at the start of the price slump, and shares of share oil companies rose 8.3 per cent on news of the deal.

Why would Saudi Arabia, after its insistence in April, now be more accommodating? A change in thinking within the kingdom’s political leadership, encouragement from Russia, and a greater urgency for immediate finance may have contributed. But with Iran holding its ground and shale oil set to counter-attack, Riyadh takes a risk in proceeding to Vienna before a decisive victory in the oil market.

Robin Mills is the chief executive of Qamar Energy and the author of The Myth of the Oil Crisis

In May 2007, dark rainclouds collected over Palmyra in the Syrian Desert. Bored Syrian conscripts in ancient costumes stood around like extras in a low-budget historical drama. Bashar Al Assad was meeting the emir of Qatar, a meeting inconceivable today.

The clouds of war have since blown back and forth several times across the historical city of Palmyra and its surrounding gasfields. But even as Mr Assad and his Russian backers unravel Syria’s latest ceasefire, various conspiracy theorists persist in blaming this complex, multifaceted war on a single cause: a gas pipeline.

This theory has it that Qatar wanted to export its vast gas reserves to Europe via Syria. The US supported this project to forestall Iran. Iran itself encouraged Mr Assad to reject the pipeline in favour of its own plans to send gas to the Mediterranean; Russia, too, wanted to keep Qat­ari gas out of its plum European markets. Qatar then turned to supporting the Syrian uprising to overthrow Mr Assad and remove the obstacles to its pet project.

Even Al Jazeera carried this story, in a 2012 piece by Pepe Esco­bar headlined “Syria’s Pipelineistan War”, which revealingly concentrates on Iran and Turkey, not Qatar.

True believers in such conspiracy theories are not deterred by logic. They can find the nefarious hand of oil and gas companies and the US government in any conflict from Mali to Gaza. As Alexander Cockburn wrote of The New York Times foreign correspondent C L Sulzberger, his role was “to fire volley after volley of cliché into the densely packed prejudices of his readers”.

Any theory that links US hege­monic imperialism, “Big Oil” skulduggery and Gulf machinations is catnip to western leftist armchair analysts. The Syria gas notion is supported by enough scraps of evidence and half-truths to lend an air of plausibility. There were indeed discussions on an Iran-Iraq-Syria pipeline, and Iranian exports to parts of Iraq are due to start shortly.

So the notion may have clouded the Syrian picture for serious analysts and casual observers, and it is still worth dispelling it.

Qatar has not even been able to export its gas to neighbouring Bahrain and Kuwait owing to Saudi opposition. What are the chances it could have constructed such a pipeline across 1,500 kilometres of Saudi territory to Jordan and on to Syria?

Qatar has no problem exporting its gas, in liquefied form, to Europe and the Far East, to a diversity of customers, with no dependence on risky overland pipelines. But if Doha had wanted that much to build its Syrian pipeline, it would have been easier to make the Assads an offer they could not refuse, rather than sponsoring an uncertain and ruinous uprising.

A quick look at a map demolishes the notion of Syria as a key gas nexus. Syria is a dead end: any pipeline to Europe would have to go onwards via Turkey. Iran has a border with Turkey and already sends gas there; it has no need to go via Syria, nor should US officials have had to devote much concern to blocking such a pipeline.

The supposedly competing Iranian route rose to prominence only in July 2011, with the Syrian revolt already under way, and seems more a gesture of Iranian solidarity to its allies in Baghdad and Damascus. The short length of its pipeline to Iraq has been repeatedly delayed by attacks in the volatile province of Diyala; a continuation through Anbar in western Iraq would have been even more vulnerable.

The theory, as with so much misinformation about the Syrian conflict, is dangerous. It turns Mr Assad from perpetrator to victim. It paints the Syrian opposition as unwitting pawns of foreign agents. And in simplifying the causes of a very complex war, it makes a diplomatic solution even less likely.

Robin Mills is the chief executive of Qamar Energy, and author of The Myth of the Oil Crisis