By continuing to use this site, you accept the Terms of Use, and Privacy Policy associated with it. We use cookies to improve your user experience, perform audience measurements and allow you to share content on social networks: please see our Cookie Policy to find out more here. Please click on the button to give your consent.

Models for the economies and energy systems of GCC countries

About the workshop 

The workshop was hosted by KAPSARC in March 2015. It was conducted under the rule of capturing the discussion on a non-attribution basis. Thirty international and local experts participated

Summary for policymakers

Members of the Gulf Cooperation Council (GCC) play a key role in the global energy system. Collectively, in 2014 the six countries supplied the global market with over 28 million barrels of oil equivalent per day of oil and natural gas. They also hold approximately 30% of global proven oil reserves, according to the 2014 BP Statistical Review. The oil and natural gas sector dominates local economic activity, constituting 44% of the region’s gross domestic product and 82% of government revenues in 2013. Beyond the upstream sector, a substantial share of the non-oil exports are still derived from crude oil and natural gas; the region is a large exporter of refined products and petrochemicals. Additionally, public government expenditure has been the main driver of infrastructure and services development in recent years. Thus, the activity of oil and gas production permeates almost the entire economy. The high dependence on hydrocarbon export revenues has placed economic diversification among the key issues for local policymakers.

Also, the region has experienced significant economic growth throughout most of the last decade, driven by the rise in oil prices. High oil revenues have allowed for an increase in public investment, and for local governments to bear the costs of providing inexpensive fuel and electricity to consumers. For the most part, households and local industries enjoy a set of administered energy prices that are well below global market values. These prices, which are intended to catalyze industrialization and achieve social objectives, have economy-wide ramifications. Economic growth and low energy prices have contributed to a rapid increase in domestic energy use. Some of the solutions proposed by policymakers to curb regional oil and gas consumption have included the adoption of alternative power generation technologies and enforcing higher efficiency standards. 

In recent years, models have been built for individual countries within the GCC to assess how sectors in an economy interact by characterizing the operational and investment decisions in the energy system. These models are diverse in methodology and the resolution at which the economy is represented; some take a partial view of the economy while others find an economy-wide general equilibrium. 

Although the members of the GCC share the challenges and opportunities of hydrocarbon-driven economies and face similar development issues, no model has been built for the aggregate GCC energy economy. Initiatives that propose a shared energy infrastructure (regional gas and electricity grids) may not have been able to assess the costs and benefits at the level of the aggregate economy of the region. However integrated, shared infrastructure requires at least three layers of foundation to succeed: 

- Common definitions and transparent sharing of data 

- Consistent and, ideally, integrated models of the member country energy economies 

- Consistent and harmonized regulatory 

regimes that do not create exploitable arbitrages KAPSARC’s research is seeking to drive the first pre-requisite by building models of the energy economies of the GCC members in partnership with local think tanks and research institutions. Calibration of these models will expose differences in data definitions and availability that can be harmonized before proposing policies that optimize the benefits of shared infrastructure.

Dataset schema

JSON Schema

The following JSON object is a standardized description of your dataset's schema. More about JSON schema.