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Why Masdar is about more than realty

Why Masdar is about more than realty

Plans for the construction of Abu Dhabi’s ambitious eco city have been scaled back. But that doesn’t diminish the wider purpose of the initiative: To preserve the UAE’s energy-producer status after the oil runs out.

March 25, 2010 6:20 by

Countries may still find new sources of oil. Last month, Dubai announced it had found oil offshore. But Jones says that with all of the money invested in exploration, most of the low-hanging fruit is gone. The new deposits are smaller and the cost of discovery and extraction — is higher. Offshore oil deposits are also more expensive to maintain.

“If you’re looking at suppliers as an importer then you want to diversify your producers. If you are a producer, you want to get your oil out of the ground so you can diversify your cash.”

Unlike oil and gas, non-hydrocarbon sources of energy can vary greatly depending on geography. If Abu Dhabi wants to maintain its producer status, it will have to invest in multiple technologies to ensure its subsidiaries and investment properties have the kind of distribution oil now enjoys.

“You can’t say wind is always cheaper than solar or gas. A lot of people put up wind turbines in Europe and if it’s in a good place for wind then the energy is cheap,” said Jones of the IEA. “If not, then the cost of electricity is much higher.”

That high cost, business or otherwise, is something the UAE seems determined to avoid.

Updated from an article that first appeared in Trends magazine

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