When Nations Need To Go Beyond Oil

Gulf states put new emphasis on growing local industries

This article is adapted from one that first appeared in Middle East Economic Survey.

There’s a certain symbolism in the role South Korea has taken on in helping the United Arab Emirates launch its nuclear power industry. South Korea – a relative newcomer to nuclear power compared to bigger rivals like the United States, Japan, or France – grew its own industry from the ground up in order to cut energy costs, create new jobs at home, and boost domestic growth.

Norway developed local companies in fields that supported the oil and gas industry

Today, a Korean consortium led by stateowned electric utility Korea Electric Power Company (KEPCO), is working with the UAE and its Emirates Nuclear Energy Corporation (ENEC) to do the same thing. The joint Korean and ENEC team is building four facilities in western Abu Dhabi with the help of local labor and companies, part of the Emirates' own efforts to increase its industrial base and employment and generate more electricity to power the nation’s economic growth moving forward. The first reactor in Barakah is scheduled to be completed in 2017; the other three are slated for 2020.

The need has never been greater for Gulf region nations like the UAE to decrease their dependence on oil and gas production and broaden the industrial base of their economies. With the decline in crude oil prices over the past two years, some of the richest Gulf nations are experiencing budget deficits and unemployment for the first time in decades. In fact, almost all major oil producing nations – from Venezuela, to Indonesia – are under pressure from their constituents to expand their manufacturing sectors, create more good-paying jobs, and increase local content across their oil and gas value chain.



Nations globally are pushing producers for more local content and jobs

Source: Oliver Wyman analysis, Saudi Vision 2030, ANP, PROMINP, Eskom, IPIECA, Global Local Content Council, World Nuclear Association, and published reports

Why oil-rich nations needed to diversify their economies after drop in oil prices in 2014.

About authors

Bruno Sousa is a Dubai-based principal, Volker Weber is a Dubai-based partner, and Saji Sam is a Dubai-based partner in Oliver Wyman's Energy practice.

When Nations Need To Go Beyond Oil