Maldives’ oil spend spikes in line with world oil prices

Saudi Arabian oil exporter Aramco has expressed unease about the global economy as oil prices have continued to rise, as unrest drops the rate of production in Africa and the Middle East.

Prices reached US$124 a barrel yesterday, after peaking earlier this month at US$127. Worldwide output fell 700,000 barrels in March amid ongoing political turmoil in Libya, Yemen, Syria, Nigeria and the Ivory Coast.

CEO of Aramco Khalid al-Falih told an industry gathering in South Korea that “We are not comfortable with oil prices where they are today… I am concerned about the impact it could have on the global economy.”

The Maldivian economy is dependent on oil to such an extent that is spends a quarter of its GDP on it – US$245 million – the vast majority on marine diesel, making imported energy one of the single largest drains on the country’s economy.

Customs documents obtained by Minivan News in January showed that Maldives was spending almost US$100,000 more per day more on fossil fuels than it was in the summer of 2010. At that time, oil was US$86 a barrel.

By the same calculations but with today’s oil price, the Maldives is paying an additional US$450,000 per day for oil compared to summer prices last year.

In Male’, the increase in price has compelled the State Electric Company Limited (STELCO) to increase the fuel surcharge component of its electricity prices, with Haveeru reporting a STELCO official as acknowledging an increase in complaints about the cost of their bills price. The fuel surcharge reached Rf 1.41 per kilowatt hour in March, dropping slightly to Rf 1.27 in April.

“The rise in fuel prices leads to an increase in the fuel surcharge, which eventually push the electricity charges up,” the official said.

The Maldives has meanwhile pledged to become carbon neutral by 2020, but little has been done to wean the country from the growing financial burden of its oil addiction.

In a previous interview with Minivan News, President Nasheed’s Energy Advisor Mike Mason suggested that spiralling oil costs could prove to be a strong argument for a return to sailing.

“I think there is a huge opportunity to take a knowledge of sail, wind and current – the thinking that has served the Maldives well for 2000 years – and apply modern technology such as solar to create a new transport paradigm. A sailing vessel with a modern hull, utilising modern technology can reach 30-40 knots, and would greatly reduce the reliance on diesel,” Mason said at the time.