Electric power accounts for most energy investment planned in the Middle East and North Africa (MENA) during the next 5 years as oil and gas spending recovers in the region’s major oil-producing countries.
Arab Petroleum Investments Corp. (Apicorp), Dammam, projects 5-year energy spending of $919 billion in MENA countries. Of that, $345 billion is for projects under execution, and $574 billion is for planned development.
The development bank expects investment in Saudi Arabia to total $149 billion during the period, much of it in upstream oil and gas. It sees a similar pattern in the United Arab Emirates, where spending will total $72 billion.
Egypt, too, has investment plans totaling $72 billion, more than half for electric power and much of the rest for natural gas.
Kuwait’s spending plans total $59 billion over the next 5 years, more than half for oil projects. The country wants to raise production capacity to 4 million b/d.
In Algeria, development of peripheral accumulations around Hassi Messaoud field accounts for much of the upstream oil and gas portion of spending estimated at $59 billion, according to Apicorp.
Spending will total $67 billion in Iran, although plans are susceptible to the reimposition of sanctions, and $47 billion in Iraq, where oil investment will total $27 billion. Apicorp notes that political risk remains high in both countries.
The firm points out that oil and gas spending remains sensitive to oil prices and that the cost of capital is rising.
Gulf Cooperation Council countries issued record debt exceeding $50 billion in 2017, breaking the prior year’s record of $37 billion, Apicorp says.
Saudi Arabia raised more than $21 billion in debt last year, followed by Abu Dhabi with $10 billion, Kuwait and Oman with $8 billion each, and Bahrain with $3 billion.
Apicorp further notes the MENA region’s “fragile” geopolitical environment.
“Persistent conflicts in the region are creating instability that deters investors and causes them to become cautious in investing in the entire region,” it says.
