The Gulf Co-operation Council’s (GCC) committed investments in the energy sector amounts to $171bn, representing about 50% of the total in the Middle East and North Africa (Mena) region, according to Arab Petroleum Investments Corporation (Apicorp). (The committed) investments in the (Mena) energy projects currently under execution are estimated at $345bn for the five-year period.
The oil sector accounts for the largest share of investments at $131bn, with the majority in upstream projects, it said in a report. Total committed gas and power investments are approximately $106bn and $95bn respectively, followed by chemicals at $14bn. “The GCC represents $171bn in committed investments, approximately 50% of the Mena total,” Apicorp said, adding “the GCC is driving investment in the region and will be well positioned on the back of increased prices.”
The planned Mena investments in the energy sector are estimated at $574bn for the next five years. The power sector accounts for the largest share of investments, at $187bn. The oil and gas sectors will represent $169bn and $150bn respectively, with the remaining investments in petrochemicals. Projects under study represent by far the largest portion of planned investments, at $251bn, it highlighted. Contracts under design and EPC (engineering, procurement and construction) phases are more likely to materialise in the medium term and projects under contract bid amount to $92bn, while those under design reach $86bn.
“Overall, according to our estimates, $574bn could be invested over the next five years, over and above what has already been committed, thereby bringing total committed and planned investments up to $919bn,” the report said. Apicorp said around 80% of the investments are government led whilst the remainder is a combination of either wholly private sector developments or public-private partnerships.
“While Mena is pushing ahead with its investment plans, we believe several challenges and constraints will prove pivotal in the medium term,” it said.Highlighting that global investments in the oil and gas sector are closely interlinked with oil prices, the report said prices have recovered and remained stable in 2017 and are expected to remain range bound around the current level for now. Privileged by its high reserves and low debt to GDP ratios, the GCC issued record debt of more than $50bn in 2017, surpassing the previous year’s record of $37bn, it said.
Sources and photo-credits: Gulf Times