Upstream opportunities in the region's most enticing prospects - Saudi Arabia, the UAE and Kuwait - are limited. However, among the less well endowed, the acceleration in exploration activity has been marked, spurred both by high crude prices and in many cases by declining production from existing assets. Bid rounds are under way in Egypt, Oman and Yemen and are planned imminently in Syria and Libya - the latter well endowed but under-explored. Even the oil shale of Jordan is receiving fresh attention.

Tripoli's international rehabilitation has given renewed impetus to the restoration of production levels, which slumped during years of sanctions due to lack of technology and investment. Libya is frequently cited as one of the most promising exploration plays in the world. Its potential was reflected in the response to its first two licensing rounds in 2005, under a new exploration and production sharing agreement (EPSA) model, known as EPSA-4. About 120 companies applied to prequalify during the first round. The US' Occidental Petroleum Corporation eventually emerged victorious, with an interest in nine of the 15 blocks awarded. About 100 expressed interest during the second auction, which saw 23 concessions let in October. A third licensing round had been due to be launched in early 2006, but the government announced in December that the process would be delayed and a new contract structure drawn up. Further exploration activity will be generated by the return after a 19-year absence of the Oasis Group of US oil companies to its Al-Waha concessions, agreed in December.

In a very different position is neighbouring Egypt, which has seen oil production fall significantly - to about 590,000 barrels a day (b/d) in 2004 from close to 1 million b/d a decade earlier - although a considerable amount of gas has been found. Licensing activity has been stepped up in an attempt to reverse the decline. Bids are due in mid-February for 13 blocks being offered by Egyptian General Petroleum Corporation in the Gulf of Suez, the Eastern Desert and the Western Desert, while agreements for exploration in three blocks in the Western Desert were signed in March and four more, in various locations, in August. In 2003, Cairo created Ganoub el-Wadi Petroleum Company (Ganope) to spearhead exploration in neglected Upper Egypt.

Syria is also auctioning new acreage to stem falling output, which is running at about 460,000 b/d, down from 563,000 b/d in 1996. Bids were submitted in late December for nine onshore blocks offered as part of a fifth licensing round, and a bid round for a number of offshore blocks is due to be launched in 2006. The country's capacity has suffered from maturing fields, international isolation and a shortage of major new discoveries, causing several international oil companies (IOCs) to withdraw from their concessions. Damascus has amended the terms of its production sharing contracts in an effort to lure in foreign firms.

Yemen is another regional producer facing a decline in its economic lifeblood. Output dropped to 429,000 b/d in 2004 from a peak of 450,000 b/d in 2000. Two licensing rounds were completed in 2005 and bids are due in mid-February for a third. The government has held up the transparency of the licensing process as one of the attractions for IOCs. However, foreign companies will not be encouraged by a series of recent disputes between Sanaa and operators over existing concession agreements. Yemen Exploration & Production Company, a US joint venture of Hunt Oil and ExxonMobil Corporation, has filed arbitration against the government over its removal from block 18.

Oman's output is also on a downward path, standing at about 770,000 b/d in 2005, compared with 785