Energy producers in the Middle East and North Africa (Mena) region have been buoyed by robust oil and gas prices in 2022, a fact that is reflected in both their profitability and capital expenditure budgets for the year.
About $14.1bn-worth of oil and gas contracts were awarded in the first half of 2022, of which nearly half was contributed by Saudi Arabia’s market, driven by awards for the Zuluf oil field development.
Qatar, also in spending mode, is in second place, with its state enterprise earmarking a 2021-25 capital expenditure budget of $82.5bn. Taken together, Saudi Aramco and QatarEnergy represented about 60 per cent, or $5.5bn, of contracts awarded in the first half of 2022.
Iraq and the UAE, with $2.2bn and $1.4bn of contract awards, take third and fourth places in terms of the volume of oil and gas project spending during the period.
Upstream investment has been propelled by the need to meet rising demand, both at home and abroad, and replace resources lost through natural depletion. Rising investment in gas projects over the past five years comes as international oil companies shift their portfolios towards gas production, which is seen as a cleaner alternative to oil.
More recently, the ongoing Ukraine war has prompted European states to look at countries in the region as a source of hydrocarbons to replace Russian energy imports.
About $836.6bn-worth of oil, gas and petrochemicals projects were planned or under way across the Mena region as of May 2022
Although the pace of global growth is set to slow in the coming years, the Mena region’s prospects are still better than two years ago thanks to the region’s oil exporters, particularly the GCC, Iraq and Algeria.
Mena countries will also shoulder the lion’s share of future global oil and gas investments.
The Arab Petroleum Investments Corporation expects Mena energy investments (oil, gas, petrochemicals and power) to increase by 9 per cent to more than $875bn over the next five years.
Meanwhile, the desire to develop income streams other than crude oil exports is seeing the launch of a new generation of downstream projects, from new greenfield petrochemical facilities and refinery expansions to the integration of existing refineries with new petchem plants. These new strategies will lead to oil companies becoming diversified energy firms, with activities stretching from oil production and solar energy to technology development and plastics production.
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