Planned regional energy spending to reach $622bn

21 March 2017

$337bn-worth projects currency underway

Around $622bn in investment will be channelled into the Middle East energy over the next five years, with the power sector dominating spending at $207bn, according to the Arab Petroleum Investments Corporation (Apicorp).

Around $195bn will be pumped into the regional oil industry and $159bn invested into gas projects, which countries such as Saudi Arabia have begun prioritising to generate cleaner, more efficient power.

Projects worth $282bn are currently under study in the region, however not all are expected to move into the execution phase.

“The GCC power sector has the highest percentage of projects in the pipeline. If you look at some countries like Saudi Arabia, they’re trying to prioritise gas projects at the moment,” says Bassam Fattouh, energy sector specialist and external advisor to Apicorp.

“The conversion from planned to committed in certain countries like Kuwait, Saudi Arabia is quite large,” he added.

Regional heavyweights Saudi Arabia and Iran - which is undertaking a raft of projects under its updated petroleum contract - will contribute to 37 per cent of planned investments with spending projected at $124bn and $103bn over the next five years.

The Saudi-based development bank estimates that projects under engineering, procurement and construction phase amount to $125bn and those under design would reach $78bn.

“Some countries are likely to have projects materialise over the medium-term because their economies are slightly more stable, they experience slightly less risks. The quality of data we have for the GCC is better and we can expect higher probability from those countries,” says Apicorp energy analyst Mustafa Ansari.

The MENA region has around $337bn-worth of committed investments, of which $174bn, representing more than 50 per cent are from GCC for the five-year period ending in 2021.

Regionally, oil represents $121bn, while gas investments stand at $108bn for the time period. Investments committed to the power sector amount to $91bn, while chemicals are valued at $17bn.

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