JEDDAH: Saudi Arabia will allocate nearly $130 billion in new energy investment during 2011-2015 period, retaining its leading role in the sector among the pan-Arab countries, data from Arab Petroleum Investment Corporation (Apicorp), an affiliate of the 10-nation Organization of Arab Petroleum Exporting Countries, showed.
Apicorp also sharply revised up its forecast for pan-Arab potential energy investment to $530 billion during 2011-2015 against $470 billion during its previous review.
It said the upward review was prompted by the fact that global energy demand is recovering from the 2008 financial distress and oil prices are expected to stabilize at relatively high prices.
The study also noted that despite heightened uncertainty stemming from the ongoing turmoil in some parts of the Arab world, global economic and financial fundamentals will continue supporting the resumption of energy investment growth in the region.
"On this basis, we expect growth in energy capital investments to continue recovering from the contraction that occurred during the crisis…. the total amount of investments shelved or postponed is expected to drop to 19 percent of potential, compared to 29 percent in the last review. As a result, actual capital requirements should amount to $430 billion for the period 2011-2015, compared to $335 billion in the last review," the report said.
Its estimates showed nearly 70 percent of the investments are located in five countries – Saudi Arabia, UAE, Qatar, Algeria and Egypt. The GCC area accounts for nearly two thirds of the region’s potential and within that region, the UAE takes over Qatar as the second biggest potential energy investor.
"In Saudi Arabia, potential capital investment is estimated at $130 billion. With Saudi Aramco and SABIC reaffirming their commitment to implementing their investment programs, shelved or postponed projects are expected to decline to six percent of potential, compared to 21 percent in the previous review," it said.
"In the UAE, revised potential investment totals $74 billion with projects made redundant amounting to 20 percent."
The report estimated potential capital investment in Qatar at $70 billion, becoming the third largest investor in the Middle East. "In this country, we continue to assume that the moratorium on further development of the North Field (beyond the Pearl and Barzan projects) will not be lifted during the review period," it said.
"Accordingly, shelved and postponed projects, even though much less than the 36 percent found in the last review, are likely to remain relatively high at around 32 percent of potential."
In Egypt, a potential investment of $42 billion is expected, that, despite recent internal turmoil, project redundancy will be contained to 17 percent of potential.
However, Apicorp said Kuwait has the highest rate of postponed and shelved projects in the region in the latest review, due to dynamics of domestic politics and policy.
In Algeria, Sonatrach is anticipated to recover fully from its 2010 paralysis and resume normal investment activities, according to the study, authored by Apicorp chief economist, Ali Aissaoui, an Algerian.
Source : Saudi Gazette, 20 February 2011
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