Arab hydrocarbon exporters are carrying out mega projects to expand their oil production capacity to meet growing global demand but they need assurances from consumers on demand security to push ahead with such plans.
Despite current political turmoil in some Arab nations, crude supplies from the region would not be largely affected given the high output capacity of Gulf countries and the massive proven oil reserves in the Middle East, the 10-nation Organisation of Arab Petroleum Exporting Countries (Oapec) said.
In a study published in its monthly bulletin, the Kuwaiti-based group estimated the region’s recoverable oil reserves at nearly 683 billion barrels at the end of 2010 while Arab nations also control around 54.8 trillion cubic metres of gas.
The study said such gigantic hydrocarbon potential would enable Arab countries to remain major oil and gas suppliers for several decades.
But it noted that the current unrest in the Middle East and North Africa (Mena) has led to disruption of crude supplies from some regional
producers, adding that pirate attacks on tankers in the Red Sea have aggravated the problem. It said these developments have given rise to global concerns about the security of oil supply from the region amidst reports that world demand would continue to rise at relatively high rates in the coming years.
In 2010, global oil demand swelled from 84.5 million bpd to 86.1 million bpd in 2009, and some sources, including Opec and the International Energy Agency forecast that world oil demand in 2011 will grow slightly, buoyed by rising demand in China and India and signs of economic recovery from the global financial crisis of 2008/2009, Oapec said.
“Arab countries are determined to make progress in building more energy projects, since they give value added to their national economies, which are heavily dependent on petroleum revenues….however, the continuity of this course depends not only on the vision of the Arab oil exporting countries, but also on the other part of the equation, namely the importing countries,” it said.
“Security of demand is the other face of the supply security coin and a major and decisive factor in prompting the Arab petroleum exporting countries to pump more investments into the energy sector….it requires continued dialogue between producers and consumers in an atmosphere of transparency and honesty through the various international institutions related to energy, notably the International Energy Forum based in Saudi Arabia.”
The report noted that Arab nations, sitting atop more than 60 per cent of the world’s oil, are striving to secure world energy supplies through their exports of crude oil, natural gas, and oil products. They are also seeking to bolster their position in the international economic arena by developing the various aspects of their petroleum industry and boosting its production capacity so as to ensure the stability of the oil market, it said.
“They have spared no effort to achieve these goals, as they have expanded their investment capabilities and implemented projects for developing their petroleum industries. Oapec member countries drew up ambitious investments plans in 2010 to develop their production capacity in upstream activities, primarily,but also in the downstream industries of refining and petrochemicals.”
Oapec figures showed most Arab nations recorded a significant increase in exploration activities, which resulted in 98 discoveries in 2010.
These included Al-Jalila oil field in Dubai, a new gas find in the Jalameed field in Saudi Arabia, the Rashid and Abu Khashab fields in Syria, and 63 oil and gas discoveries in Egypt. In downstream industries, most Arab countries planned to add new hydrogen treatment capacity to meet the growing demand for middle and light distillates and improve product specifications to comply with environmental legislation relating to clean fuel production.
In a recent study, an Oapec affiliate--the Arab Petroleum Investments Corporation (Apicorp--) estimated Arab states would have to pump nearly $430 billion into hydrocarbon projects during 2011-2015. “It is expected that the projects will be concentrated in five Oapec members, namely Saudi Arabia, the UAE, Qatar, Algeria, and Egypt,” Oapec said. “Moreover, GCC members are expected to account for about two thirds of the Arab countries’ energy investments.”