Saudi best for energy investment

The political turmoil that raged in the region three years ago has hit the investment climate but Gulf oil producers have been the least affected and Saudi Arabia emerged as the best target for energy capital, an official Arab study said on Wednesday.

The study by the Dammam-based Arab Petroleum Investment Corp (Apicorp), an affiliate of the 10-nation Organization of Petroleum Exporting Countries (OAPEC), said energy projects in many Arab countries have been stifled by the upheaval and that the outlook for the region as a whole has remained “ clouded with many questions.”

The study, sent to Emirates 24, classified each Arab country in terms of energy investment potential on three main bases—the  energy investment potential, country risk and the enabling business environment.

“One country, Saudi Arabia, continues to occupy a unique position in the most desirable quadrant. As a result of substantial increase in public spending to deal with unmet social needs, it has managed to retain its position near the Ideal Point…therefore the country can still be viewed as a superior energy investment destination,” it said.

The study showed Iran far lagged behind Saudi Arabia although the Persian country controls one of the world’s largest proven crude deposits.

Despite having almost the same investment potential, Iran has greatly been affected by tougher international sanctions and as a result has been kept relatively distant from the ideal point, the study said.

But it noted that the sanctions have not prevented Iran from slightly improving its

position compared to the one it had prior to the Arab political upheavals. “This country has indeed revealed itself to be much more resilient to external stresses than expected.”

Turning to other Gulf oil heavyweights, Apicorp said Kuwait, Qatar and the UAE continue to be clustered together in the “next best quadrant.”

“However, the UAE has regained the lead thanks to its better perceived enabling environment for business.” It said.

“As all three countries have largely avoided the turmoil, they continue to be perceived as having each a low country risk, in addition to a sound enabling environment.”

The study said Oman and Bahrain, which have far less hydrocarbon resources, have managed to maintain their relative positions in the third investment climate quadrant.

“Both Oman and Bahrain have continued to be perceived as having a strong enough enabling environment for business, but a low energy investment potential for lack of sufficient hydrocarbon resources,” it said.

The report considered conflict-battered Iraq as “in an odd position” since it remains way behind other Gulf oil exporters, stressing that the country needs to improve its security situation and institutional practices to move ahead of its fifth ranking position.

Tunisia has regrouped with a less appealing cluster comprising Morocco, Jordan and Lebanon while Libya and Syria have broken out of the cluster previously containing.

Algeria and both have been relegated to a much less attractive quadrant, very far from the ideal point, the report said.

They have joined Sudan, Yemen, and Mauritania, which have stayed in this quadrant as a result of modest investment potential, higher country risk and a deficient enabling business environment. In this group, strife-ridden Yemen has regressed further.

“Lingering political turmoil in parts of Middle East and North Africa has undermined the region as a whole, adversely affecting its investment attractiveness,” Apicorp concluded.

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