Arabs to invest $298bn in oil and gas sector - Emirates24|7

Arabs to invest $298bn in oil and gas sector

Arab states are expected to pump more than $298 billion (Dh1.09 trillion) into projects in five years to lift their oil and gas production capacity and maintain their position as the world's main hydrocarbon suppliers, according to official figures.

Around $141.5bn would be invested in the crude oil sector between 2007-2011 while nearly $156.7bn would be put into natural gas and related industries, showed the figures by the Organisation of Arab Petroleum Exporting Countries (Oapec).

The bulk of the investments in both sectors would be based in the UAE, Saudi Arabia, Kuwait, Qatar, Algeria and Egypt and a large part of the funds would be raised through loans from banks and other institutions.

The investments do not include those in other energy sector, including power generation, which is expected to attract around $46.7bn.

The oil projects will lift the combined Arab crude output capacity by nearly 13.1 million barrels per day to 39.6 million bpd and more funds could be pumped to maintain that capacity through 2020 to meet demand.

"Global demand for Arab crude oil is expected to reach 39.5 million bpd in 2030, an increase of nearly 14 million bpd over the 2005 demand," Oapec said.

"Those projects will enable the Arab countries to meet that demand… but they need to draw up new investment plans to maintain that capacity through 2030 and expand it to face an expected increase at a later stage. More investments are needed to create a spare capacity in the region."

According to Oapec's bulletin for the first quarter of 2008, obtained by Emirates Business yesterday, the total Arab energy investment stood at around $175bn during 2004-2008 and is planned to reach $345bn during 2007-2011. The increase will push up annual investments to a record $69bn during 2007-2011 from around $30bn during the previous period.

"Total investments in the oil and gas industry are expected to reach $298.2bn during 2007-2011, nearly 86 per cent of the total energy investments. Around 53 per cent of those investments would be financed through loans while 47 per cent would come from the countries' own resources."

A breakdown showed Saudi Arabia, the world's dominant oil exporter, would be the largest Arab investor in the crude sector as it will pump nearly $40.8bn.

Oil investments are estimated at nearly $15.4bn in Kuwait, $12.5bn in the UAE, $12.1bn in Algeria and $10.2bn in Qatar.

Qatar, which has the world's third largest gas resources after Russia and Iran, will be the biggest investor in the gas sector, pumping around $45.6bn. It will be followed by Saudi Arabia, with $35.9bn, Algeria with $17.5bn, Egypt with $14bn and the UAE with $12.1bn.