The UAE and four other Arab oil producers are planning to pump nearly $470 billion (Dh1.73 trillion) into projects to expand their hydrocarbon output capacity to meet domestic and external demand, their oil group said yesterday.
But the region, which controls over half the world's extractable oil deposits, needs to be reassured by industrial nations that demand would grow and such investments would not be wasted in idle capacity, the 10-nation Organisation of Arab Petroleum Exporting Countries (Oapec) said in its monthly bulletin.
Over the next five years, investments in oil, gas and other energy development ventures by the UAE, Saudi Arabia, Qatar, Kuwait and Algeria are estimated at about $470bn, nearly 70 per cent of the total Arab energy projects, it said.
Upstream, midstream and downstream gas projects are expected to get the lion's share of those investments, accounting for nearly 36 per cent, the report said.
A breakdown showed Saudi Arabia, the world's oil superpower which controls over 20 per cent of global crude resources, could invest nearly $170bn in the coming five years while investments by Algeria are estimated at $69bn. Kuwait has also announced it would pump nearly $87bn into its oil sector while Qatar is projected to channel in excess of $70bn, mostly in its liquefied natural gas to maintain its position as the world's top LNG supplier.
"These projects will largely develop the energy industry in the Arab region and at the same time contribute to stable oil and gas supplies to global markets… these projects are considered crucial for the world energy markets given the massive hydrocarbon resources of the region," the Kuwaiti-based Oapec said. "The Arab countries are willing to pump sufficient investments in energy projects to ensure global market stability and support their economies and sources of income… but there is a need for consuming countries to provide producers with assurances on demand for oil and gas so they will push ahead with those investments… this of course requires a continuation of a constructive and meaningful dialogue between hydrocarbon producers and consumers."
Oapec's figures showed the Arab region's proven oil reserves stood at 667.4 billion barrels at the end of 2009, accounting for about 56.6 per cent of the world's total recoverable crude potential. The Arab gas wealth was estimated at 52.5 trillion cubic metres, nearly 28.1 per cent of the world's gas deposits.
Citing estimates by the International Energy Agency, Oapec said the world needs to pump nearly $26trn into oil expansion projects until 2030.
"There is no doubt such huge investments face challenges following the eruption of the global economic crisis, including the slowdown in the world oil demand and a sharp fall in energy infrastructure ventures because of the credit squeeze… this could adversely affect hydrocarbon supply in the future."
In a recent study, Oapec's affiliate, the Arab Petroleum Investment Corporation (Apicorp), said it expected regional oil producers to shelve several energy projects because of unstable crude prices and slower growth in demand.
Follow Emirates 24|7 on Google News.