Gulf countries to pump $500bn into hydrocarbons

The six GCC states, which control around 45 per cent of the world’s extractable oil resources, are encouraged by strong crude prices, which provided them record revenues of $315bn in 2007.

Saudi Arabia, the world’s dominant oil power, will account for the bulk of the investment as it pushes ahead with mega-projects to expand its crude production capacity and construct more refining and petrochemical units, according to the report by the Global Investment House (GIH).

Qatar has approved up to $100bn in its next five-year plan for projects involving the development of its oil output capacity, construction of new refining and petrochemical units and expansion of its liquified natural gas (LNG) industry.

“Currently, the GCC is following the international industry trend of increasing refining capacity and establishing integrated petrochemical complexes,” said the report released by Kuwait-based GIH, a financial and investment consulting company.

“GCC countries are investing around $500bn in active and planned projects in the oil, gas and petrochemical sectors for the 2007 to 2012 period.” It estimates Saudi Arabia’s present sustainable oil output capacity at 10.5 million barrels per day to 11mbpd and its average production at 8.6 mbpd in 2007.

“In order to maintain its position and protect its most significant source of economic growth, Saudi Arabia has undertaken several projects aimed at increasing oil production capacity to 12.5 mbpd by 2009,” it said.

“The Kingdom is investing nearly $561bn in active and planned projects during the 2007 to 2012 period, out of which $248bn is allocated to oil, gas and petrochemical projects, accounting for 44 per cent of the total.”

The report said Qatar has been locked in a oil and gas development programme involving expansion of its oil output capacity, refining and petrochemicals and its LNG sector, now the largest in the world.

It said Qatar Petroleum is planning to invest a further $80bn to 100bn in the upstream and downstream sectors over the medium-term and a large part of the investments would be pumped by foreign partners.

The report highlights expansion plans involving oil and gas-related sectors in the other GCC states – the UAE, Kuwait, Oman and Bahrain.

“High oil prices have provided GCC economies with huge trade and current account surpluses,” it said.

“As a result of these huge surpluses, the GCC will continue to invest in large infrastructure projects. GCC countries are also focusing on expanding their oil production and refineries, through allowing foreign investments in the region. This step by the GCC countries is expected to improve the hydrocarbon sector and bring in new international players to the sector.”

The GCC’s current crude oil sustainable capacity is estimated at around 18 mbpd and expansion would lift it to more than 20 mbpd within five years. Capacity could peak at 25 mbpd, including 15 mbpd in Saudi Arabia.

$100: Will be invested in the sector by Qatar, which has the world’s largest gas reserves