Middle East and North Africa need $395 billion to expand capacity
RIYADH -- The Middle East and North Africa (MENA) needs to pump a whopping $395 bn to increase the region’s oil production capacity and also to invest in other energy projects in the next five years, said a report.
Over $345 bn alone will have to be invested by the Persian Gulf and the remaining Arab producers during 2007-11, the report said quoting figures released by the Saudi Arabia-based Arab Petroleum Investment Corp (Apicorp).
The estimates are sharply higher than previous reviews. Apicorp said the rise was a result of larger projects, an increase in the prices of industrial materials, higher financing costs and other factors.
Previous reviews showed energy investment requirements in the MENA region were estimated at about $260 bn during 2006-10, a sharp increase of nearly 52%, according to Apicorp, an affiliate of the Organization of Arab Petroleum Exporting Countries (OAPEC) said.
“Apicorp’s current review of energy investments for the five-year period 2007-11 yielded several notable findings. One of them is simply the continuing upsurge in the cumulative investment requirements, which now stand at $395 bn for the MENA region including around $345 bn for the Arab world,” the study has revealed.
“This represents a 52% increase over the last Apicorp’s annual survey of $ 260 for the period 2006-10 (57% for the Arab world), which indicates a further acceleration from previous reviews.”
The report said the outlook for each link of the hydrocarbon supply chain reveals a greater increase in the downstream sector, most dramatically in the oil-based refining and gas-based petrochemicals and fertilizers. It noted that the past surveys have shown that rising capital investment was mostly matched with an increase in the number of projects.
“This time, however, the number of projects have leveled off. From what can now be pieced together, the factors most responsible for the current upsurge are notable changes in scope and/or scale of key projects and soaring project costs across the board,” it said.
The study also cited higher prices of most industrial raw materials, which constitute a significant share of factor inputs in hydrocarbon and energy projects. Source: PIN/TradeArabia.com
