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Energy Investments in MENA to Exceed $1 Trillion | ASHARQ AL-AWSAT English Archive 2005 -2017
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A solar farm on the outskirts of Masdar City in the UAE. (AFP)

Dubai – Total energy investments in the Middle East and North Africa (MENA) region are likely to hit the USD1 trillion mark over the next five years despite the economic and political challenges dominating the region, according to the Arab Petroleum Investments Corporation (APICORP).

A report by APICORP said that despite the 24 percent drop in investment in the global energy sector in 2016 compared to 2015, the MENA region saw a surge of 7 percent in investment compared to 2016.

Based on this evidence, the APICORP research team felt cautiously optimistic for the MENA region. Governments continue to make investments in the energy sector a priority, and it is expected that a number of important projects will be executed and completed successfully over the course of the next five years. Plans for power projects are at the top of the five-year agenda in many countries.

The study, “Predictions of investment in the MENA Region”, pointed out that a total of USD337 billion had already been pledged to ongoing projects by the end of 2016. It estimated that projects worth USD662 billion will be implemented in the next five years, bringing the total worth of projects from 2016 to USD959 billion compared to USD900 billion in 2015.

The study showed that the planned investments increased by 2 percent, while ongoing investments increased by 17 percent.

APICORP noted that the GCC countries are currently driving investment in the region and will be well positioned when oil prices begin to increase. Iran and Egypt also enjoy a promising outlook, with the former having vowed to make heavy investments in the upstream sector and the latter facing the challenge to meet rapidly rising power demand.

Renewable energy projects will be at the top of efforts to meet power demand that is also increasing in Morocco, Tunisia and Jordan, said the top Arab bank.

APICORP said that the total ongoing investments worth about USD337 billion, including USD121 billion will be pumped into the oil sector, USD108 billion into the gas sector, USD91 billion into power and USD17 billion into chemicals.

The GCC boasts about USD174 billion, more than 50 percent of the MENA’s total committed investments.

On the other hand, of the planned investments worth USD622 billion, APICORP said that the power sector accounts for the lion’s share at USD207 billion, while the oil sector has USD195 billion and gas sector USD159 billion, with the remaining investments in petrochemicals.

The report revealed that, at USD289 billion, projects under study constitute the largest portion of planned investments. In the region, Saudi Arabia dominates the investment scenario with 19 percent of the planned projects over the next five years. As a result of concrete plans to increase gas production and the role of gas in its energy mix, the kingdom has a large number of projects in the pipeline to add significant power-generating capacity. Saudi Arabia is also planning to continue investing in petrochemicals in its drive to diversify and create more value, it added.

Commenting on the report, Dr. Raed al-Rayyes, deputy chief executive and general manager of APICORP, said that “having recently witnessed one of the biggest drops in history, investments in oil and gas are still struggling to recover on a global level.”

However, there are clear signs for an upturn, he added, and they can be found in the MENA region.

Dr. Bassam Fattouh, energy sector specialist and external advisor to APICORP, said budget deficits and tightened public expenditure are a reality across the region.

“Our research suggests however that governments still prioritize critical investments in their energy sectors – some of them to maintain their position as global energy suppliers, some of them in response to local energy supply shortfalls,” he stated.