Energy investment on rise across MENA, but not for oil and gas: APICORP
London (Quantum Commodity Intelligence) - Investments in energy in the Middle East and North Africa will exceed $805 billion in the next 5 years, an increase of $12.6 billion from last year's 5-year outlook, but oil and gas will both experience dips in expenditure, said a report released Tuesday by Arab Petroleum Investments Corporation (APICORP).
Just under $229 billion is predicted to be invested in the oil sector in 2021-2025, down 4% from last year's outlook, while gas will attract 1% less at $208 billion.
The power sector, conversely, is set to attract an 8% increase to $245 billion, of which renewables will take 40%, as countries in the regions push ahead with their energy diversification agendas.
"For hydrocarbons producers, this decade might prove to be the last window for the low-cost producers to firmly re-establish their market share, particularly Saudi Arabia and Qatar," said the report.
"The current vicious circle of low revenue, low investment, low output needs to be broken, and a virtuous cycle of investments in lower cost, lower carbon, sustainable assets need to be induced...This gives low-cost oil and gas and low-carbon power producers a substantial advantage and positions them to be among the few energy producers who will emerge as clear winners in the post-Covid-19 world," it added.
The fall for oil follows the completion of several large downstream projects across the region in 2020 and postponed investments in Iran and Iraq.
An additional $10 billion committed by Libya and oil production stabilization projects in Algeria and Oman were not enough to offset a slowdown in new committed and planned investments over the last 12 months.
Committed gas investments fell by $9.5 billion to $75 billion, despite the award
of the huge North Field East project in Qatar, with the fall attributed to the completion of several gas megaprojects in the UAE, Egypt and Saudi Arabia and the stalling of several projects.
Planned investments for gas were up slightly compared with the last forecast at $133 billion, but the figure was reliant on numerous what-if scenarios, including the success of legislative change in Algeria in attracting upstream capex and Iraq's resumption of its stalled gas-to-power projects.
The power sector will see the largest amount of expenditure overall with an estimated $93 billion and $157 billion in committed and planned projects, respectively, over the next five years.
"The MENA region expects to add an estimated 3GW of solar power in 2021 – doubling its total from 2020 – and almost 20GW by 2025. Wind and other sources such as hydropower are also coming into their own as countries step up their energy diversification plans," said APICORP.
"MENA is also a strong candidate for becoming a major hydrogen-exporting region thanks to its combination of low-cost gas resources and renewable energy. A few countries, such as Saudi Arabia and Morocco, have already made headways as low-cost exporters of blue and green hydrogen, net-zero ammonia and other low-carbon products, while other countries, such as Oman, UAE, and Egypt are attempting to catch up."
