Mideast energy investment put at $532b in thirty years

Abdul Aziz Al Turki, Secretary General of the Organisation of Arab Petroleum Exporting Countries (OAPEC), said gas projects alone are forecast to attract in excess of $230 billion as Qatar and other key Gulf oil producers are push ahead with mega LNG ventures.

In an interview with the Pipeline magazine to be published next week, Al Turki said Arab states had sufficient hydrocarbon resources to meet rising global demand, estimating their crude reserves at around 650 billon barrels and gas at over 51 trillion cubic metres — accounting for nearly 30 per cent of the world's total gas wealth. He also spoke about oil prices, Opec's efforts to ensure stability in global markets, and the expected role of Arab producers in the future.

"The best estimates of current investment needs of the Arab oil and gas industries were presented by the Arab Petroleum Investment Corporation (APICORP), which was established by OAPEC members in 1974 as a vehicle for financing Arab petroleum projects’ he said.

APICORP figures indicated a call for $84 billion for new projects in the period from 2002 to 2006 for "longer term investment needs to expand oil production capacities to meet projected demand, the international energy agency (IEA) in its energy investment outlook, estimated the figure for the Middle East (including Iran and Turkey) at around $532 billion over the next three decades."

He said Arab states have enough oil to meet the growing global oil consumption, as they control nearly 60 percent of the world’s proven crude resources.

"There is a general consensus among energy experts that there are sufficient oil and gas resources to meet energy demand and support economic growth for the foreseeable future. the main reserves of oil exist in Arab countries amounting to 650 billion barrel, or 60 per cent of world total proven reserves. as for natural gas, Arab countries' proven reserves amount to 51,714 billion cubic metres," he said.

"The crucial question is whether sufficient and timely investments are made. the main problem facing investors is the unpredictability or element of uncertainty related to future demand in light of the mounting campaign and increasingly restrictive policies adopted by major industrial countries to lessen their dependence on oil. At present the expectation is for a surge in oil production capacity coming on stream during 2006 and 2007. the question is, can investors count on a predictable rise in demand?’

Asked about oil prices, he said such an issue is determined by OPEC but noted prices should stabilise at a level that will attract investment for capacity expansions and at the same time ensure enough funds for producers and do not hurt the global economy."

"Matters related to the price of oil are not the domain of OAPEC but OPEC. However, if I were to comment, I would point out that what is considered as a 'high' price is a relative matter. What is important is that the price is right to attract sufficient and timely investments. Additionally the price should compensate producing countries for depleting their main asset, oil. The sale of oil is the mainstay of economic growth in all OAPEC and Opec members."

"The price of oil, one should remember, is constricted at its upper limits by the price of present and future alternative supplies, including oil from sources deemed too expensive to produce at present. Ideally a balance should be maintained between the investment requirements for maintaining a healthy oil and gas industry and sustainable economic growth. no one wants the price of oil to spike upwards due to a shortage in production capacity or to spike downwards due to a shortage of demand."