Investments in MENA gas projects to increase despite fuel demand drop

By Rahul Vaimal, Associate Editor
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Oman Oil and Gas
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According to Arab Petroleum Investments Corp (Apicorp), a multilateral development bank, investment in natural gas projects across the Middle East and North Africa (MENA) will increase, even as the coronavirus pandemic dampens fuel demand.

Gas projects planned or under progress in the region would need an investment of approximately $211 billion between 2020 and 2024, the multilateral lender said in a statement. In its previous investment forecast, Apicorp projected that between 2019 and 2023, spending will total $185 billion.

Production expansion in Qatar, the largest liquefied natural gas exporter, will account for a planned investment of $22 billion, Apicorp, based in Saudi Arabia, said. With nearly $90 billion of planned and committed investment between them by 2024, Iran and Saudi Arabia are likely to see the most activity.

MENA Gas Investments Graph
The planned and committed gas investments in the MENA region until 2024

After the discovery of several important reserves that moved it into sixth place worldwide, the UAE allocated $22 billion to the production of unconventional and sour gas.

Egypt is leading the region in petrochemical sector investment, followed by Iran and Saudi Arabia. A $10 billion increase in gas operations was reported by Egypt, especially related to gas blocks awarded to oil companies Chevron, BP and Noble.

By cutting oil-related investments, Middle Eastern states are lining up new gas ventures, while the pandemic has battered prices for both fossil fuels. This is partially because governments support the use of gas instead of oil, a more polluting substitute, to generate electricity.

IEA Gas 2020 Report
The forecast of demand for gas in 2020 pre and post-COVID-19

Over the next two or three years, the battle to secure LNG buyers will become fiercer and some producers may choose to consume more gas at home if global LNG prices remain low, said Apicorp’s Chief Economist, Leila Benali.

“The key question is how you monetize the gas, whether you export it or consume it domestically,” Benali said. “A player should go where it can get the most monetization for the fuel that it’s producing.”

According to Apicorp research, state-run companies and entities account for as much as 92 percent of investments in the region’s gas projects.