Apicorp forecasts $792 B investment in Mena energy sector over next five years
Apicorp estimates that planned and total investments in the Mena energy sector will reach $792 B in the 2020-2024 period.
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The Middle East: The Arab Petroleum Investments Corporation (Apicorp) estimates that planned and total investments in the Middle East and North Africa (Mena) energy sector will reach $792 B in the 2020-2024 period, marking a $173 B drop on the group’s last five-year forecast.
Apicorp largely attributes the $173 B reduction on the 2019-2023 forecast to the combination of the Covid-19 pandemic, fall in oil prices, and the looming financial crisis.
The Saudi-based investment group believes the economic impact of the Covid-19 outbreak will result in a global liquidity crunch. As central banks and multilateral financial institutions take significant steps to try and mitigate some of the financial impact of the pandemic, Apicorp raises concerns that the massive stimulus plans being proposed and implemented have the potential to create major debt overhangs that will slow economic growth.
In its latest forecast, Apicorp identifies Saudi Arabia, UAE, Iraq and Egypt as the primary drivers behind the expected $792 B investment over the next five years.
In terms of planned investments by sector, the largest increase in planned expenditure on the 2019 forecast was the gas sector, with planned investments increasing by $28 B over the next five years.
Apicorp noted that planned upstream spending had been cut by 20-30 % for the region’s National Oil Companies (NOCs) and large private oil firms as a result in the drop in demand and fall in hydrocarbon prices since the onset of Covid-19 in January.
In the downstream sector, the investment group expects the region’s energy firms to push ahead with plans to develop their petrochemicals sectors, with some of the largest projects including the $8.67 B Duqm and $6.73 B Sur petrochemicals projects in Oman and the $6.5 B Al-Zour and $6.34 B Satorp Amiral projects in Kuwait and Saudi Arabia respectively.
Planned investment in the Mena region’s power sector over the next five years was cut by $114 B from Apicorp’s last forecast, with the commissioning of several large projects in Egypt, Saudi Arabia and the UAE contributing to the fall in future investments.
Expenditure on power projects in 2020 has unsurprisingly fallen due to the restrictions and expectations of lower demand as a result of the Covid-19 outbreak. However, Apicorp notes that progress is being made with large-scale renewable projects, highlighting Saudi Arabia’s progress with the second and third rounds of its ambitious National Renewable Energy Programme (NREP).
Source: Energy & Utilities