Abu Dhabi: Investments in the Arab region may experience a period of relative lull before picking up by the end of the current decade, a top energy consultant said in the Arab Energy conference in Abu Dhabi on Sunday.
“We estimate cumulative Arab energy investment to $685 billion [Dh2.52 trillion] for the 5-year period of 2015-19. This level of investment, which is slightly lower than that of last year’s review, indicates a pause in trend,” said Dr Ali Aissaoui, a senior consultant of Arab Petroleum Investments Corporation on Monday.
He said that a little more than three-quarters of total capital investment projects is in seven countries among the region’s biggest holders of oil and gas reserves.
“Although Saudi Arabia continues to top the ranking, its investment is projected to fall to $127 billion. The most significant factors in this relative decline are the achievement of the major upstream oil development phase and the diminished opportunities for further downstream mega projects.”
Next in the ranking is the UAE, which has established itself as the region’s second-largest investor, with its projects’ worth increasing to $116 billion.
“Policymakers should focus their commitment on improving the investment climate and creating a more enabling environment for the development of the oil, gas and power sectors,” he said.
“This is particularly the case of countries that have witnessed a wave of social and political unrest and, therefore, are in greatest need to attract investors back.”
Subdued economic recovery, continuing geopolitical turmoil and collapsing oil prices have been cited as the reasons for decline in investments. UAE has said it will continue to invest in oil and gas sector despite drop in oil prices.
Dr Ali Obaid Al Yabhouni, chairman of Organisation of Petroleum Exporting Countries (Opec) board of governors and chief executive officer of Abu Dhabi National Tanker Company (Adnatco) said falling oil prices is having an effect on the industry.
“Lower oil prices are never welcome, global markets are responding to an increased supply. There has been no structural change in the market, demand continues to grow. Demand, not the price should drive our national investment policy.”
He said Arab populations are growing and economies are strengthening. “There will be a continuous need for investment. UAE has provided an ideal example in energy policy by creating a diversified mix of oil, gas, renewable and nuclear energy.”
He said shipping industry is doing well after many difficult years. “Typical daily operating price has decreased and the volume of trade has increased.”