GCC Oil & Gas Industry overview

GCC Oil & Gas Industry overviewThe countries of MENASA (Middle East, North Africa and South Asia) collectively possess over half of the world’s conventional, proven oil reserves and 40% of the world’s conventional, proven natural gas reserves. They also contain additional amounts of unproven and undiscovered natural reserves. MENASA accounts for only 30% of global oil production and 15% of global gas production, reflecting the region’s potential for growth.

Today, most of the proven oil & gas of the Middle East and North Africa is located within the countries of the Gulf Region – comprised of the Gulf Cooperation Council GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE), Iran, and Iraq.

The Gulf Region countries collectively possess some 54% and 40%, respectively, of the world’s conventional oil and gas proved reserves, and large additional amounts of unproved and undiscovered reserves.

In 2010, the Gulf Region produced (according to BP 2011 Statistical Review) over 25.2 million barrels of oil per day, and 44.6 billion cubic feet of natural gas per day, accounting for over 30% of the world’s oil production, 15% of gas production, and 32% of Liquefied Natural Gas (LNG) exports. The United Arab Emirates holds the world’s sixth largest proven oil reserves of approximately 98 billion barrels and seventh largest gas reserves of 215 trillion cubic feet. Oil and gas is a significant component of the UAE economy.

Oil was first discovered in Abu Dhabi in 1958. Onshore and offshore fields were developed quickly and it soon became a major oil exporter in world terms. Oil was discovered offshore Dubai in 1966, with exports starting in 1969, while its onshore production of oil and condensate began in 1983. Sharjah production commenced in 1974, from the Mubarek Field, which was discovered by Crescent Petroleum in 1972.

WORLD OIL AND GAS RESERVES – YEAR END 2010

Region

Oil Reserves

Gas Reserves

Thousand Million BBls


%

Trillion Cubic Metres


%

Americas

313.8

22.7

17.3

9.2

Europe & Eurasia

139.7

10.1

63.1

33.7

Middle East–of which

752.5

54.4

75.8

40.5

(Gulf Region)

749.2

54.2

74.8

40.0

Africa

132.1

9.6

14.7

7.9

Asia Pacific

45.2

3.3

16.2

8.7

Total World

1383.2

100

187.1

100

Source: British Petroleum (BP)2011 Statistical Review

 

The Arab Petroleum Investment Corporation (APICORP) review of energy investment needs in the MENA region over the period 2012-2016 is $525 billion, and given the distribution of hydrocarbon resources within the world, most of these energy investments will be in the Gulf. Of the potential $525 billion in investment, the oil supply chain accounts for 42%, the gas chain 34%, and the power generation sector accounts for the remaining 24%, according to APICORP Economic Commentary January 2012.

According to International Energy Outlook projections, world energy consumption is projected to increase by over 50% by 2030 from 2008 figures, an average increase of 1.6% p.a. Fossil fuels (oil, gas and coal) will continue to supply much of the energy used worldwide. Global demand for liquid fuels is expected to grow by only 1.0% p.a. across this period, and the total share will decline from 34% (in 2008) to 29% (in 2035). We expect that to meet the world’s growing energy demand, the Gulf Region’s share of world oil production will increase above 30% as Iraq returns to full production in the coming years.

We expect that to meet the world’s growing energy demand, the Gulf Region’s share of world oil production will increase above 30% as Iraq returns to full production in the coming years.

Global demand for natural gas has risen at a rate even greater than that of crude oil, experiencing an average4 increase in demand of 2.7% per year over the 1973-2010 period compared to 0.9% for crude oil over the same period. Natural gas consumption worldwide is forecasted to continue increasing at an average rate of 1.6% annually up to 2035, as compared with a continuing 1.0% per year for liquid fuels.

The expansion of the gas industry in the Gulf Region itself will continue to be immense, due to the rapidly growing power requirement of the GCC population and increasing substitution of gas as a primary fuel for power generation around the world due to lower cost of natural gas on an equivalent basis, efficiency considerations, and environmental considerations.

While hydrocarbon industry continues to form the backbone of these economies accounting for more than three fourths of their government revenues and over half of their exports, the hydrocarbon industry on its own has witnessed a subtle shift from core upstream projects into downstream activities of refining, petrochemicals and storage tanks, each vying with the other to enhance their refining capacities to exploit this trend to the maximum. Investments in the energy sector across the GCC total US$ 470 billion between 2010 and 2015, of which oil and gas accounted for 47 percent and 36 percent, respectively of the total. Contracts worth US$ 39,405 million were awarded across the GCC hydrocarbon sector in 2012 of which downstream projects accounted for 82 percent with a large focus on petrochemicals, overtaking the earlier emphasis on refining, reflecting the maturing nature of the industry and its need for diversification. The GCC petrochemicals sector has witnessed promising growth with a Compound Annual Growth Rate (CAGR) of 26 percent between 2007 and 2011 despite financial instabilities across the region and among its trading partners and continues to demonstrate strong potential in spite of the worsening global economic conditions, especially its key trading partner Europe with its financial woes and other prime markets. The challenges likely to be faced by the industry in the prevailing economic climate are manifold, including external financing, retaining economic growth while reducing vulnerabilities to external shocks.

For more information on the petroleum industry, read the article About oil and gas industry and http://www.researchandmarkets.com/research/6538jx/gcc_oil_and_gas

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