Oil industry investments take hit during crisis - survey

Investments in the oil industry in the Gulf region have faced a major contraction due to the global financial crisis which could endanger the future of the industry, a survey claims.

The value of such investments fell dramatically as the economic downturn forced projects to be deferred, acting director general of OPEC Adnan Shehab-Eddin said in the survey.

The annual review, compiled by the Arab Petroleum Investments Corporation (APICORP), showed that the projected investments in the energy sector, mainly in the oil sector of the Gulf region, in the coming five years will hit $381 billion compared with $287 billion between 2008 and 2012, KUNA news agency reported.

But an average 20 percent of the projected total investments will have to be deferred as a result of the financial crisis, the survey said, indicating that the percentage could vary from country to country.

No projects in the oil industry in the Gulf region have been recently cancelled and the 20 percent of delayed projects was less than delays of projects globally which is estimated at 30 percent, according to the survey.

The review also said that the cancellation or postponement of projects risked cutting the oil supplies on the global market and could trigger sharp fluctuations in the oil prices which would not be in the interest of the oil exporting countries in the long run.

The study recommended that the national oil companies should reschedule their projects instead of cancelling them unless there were technical obstacles.