A decline in planned investments is largely a result of the Covid-19 pandemic, the oil crisis and a looming financial crisis
Planned and committed investments in the MENA region’s energy sector will exceed $792 billion over the next five years, approximately $173 million less than previous outlooks, according to a new report from the Arab Petroleum Investments Corporation (APICORP).
According to the report, the overall decline – which is mostly in planned investments – is largely a result of the Covid-19 pandemic, the oil crisis, and a looming financial crisis.
Despite these circumstances, however, the GCC region’s committed investments increased by 2.3 percent, compared to a 6 percent overall decrease in the MENA region as a whole, indicating a higher project execution rate in the AGCC.
“The impact of Covid-19 is already deeper lasting than past downturns. Indeed, the nature of this triple crisis and the profound restructuring in oil and gas will hit energy investments for a potentially long period of time, sowing the seeds of supply crunches and price volatility,” said Dr. Ahmed Ali Attiga, the CEO of APICORP.
“Therefore, we expect a W-shaped recovery for the MENA region,” he added. “Furthermore, despite the positive effects of digitisation and automation on efficiencies across the value chains, many fundamental questions remain that will negatively affect investments.”
According to the report, energy investments are primarily driven by Saudi Arabia’s gas and power sectors, which accounted for $39 billion and $41 billion respectively, as well as the UAE’s oil capacity maximisation ($45 billion), Iraq’s reconstruction and gas-to-power efforts, as well as Egypt’s new petrochemicals drive.