By Joel Bowman
Petrodollar profits to spur investment in hydrocarbon sector over next five years, report says.
Gulf states will reinvest $500 billion into the hydrocarbon sector over the next five years, with projects aimed at increasing refining capacity and developing of new oil and gas industries, according to a report by Gulf Investment House (GIH).
The Kuwait-based investment bank said GCC petrodollar revenues swelled to a record $315 billion last year thanks to surging crude prices, which hit an all-time high above $111 last week.
The six GCC states control around 45% of the world’s proven oil resources.
“High oil prices have provided GCC economies with huge trade and current account surpluses,” GIH said in the report, quoted UAE daily Emirates Business 24/7.
“As a result of these huge surpluses, the GCC will continue to invest in large infrastructure projects."
GIH said the large-scale investment was expected to boost the GCC’s overall oil production capacity from 18 to 20 million barrels per day (bpd).
Investment in Saudi, the world’s largest oil producer and exporter, will constitute almost half of the new developments over the next five years, according to the report.
“The kingdom is investing nearly $561 billion in active and planned projects during the 2007 to 2012 period, out of which $248 billion is allocated to oil, gas and petrochemical projects, accounting for 44% of the total,” the report said.
GIH said Saudi was looking to maintain its dominance in the oil sector and protect its largest single source of revenue, with projects aimed at increasing the kingdom’s production capacity to 12.5 million bpd by 2009.
The country currently averages around 8.5 million bpd in production, with a capacity of around 10.5 million bpd.
Qatar, which holds the world’s largest proven gas reserves, will account for around one-fifth of the $500 billion-investment, with projects planned for the full spectrum of gas-related industries, both up and downstream, according to the report.
GIH said Gulf states would also be looking to attract additional foreign investment.
“GCC countries are also focusing on expanding their oil production and refineries, through allowing foreign investments in the region,” the report said.
“This step by the GCC countries is expected to improve the hydrocarbon sector and bring in new international players to the sector.”For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.