MENA region needs to spend $260 billion for power production, report says

A Saudi man talks on his mobile under the shade of solar panel at a solar plant in Uyayna, north of Riyadh, on March 29. APICORP said that countries in the region are increasingly resorting to clean energy sources like solar and nuclear to produce electricity. (AFP)
Updated 17 April 2018
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MENA region needs to spend $260 billion for power production, report says

DUBAI: Middle Eastern and North African countries need to spend $260 billion over the next five years for electricity production to meet rising demand, a report said on Tuesday.
The region, which includes oil heavyweights Saudi Arabia, Iran and Iraq, must make the investments to add 117 gigawatts (GW) of power generation by 2022, Arab Petroleum Investment Corp. (APICORP) said.
The Dammam-based energy development bank said $152 billion is needed for electricity generation and the rest for transmission and distribution projects.
It estimated that power capacity in the Middle East and North Africa, currently standing at 321 GW, needs to expand by 6.4 percent on average annually by 2022 to meet growing demand.
The six nations belonging to the Gulf Cooperation Council (GCC) — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — need to spend $89 billion to add 43 GW over the next five years, according to APICORP estimates.
The UAE and Saudi Arabia lead the way with expected investments worth $33 billion and $21 billion, respectively, it said.
Iran needs to add 25 GW of power to its current capacity of 77 GW with estimated investments of $50 billion, according to the report.
Iraq, another oil-rich country, is required to invest $39 billion to add 12 GW of electricity by 2022, it said.
Egypt, the most populous country in the region, is estimated to need $46 billion of investments to add 22 GW of power to raise its capacity to 60 GW in 2022.
APICORP said that countries in the region are increasingly resorting to clean energy sources like solar and nuclear to produce electricity.


New oil, gas projects to accelerate next year

Updated 58 min 50 sec ago
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New oil, gas projects to accelerate next year

  • Global investment in oil and gas production is expected to reach around $425 billion next year
  • Many of the new projects will be around gas, with a record number of liquefied natural gas (LNG) projects

LONDON: The number of new oil and gas projects will rise five-fold next year from a 2015 trough but overall spending is still unlikely to be enough to meet future demand, consultancy Wood Mackenzie said in a report.
Shaken by a sharp drop in oil prices in recent months, boards are generally expected to stick to spending discipline imposed following the 2014 price crash.
Global investment in oil and gas production, known as upstream, is expected to reach around $425 billion next year, according to WoodMac analyst Angus Rodger.
That compares with a total spending of $770 billion in 2014, which dropped to $400 billion in 2016 and 2017.
Although spending levels have slightly recovered since then, next year’s capital expenditure will still fall short of the $600 billion required to meet demand growth and to offset the natural decline of output from fields, Rodger told Reuters.
A handful of the world’s top oil companies, including US giants Exxon Mobil and Chevron, said they would boost spending next year as they accelerate developments of highly-productive shale fields.
But overall, companies will seek to maintain spending largely flat in order to return cash to investors after years of pain, Rodger said.
Still, deep cost cuts introduced in recent years and lower rates for drilling rigs and services mean that companies can do more with their money.
In 2019, the number of large new oil and gas projects is expected to reach up to 50, compared with 40 in 2018, and around 10 in 2015, according to WoodMac’s 2019 outlook. Large projects hold over 50 million barrels of oil or gas equivalent.
Many of the new projects will be around gas, with a record number of liquefied natural gas (LNG) projects set to get the green light in 2019.
Those include the Arctic LNG-2 in Russia, at least one project in Mozambique and three in the United States, which would together require $50 billion, according to the report.
“The stars are aligning on LNG sales contracts, corporate appetite, long-term demand and costs. But these are huge investments, and investor confidence could waver if we see signs of cost inflation, global recession and falling prices.”
The LNG projects will target 100 trillion cubic feet of gas, up from 80 tcf in 2019 and 32 tcf in 2017.
Spending could see a strong increase in 2020 if oil prices continue rising steadily and as rig costs are expected to rise, Rodger said.