The Arab Petroleum Investments Corporation (APICORP), a multilateral development financial institution, estimates that planned and committed investments in the MENA region will exceed $792 billion over the next 5 years (2020–2024). As per APICORP’s MENA Energy Investment Outlook 2020-2024, the amount marks a $173 million decline from the $965 billion in last year’s five-year outlook.
The overall decline in the investment outlook — mostly in planned investments — is largely attributed to the “2020 triple crisis” — the COVID-19-related health crisis, oil crisis and a looming financial crisis.
Despite these difficult 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 GCC.
Dr. Ahmed Ali Attiga, CEO of APICORP, said: “The impact of COVID-19 is already deeper and longer 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. Therefore, we expect a W-shaped recovery for the MENA region.”
Dr. Leila R Benali, chief economist, head of strategy, energy economics and sustainability of APICORP, said: “The impact of the triple crisis has led to sharp cuts in capital expenditures and restrictions to projects and supply chains. It has also brought to the forefront a possible restructuring of the oil and gas industry, accelerated the closure of the lowest efficiency parts of the capital stock, and energized mergers and acquisition activity. As we mention in the outlook, we expect a restructuring of the value chain, thus putting the strongest countries and companies from a total cost and leverage standpoint in the best position to preserve their long-term value proposition and return to their respective shareholders.”
