The Arab Petroleum Investments Corporation (APICORP), the multilateral development bank focused on the energy sector, has predicted $1trn of investments in the Middle East and North Africa energy sector over the next five years.
According to APICORP’s annual MENA Energy Investment Outlook, the MENA region will see a number of critical energy projects pushed through over the next five years, despite the uncertain geopolitical backdrop.
Around $345bn has been committed to projects under execution while an additional $574bn worth of development is planned. Total investment (committed and planned) of $919bn is forecast over five years, which is 4% lower than 2017 forecast.
The overall economic outlook remains similar to the forecasts estimated this time last year, with growth of around 3.2% forecast for both 2018 and 2019. Global investment in the industry is expected to pick up and parts of the MENA region are expected to see a corresponding improvement in investment.
Saudi Arabia is expected to lead the way, but the uncertainty over the possible re-imposition of sanctions on Iran mean that it may struggle to attract the foreign investment it needs to develop its industry. Iraq is also facing challenges, despite the improving security situation.
Saudi Arabia and the UAE represent 38% of planned investments, with $149bn and $72bn respectively, over the outlook period, as both countries look to boost their upstream oil and gas sectors.
Commenting on the report, Dr Ahmed Ali Attiga, Chief Executive Officer of APICORP, said: “We expect the MENA region to continue investing heavily as major energy-exporting countries expand the size of their energy sector and strengthen their positions in global markets.”
Mustafa Ansari, Senior Economist at APICORP, added: “We see three important trends materialising in our outlook: the first is higher allocation of capital towards the power sector, which now accounts for the bulk of planned investments as demand for electricity continues to increase. The second is the increase in committed investments, reflecting an improving investment climate and a healthy transition of projects from the planning phase towards execution. And third, the private sector has an increasing role to play in financing energy projects in the Middle-East, that will help ease fiscal pressures on governments.”