Intelligence/analytics firm Wood Mackenzie said earlier this week the Middle East stood out in terms of oil projects in 2018, Kallanish Energy learns.
Last year was positive for the entire upstream industry, as the number of final investment decisions (Fids) rose to pre-crisis levels. Of 49 projects, 11 were located in the Middle East, which also accounted for 40% of global volume and 55% of capital expenditures.
The market was encouraged thanks to the relatively low-cost nature of the projects and the ambitious production targets set by the governments.
Most ventures involved expanding already existing projects, where infrastructure is already present, implying lower costs for investors.
In terms of targets, the United Arab Emirates planned to grow capacity from 3 million barrels per day (Mmbpd) to 4 Mmbpd by 2020, reaching 5 Mmbpd by 2030.
“With these targets in mind, big producers moved last year to sanction projects at the right price, motivated by the lower cost environment,” said Wood Mackenzie’s report.
Oil is undisputedly at the center of the Middle East upstream market, as 90% of Fids were for oil projects, leaving only 10% to gas ventures. Globally, they would account for roughly 50% each.
Researchers expect some investments to keep going into gas, also to feed the domestic market. Qatar is already the second largest exporter of LNG in the world, with plans to expand capacity by 32 million tons per annum (Mtpa) with further developments of its North Field Basin.
This year is not expected to see as many Fids, as producers may need time to catch up. However, holding a third of global oil reserves, the area is still considered pivotal for the upstream industry, according to Wood Mackenzie.