The Ninth Arab Energy Conference was held last week in Doha, under the auspices of the Organization of Arab Petroleum Exporting Countries (OAPEC), the Arab Fund for Economic and Social Development, the Arab League and the Arab Organization for Industrial Development and Mining. It was decided that the tenth session would be held in Beirut in 2014. The Arab Energy Conference, which convenes once every four years, brings together Arab oil producing and oil consuming countries, and looks into various energy-related issues, including those related to petroleum, natural gas, electric power and renewable energy, as well as production and consumption methods, their enhancement and the way to achieve energy savings. The conference was attended by about 500 participants, mostly official delegates, in addition to a limited number of Arab and foreign specialists who were invited to the event. However, there is an urgent need to change this trend in future attendance, and an invitation must be sent to state-owned and private Arab energy companies as well as other specialized institutions, such as Masdar, the atomic energy commissions and KUFPEC, in order to improve the discussions thanks to new experiences relevant to the regional energy industry. The slogan of the conference this year was ‘Energy and Arab Cooperation'. In truth, these energy conferences are the natural successors of the Arab Petroleum conferences that used to look into agreements with foreign companies operating in the region, and crude oil prices. However, the agenda has since changed, and these modern conferences now focus on industry-specific aspects of energy. In his speech at the conference, the Saudi Minister of Petroleum and Mineral Resources Ali al-Naimi identified the primary concerns of the Arab energy industry at present, which are: the importance of market stability, how to render energy environmentally friendly, developing specialized human resources, the need for regional cooperation and integration, the increasingly important role of the private sector, the importance of research and new technology in modern projects, the need for wider use of natural gas, the importance of renewable energy, and how to balance economic interests with the people's welfare. In this regard, the Qatari Deputy Prime Minister and Minister of Energy and Industry Abdullah al-Attiyah stressed the need for real, and not superficial Arab cooperation, and hoped that actual and transparent cooperation would soon emerge. The conference then discussed the prospects and risks of investment in Arab oil and gas projects, in light of the major economic instability seen in recent years. This was done as part of the comprehensive study presented by the Senior Adviser at the Arab Petroleum Investments Corporation APICORP (a subsidiary of OAPEC) Ali Issawi. The study examined the current conditions of credit markets and international oil markets, and their impact on investments in the Arab energy sector. Issawi noted that capital markets, despite the fact that more than two years have elapsed since the outbreak of the credit crunch in August 2007, continue to be influenced by the crisis. Besides, the rate of investments is still in steady decline, while the world economy is forecasted to remain fragile. However, as a result of the rise in oil prices during the first half of 2008, it was thought that the Arab region is not in risk of being affected by the repercussions of the crisis. However, the sharp drop in oil prices that took place after that, in addition to the continued restrictions on bank lending, adversely affected the economic and investment outlooks for the energy sector in the region. APICORP's report also pointed out that “those responsible for energy policies in the Arab countries, along with project marketers and investors had no choice but to reconsider their investment strategies and their project portfolios in order to adapt to the crisis. This is in contrast with the upward trend that has been achieved in previous years”. The report also highlighted the decline in the volume of possible capital investments until 2014. One of the most important causes for this is the anticipated decline in the cost of projects. The report also emphasized the continuing decline in the actual need for capital, due to the deferral of many projects that have become unfeasible or those that could not be funded or were cancelled altogether. In addition, the restructuring of the majority of the remaining projects' financing tended to move in the direction of further self-financing, while the rate of borrowing for upcoming industrial projects remained high. Then securing the required credit has become more challenging than ever before. Based on this analysis, APICORP's report made the following recommendations: The Arab governments must continue to offset the decline in the flow of foreign investments to the region by reinvesting their assets, which are currently invested abroad in sovereign funds. These governments must also provide liquidity and enhance the capitalization of regional financial institutions that operate on the level of the Arab world, and to direct these funds into the companies concerned with developing the oil and energy industries. This is because these latter “are a strong buoy for economic and social growth in the region”. This means that electric and hydroelectric projects must not be postponed. Finally, the report recommended that action be taken to reduce risks and improve the investment climate, as a number one priority. *. Mr. Khadduri is an energy expert
