Energy capital investments in the Middle East and North Africa (MENA) region could total around $525 billion during 2012-2016, Dammam-based Arab Petroleum Investment Corporation (Apicorp), an affiliate of the 10-nation Organization of Arab Petroleum Exporting Countries (Oapec), said. “In the contexts of a global economic downturn and regional political turmoil, our review of MENA energy investment for the five-year period 2012-16 points to a broken momentum, yet mixed outlook,” Apicorp said. Sector-wise, the study showed the oil value chain accounts for 42 percent of the MENA investment, the gas value chain for 34 percent and the remaining 24 percent represent the oil and gas fuelled power generation sector. “On the one hand, driven by the oil downstream and the power sector, the anticipated investment of $525 billion is higher than the actual capital requirements found in the last review,” it noted. “On the other hand, such a level remains well below the potential investment identified on that occasion. Whatever the interpretation of these findings is, one thing is clear. Project sponsors will continue to face many of the same challenges, i.e., cost uncertainty, feedstock availability and fund accessibility, with the latter becoming more critical than any time before,” Apicorp study said. The study noted that internal financing would not pose major problems as long as the value of the OPEC basket of crudes stays above $90/barrel. “In contrast, external financing, which comes predominantly in the form of loans, is likely to be daunting in the face of a combination of collapsing loan supply and persistently high cost,” it said. Moreover, the study said “faced with more pressing social demands, governments … governments best policy going forward is to attempt to regain private investment momentum.” The study also noted more challenges to the investment scene in the region as the average energy project, which has increased almost three times between 2003 and 2008, has resumed its upward trend after declining significantly in the middle of the global financial crisis, but added that the relatively moderate 12 percent upward trend underpinning the current review should not mislead. “The extent project costs are predictable depends on the outlook for the price of engineering, procurement and construction and its components.
