Gas investments in MENA region rise despite a global slowdown in demand

NORTH AFRICA – A recently released report by the Arab Petroleum Investments Corporation (APICORP) has shown that committed gas investments will hold steady while planned gas investments are projected to rise in the MENA region despite of a global slowdown in demand.

According to the APICORP MENA Gas & Petrochemicals Investments Outlook 2020-2024, planned gas investments in the MENA region are projected to reach US$126 billion in 2020, a 29% increase compared to last year.

This according to the report, is mainly due to the strong ongoing regional gas drive for cleaner power generation and improved monetization as a feedstock for the industrial and petrochemicals sectors.

Notably, the petrochemicals sector witnessed a y-o-y increase of US$4 billion in planned projects compared to last year’s outlook, while committed projects decreased by USD13 bn due to the completion of several projects in 2019.

Gas demand is expected to grow by approximately 3.8%-4% on average in MENA compared to 6% in 2019, according to the report.

Despite the increase in gas demand in the MENA region, Dr. Ahmed Ali Attiga, Chief Executive Officer, APICORP says that the decrease in gas demand has put fiscal pressures on government and private sectors alike.

The report further notes that integration of the downstream value chain is expected to continue in the region, in conjunction with Asia.

Saudi Arabia, Iran and Iraq leading the way in terms of committed gas investments riding on the back of a strong gas-to-power development drive in both Saudi Arabia and Iraq, as well as Iran’s South Pars program and petrochemicals feed.

In terms of committed petrochemicals investments, Egypt tops the region, followed by Iran and Saudi Arabia, owed to localization of specialty chemical industries and feedstocks import substitution.

Egypt also saw a US$10 billion uptick in planned gas activities in 2020, mostly related to recently awarded offshore blocks to companies such as Chevron, bp and Noble.

The North African country also experienced development of its midstream-downstream infrastructure to bolster its position as a gas hub.

“we expect a few committed projects to continue facing strong headwinds in terms of payments, supply chain issues and potential project delays,” Dr. Attiga said.

He added that overcoming these challenges will require strong policy support from governments, as well as enhanced collaboration between the private and public sector.

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