Gulf’s Energy Investments
The outlook for the GCC economy improved significantly in H1 2022. Energy prices are driving a rapid economic recovery in the region with most states forecast to achieve significant fiscal surplus by the end of the year.
The invasion in Ukraine resulted in the surge in oil and gas prices and had a radical impact on the fiscal outlook for oil-exporting countries. The improvement in the GCC’s economic and fiscal outlook encourages the investment in projects.
The IMF’s latest forecasts see a 5% spending increase in 2022, driven by Qatar and the UAE, while Saudi Arabia and Oman, are both showing modest 4% year-on-year increases in expenditure.
The total planned and committed energy investments in MENA is expected to increase by 9% to exceed $879 billion over the next five years, says a report by the Arab Petroleum Investments Corporation (Apicorp). Saudi Arabia leads the region in energy investments.
The energy investment shows that the GCC continues to progress the transformation from global oil and gas suppliers to energy transition leaders by diversifying into other forms of energy. Decarbonization, renewables and clean energy are part of its long-term strategic vision now.
Governments have set ambitious clean energy targets. About 98 GW of new renewables capacity is planned across the Middle East region with 39 GW due to come on stream by 2025. A number of projects have been proposed for the development of hydrogen production and export. The UAE, Saudi Arabia and Oman have so far been the most aggressive in advancing hydrogen.
The oil and gas sector too is continuing on a rising trend. Amid stronger oil prices, a wave of upstream oil schemes has taken shape.
Governments are backing large-scale investment programmes, and also accelerating efforts to increase private sector participation. The projects’ outlook seems brighter going ahead.