MENA energy investments to hit $879bn in next five years
Energy investments in the Middle East and North Africa are projected to grow 9 per cent in the next five years to more than $879 billion, as energy exporters boost spending amid higher oil revenue, according to a report by Arab Petroleum Investments Corporation (Apicorp).
The investments, which include both planned and committed investments in the region between 2022 and 2026, are up $74bn when compared with last year's estimates by the Saudi Arabia-based multilateral lender.
Saudi Arabia, Opec’s largest crude producer and the Arab world’s largest economy, is expected to lead the region in energy investments, followed by Iraq, Egypt and the UAE, Apricorp said in its Mena Energy Investment Outlook 2022-2026 report on Tuesday.
Of this, investments in committed projects — ones in execution stage — amount to $352bn, while planned projects investment total $527bn, the report said.
Countries are boosting investments in different sectors, including oil and gas, power and petrochemicals.
“Mena countries shoulder the largest share of global investments in oil and gas going forward to ensure global energy security and avoid an impending super cycle that may severely hamper the world economy,” said Ramy Al-Ashmawy, senior energy specialist at Apicorp.
“At the same time, the region continues to invest in decarbonisation, renewables and clean energy as part of the long-term strategic vision for a low-carbon future underpinned by a greener, more balanced and sustainable energy mix.”
Gulf economies are forecast to receive up to $1.4 trillion in additional revenue in the next four to five years as a result of higher oil prices and lower inflation, the International Monetary Fund said in a report last month.
Oil prices, which rose 67 per cent in 2021, rallied to a notch under $140 per barrel in March before giving up some gains. They are still up 60 per cent since last year on supply concerns amid the Russia-Ukraine conflict.
The Mena region is expected to add 5.6 gigawatts of installed capacity from renewables in 2022, from 3 gigawatts that came online in 2021, according to Apicorp. By 2026, the region is expected to add 33 gigawatts of installed capacity.
Morocco and Jordan are leading the race for achieving renewable energy targets in the region, while other countries, including Saudi Arabia, UAE, Egypt and Oman, have relatively low renewable energy generation, but they are expected to witness a “significant increase with several planned and committed large-capacity projects in the pipeline”, the report said.
The UAE, Opec's third-largest oil producer, aims to become carbon neutral by 2050, with clean and renewable energy investments worth Dh600bn ($163.5bn) planned over the next three decades.
Abu Dhabi, which accounts for the bulk of the UAE's oil production, is building the world’s largest solar plant at Al Dhafra with a capacity of 2 gigawatts, while Dubai is building the world’s largest solar energy park in an effort to reduce reliance on natural gas and diversify its power sources.
