Middle East oil & gas, published by Ernst & Young
Published by Ernst & Young
With almost two-third of the world's proven oil reserves, the Middle East has no shortage of fuel and will not run out for many decades to come. Yet the investment rationale of many countries in the region is to diversify away from this superabundant supply and thereby limit the danger of economic hardship in future. It is also a means of capitalising on good fortune, by creating further wealth from the proceeds of oil production.
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Across the region, there are few opportunities for foreign direct investment in oil production. This is directly controlled by governments, by state-owned companies, or companies owned by members of ruling families.
Nevertheless, there are many opportunities to partner with local companies in the 'downstream' oil sector, i.e. the refining process and in manufacturing products reliant on petrochemicals. For example, Saudi Arabian oil companies have explored the potential of attracting automotive companies into the country, to make plastic car components, drawing on the need for petrochemicals.
The Middle East produces just over 12 per cent of the world's supply of natural gas, with Saudi Arabia accounting for 2.6 per cent and Qatar 2.0 per cent. The most dramatic change has been Qatar's rise to prominence in the gas sector in the decade from 1998 to 2008, during which its production rose from 19.6 billion cubic metres per year to more than 60 billion cubic metres. This contributed a great deal to Qatar's newfound prosperity, the ability of its SWFs to invest overseas and to the heightened interest among international investors to form business links with the country.