A greater role for private sector investment in the Middle East's oil & gas sector is required to support governments and national oil companies to meet growing energy demand in the region, said Majid Jafar, CEO of Crescent Petroleum and Vice-Chairman of the Crescent Group.
According to estimates by the International Energy Agency, the oil & gas sector in the Middle East will require a total of $1.6 trillion of new investment over the next 25 years, equating to $65 billion annually.
In a speech at the 2013 Oil & Money Conference in London, Majid Jafar emphasized the need to provide incentives for investment and increased partnership between the public and private sectors to address the growing needs of energy supply in the Middle East region, which now has the fastest growing energy markets in the world. He also highlighted the need to tackle energy subsidies, which are costing the Middle East North Africa region over $500 billion annually, according to the latest report by the International Monetary Fund (IMF).
The Middle East's energy demand, equivalent to 12.5million barrels oil equivalent per day in 2010, is forecast to expand to 15.5m BOE/D by 2020 and to reach 18.5m BOE/D by 2030 – of which oil & gas will still contribute 96 percent – emphasizing the resources' continued importance to the region. But meeting this demand should not be difficult, since the Middle East is endowed with 48 percent and 43 percent of global oil & gas proven reserves, respectively.
"The role of the private sector in all sectors of the economy is important to bring in project management skills, new capital and technology, and to help create new jobs in partnership with the national oil companies and regional governments in order to address the future investment and energy needs of growing economies," said Jafar.
Over the past decade, the global exploration and production industry has increased global oil & gas production from c. 128m BOE/D to c. 145m BOE/D. The national oil companies and independent private companies, which contribute more than 80 percent of this production, have been the chief contributors to this production growth, growing their production bases by over 25 percent and 15 percent respectively in this period. By contrast, the large energy major companies, which have maintained their share of the global mix at around 16 percent, have grown their aggregate production base by only around 5 percent over the same period.
The Saudi Gazette