The Arab Petroleum Investments Corporation (Apicorp) has said that it expects project spending in the Middle East's energy market over the next five years to hit $919 billion.

The Dammam-based institution, which acts as a devlopment bank for energy projects, said that despite uncertainties clouding the investment outlook, spending on energy projects in the region is set to increase. It said that about $345 billion has already been committed to projects that are currently under execution, while a further $574 billion worth of new projects are planned.

In a special report published on Wednesday, Apicorp said that the overall economic outlook for the region looks similar to last year, with growth of 3.2 percent expected both this year and next. It added, however, that global investment on the oil and gas market is expected to pick up and the MENA region is likely to benefit from this.

The report cited International Energy Agency data, which said that investment in the industry recovered slightly in 2017, following sharp declines of 24 percent and 26 percent in 2016 and 2015 respectively, which it described as "one of the biggest back-to-back drops in history".

In terms of new investment, Saudi Arabia is expected to lead the way with an expected spend of $149 billion over the five-year period, followed by the United Arab Emirates and Egypt ($72bn each), Kuwait ($59bn), Algeria ($58bn), Iran ($57bn) and Iraq ($37bn). Projects in the three remaining GCC states (Oman, Qatar and Bahrain) amount to $57bn of investment, whereas the total planned projects in Morocco and Jordan amount to $19bn, the study said.

OF the $574 billion of projects planned, $187bn are power projects, $169bn are oil projects and $150bn are gas. Some $251bn of projects remain under study, and Apicorp said that "given the current investment climate and uncertain outlook", it did not anticipate that all of these would be built.

Potential barriers to projects moving ahead are the volatility of the oil price, a rising cost of capital and a geopolitical environment in the region that remains 'fragile', Apicorp said, with persistent conflicts creating instability that deters investors.

In a press release accompanying the report, Apicorp chief executive Dr Ahmed Ali Attiga said: “We expect the MENA region to continue investing heavily as major energy-exporting countries expand the size of their energy sector and strengthen their positions in global markets.”

Abu Dhabi National Oil Company announced in a separate statement yesterday the signing of the latest of a series of new offshore concession deals with China National Petroleum Company's (CNPC) PetroChina arm. PetroChina paid 4.3 billion dirhams ($1.17bn), comprised of a 2.1 billion fee for a 10 percent stake in the Umm Shaif and Nasr field and a 2.2 billion dirham payment for 10 percent of the Upper Zakum field.

The deal follows on from a string of new concession announcements by Adnoc, including a 5.3  billion dirham agreement earlier this week with France's Total, for a 20 percent stake in Umm Shaif and Nasr and 5 percent in Upper Zakum. Further concession stakes in the same two offshore fields have been signed over the past six weeks with ENI of Italy, ONGC Videsh of India and INPEX of Japan, although ADNOC has retained a 60 percent stake in both concessions, according to Reuters.

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(Writing by Michael Fahy; Editing by Anoop Menon)
(michael.fahy@thomsonreuters.com)

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