Iran, Saudi Arabia to dominate Middle East offshore capex

Gulf producers Iran and Saudi Arabia will lead offshore investments in the Middle East region over the next few years, according to Infield Systems.

Offshore staff

LONDON -- Gulf producers Iran and Saudi Arabia will lead offshore investments in the Middle East region over the next few years, according to Infield Systems.

The study also says Azerbaijan should remain the largest offshore producer of both oil and gas in the Caspian Sea, and also leads the way in capex, with Kazakhstan, Russia, and Turkmenistan each expected to contribute $1.6-2 billion over the forecast period.

Infield’s new “Offshore Middle East & Caspian Sea Oil & Gas Market Report To 2015” predicts a 33% increase in offshore capex across the Middle East and Caspian over the next five years compared to 2006-10, up from $29.9 billion to around $39.9billion.

Much of the growth will come from an expected capex increase of $6 billion in Iranian projects to around $12 billion. Infield forecasts capex in Saudi Arabia of $5.8 billion over 2011-2015, up from $4.5 billion during 2006-2010.

The two countries combined should contribute just over 44% of total offshore capex in the region between 2011 and 2015. However, capex from Qatar looks set to drop off compared with the previous five years due to a moratorium on further development of the North field which could last through 2014.

Infield sees Israel becoming an influential contributor to the regional offshore oil and gas scene, with new offshore gas projects going forward in the eastern part of the Mediterranean Sea. It anticipates just over $2 billion capex commitments in the Israeli sector over the next five years, compared to $272 million over 2006-10.
One of the main drivers for offshore development will be continued strong demand for natural gas in the Persian Gulf region and the broader Middle East.

Infield’s report also assesses the impact of the latest round of sanctions imposed on Iran due to its nuclear program, and how these sanctions have impacted development of Iran’s offshore oil and gas sector.

Iran will rely increasingly on China as a major source of investment, the authors claim, but the number of potential partners with the technology and expertise to develop Iran’s energy sector has been reduced.

This could lead Iran to maximize the involvement of domestic companies, but it will still have difficulties gaining access to the latest technology and equipment to develop, for example, its LNG sector.

01/11/2011

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