A new Deloitte report looks at the opportunities for private sector investment in the oil and gas sector
The report has shown that approximately US$ 140 billion worth of engineering and construction contracts have been either awarded by National Oil Companies (NOCs) or are planned throughout the Middle East in 2011.
According to the Deloitte white paper, upstream oil and gas development and pipelines have not been widely accessible to the private sector and looks at Saudi Arabia as an example which has developed its own gas initiative some time ago to lessen dependence on imported gas for domestic consumption and exploit natural gas reserves for the same purpose.
"In common with other GCC NOC's, the Kingdom entered into joint ventures and contracts with International Oil Companies (IOCs) to access the technology and transferable skills necessary to enable optimal use of their natural resources," said Kenneth McKellar, partner and Energy and Resources leader at Deloitte in the Middle East.
Offshore exploration
The report reiterates that offshore exploration also presents an opportunity for IOCs to lend much needed technical expertise and reveals that regional NOCs originally focused on more accessible and cheaper, onshore exploration but are now under pressure to maximize and replace output from onshore and offshore fields that are maturing.
"The region's offshore technological requirements have to cover a range of geologies, from the large shallow-water Gulf acreage, to the deep-water acreage in Egypt with depths of over 600 meters," reiterated McKellar.
Private sector's potential
The Deloitte report states that an area where the private sector has the potential to play a particularly important role is the construction and upgrading of regional petrochemical refineries and petrochemical plants.
"Over the course of the coming decade, governments of the Middle East will deploy significant resources to ensure that petrochemicals manufacturing plays a key role in their domestic industrial base," stated McKellar.
The Deloitte paper reports that private sector involvement throughout the Middle East enabled petrochemical capacity in the region to grow by 3.7 per cent during the past decade, despite the global financial crisis, and at a time when manufacturers in the US and Europe were forced to either cut production or close their facilities.
The report also looks at the growing importance of drilling services as the increased demand hydrocarbon production increases this will result in greater demand for drilling activity both onshore and offshore.
The report states that Oil Field Services (OFS) in the region are provided not only by the in-house resources of the NOC's, but also by a host of private players, both international and domestic, who will conduct drilling work with expenditure in the MENA region forecasted to surge by over US$ 10 billion to reach US$28 billion by 2014.
