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DOHA: With an objective to meet its fast growing electricity demand, the Middle East and North Africa’s (Mena) total energy capital investment is expected to add up to $740bn for the five year period 2013-17, according to a new report.
In Saudi Arabia, investment is projected to reach $165bn and UAE $107bn. Qatar, Iran and Algeria are among other countries to Algeria is another country which is expected to see exponential investment growth in the power sector during the five-year period, said the report published by the Arab Petroleum Investment Corporation.
Notwithstanding sustained expansion of investment, power supply has fallen short of needs in the Mena region. To catch up with unmet potential demand, medium-term capacity growth, which has been worked out on a country by country basis, is expected to be much higher than that of economic output-7.8 percent for the period 2013-17 against 4.5 percent for GDP. This would require an investment of about $250bn, 59 percent for a new generation capacity and the remaining 41 percent for transmission & distribution (T&D).
Tighter international sanctions, and the retreat of foreign companies, have ended up taking a toll on Iran’s elusive energy investment programme, which has tentatively been put at $68bn. Despite moving up the rankings ahead of Qatar and Kuwait, Iraq with $56bn worth of capital requirements is still far below its huge potential.
The report noted under-investment is apparent both in Kuwait and Qatar. In Kuwait, government policy has often been at odds with parliamentary politics and efforts to align the two have been repeatedly frustrated. As a result, major components of the upstream development continue to be questioned and key downstream projects such as long-delayed giant Al Zour refinery are still striving for materialization.
In contrast, Qatar’s stagnation is the result of the lack of a pure policy decision on whether or not to extend the ongoing moratorium on further development of the North Field, beyond the domestic market oriented Barzan project. As a result, and despite a shift in emphasis on enhancing oil recovery and expanding the petrochemical industry, energy investment in Qatar has lost momentum.
The region is facing major challenge in the supply of fuel/feedstock-primarily natural gas to the petrochemical industry and the power sector.