North America Dominates Middle East for Investment in Oil and Gas Projects

Tuesday 8 March 2016, Amsterdam

The new report, now available on ASDReports, Construction Intelligence Center (CIC) shows that despite the collapse in oil prices and the negative impact this is having on investment in the industry, there is a huge pipeline of projects worth US$3.24 trillion in 18 key countries.

North America has shown the highest growth in the oil and gas sector in recent years, owing to the development of Canada’s oil sands industry and the US shale fracking boom. According to the report, Canada is in a leading position in terms of planned investment, with the total value of projects standing at US$593.6 billion, followed by the US with US$422 billion. Both countries are also investing heavily in the export of liquefied natural gas (LNG) to the expanding Asia-Pacific markets. Moreover, Australia is also a major player in the industry, with projects valued at US$246.5 billion, and it has huge shale oil reserves that are attracting investment. Brazil is also becoming a significant producer with a project pipeline valued at US$206 billion.

In contrast, the traditional Middle East producers have comparatively low investment in oil and gas projects. Iraq is leading with investment of US$210.8 billion, while Iran is expected to invest heavily in its oil and gas industry after the lifting of international sanctions on trade. The low price of oil has impacted on investment for Saudi Arabia and its GCC neighbours like the UAE, with both countries having low investment in oil and gas projects, at US$76.0 billion and US$72.5 billion respectively, putting them just ahead of the UK with US$71.8 billion.

The highest value projects tracked are the US$80 billion Libra Offshore Oil Field Development in Brazil and the US$70 Power of Siberia Gas Fields and Transmission System Development in Russia.

According to Neil Martin: “The power struggle between the producers of oil and gas has been apparent in the last few years, with North America taking more of the market from the Middle East, and Russia becoming a major influence particularly in the supply of natural gas.”

“The recent collapse in oil prices and brinksmanship by oil producers will see the economies of some countries, such as Nigeria and Venezuela, which are dependent on hydrocarbon revenue, being severely damaged. Iran is expected again to be a major contributor to the market after sanctions were lifted, albeit with slow growth,” says Martin.

“Furthermore, the industry is expecting decreases in production by the US; however, oil prices are not expected to rise in the short term and are largely dependent on production agreements by OPEC and other producers. It is therefore still likely that a number of planned projects may be shelved,” he concludes.