Regional report: Middle East — Investment in key projects continues

It goes without saying that the Middle East has historically been an important contributor to the global oil and gas market, with numerous prolific reservoirs. Accordingly, analysts and investors expect to see some big changes over the next 12 months. According to the University of Texas at Austin’s director of the Center for Subsurface Energy and the Environment, Professor Hugh Daigle, “this long history of production presents challenges and opportunities for future production.” His bet is that additional oil production from old fields “can be achieved through EOR technologies.”

Many large Middle Eastern fields contain carbonate rocks, which present challenges for EOR, due to complex pore structure and the presence of fractures. Daigle, who serves in the University’s Department of Petroleum and Geosystems Engineering, believes that recent advances in EOR in carbonates may enable operators in the region to see success with EOR: “Old fields also produce large volumes of water, but this water often contains valuable chemicals like lithium, and there is growing interest in the region in recovering critical minerals from produced water.” 

In addition to conventional oil and gas production, several Middle Eastern countries, including Saudi Arabia, are investigating the potential for production from unconventional resources, Fig. 1. Daigle thinks that “if sufficient resources are present and can be extracted, the additional production could offset declines in older conventional fields.”

Fig. 1. Saudi Arabia is one of several Middle Eastern countries assessing the potential for production from unconventional resources, such as this well site at Wa’ad Al-Shama. Image: Aramco.

It’s notable that, in addition to oil and gas production, there is a growing focus in the Middle East on low-carbon energy and decarbonization. An emerging hydrogen economy could be a new market for natural gas, if the hydrogen is produced from methane, and we may see a push for more production and use of synthetic fuels. The region also has large carbon storage capacity. Daigle notes that “recent work has shown the potential for safe, long-term storage of carbon dioxide in ophiolites in Oman, and it is likely that the region will see more activity in this area.” 

A growing number of analysts are predicting changes for oil and gas investment activity in the Middle East over the next 12 months. Here are some of their key predictions:

• Modest overall growth. Energy investment in the Middle East is expected to reach approximately $175 billion in 2024, with clean energy accounting for around 15% of the total investment.
• Slower upstream capex growth. The Middle East's upstream oil and gas capital expenditure (capex) growth is forecasted to slow down significantly, compared to other regions. It's predicted to rise from $60 billion in 2023 to only $65 billion in 2030, an increase of just $5 billion. Indeed, analysis house Evercore said in its mid-year Spending Outlook that Middle Eastern spending would be up only 9.4% in 2024, compared to an 11.4% gain in 2023, Table 1.   

• Declining global share. The Middle East's share of global upstream capex is expected to decline from 10% in 2024 to 9% in 2030.
• GCC national oil companies' spending. Capital expenditures of national oil corporations in the Gulf Cooperation Council (GCC) are estimated to total $115 billion in 2024, a 5% increase over 2023’s level.
• Impact of production cuts. Saudi Arabia's planned output cuts are likely to reduce demand for drilling platforms, operating ratios, average daily production rates, and profitability among regional drilling companies.
• Continued investment in key projects. Despite the overall slowdown, significant investments are expected to continue in major projects like Qatar's North Field Expansion (NFE) and the UAE's ongoing development plans.
• Shift towards clean energy. While fossil fuel investments still dominate, there's an increasing focus on clean energy investments, with expectations that they will more than triple by 2030, compared to 2024 levels.
• Regional variations. Investment patterns are likely to vary significantly across the region, with some countries like Qatar and the UAE maintaining higher levels of investment, compared to others. 
• Potential for increased debt. S&P Global Ratings estimates that the debt-to-EBITDA ratio of rated and publicly listed drillers based in GCC countries could increase by approximately 1x, on average.
• Uncertainty in long-term outlook. Experts note significant uncertainty around the trajectory for global oil and gas demand and the pace of the energy transition, which could impact investment decisions in the region. 

These predictions suggest a cautious investment environment in the Middle East's oil and gas sector over the next 12 months. There will be a gradual shift towards clean energy investments and continued focus on strategic projects despite overall slower growth in upstream capex. 

In the not-so-distant background of these expert predictions are all of the region’s current and future political and military conflicts. Any short listing of these is enough to scare off some lead investors:

• Ongoing Gaza conflict. The war between Israel and Hamas in Gaza is expected to continue without resolution in the near term. Experts see this as a highly volatile and fragile situation.
• Potential Israel-Hezbollah conflict. There are growing concerns about a potentially devastating conflict breaking out between Israel and Hezbollah in Lebanon.
• Risk of regional escalation. Some experts worry that heightened military conflict with Hezbollah, coupled with unrest in the West Bank and global terrorism, could lead to a wider regional war.
• Iranian involvement. Iran's actions and potential responses to regional developments remain a significant factor. Some experts note the possibility of Iranian-backed groups escalating tensions.
• Continued instability in Yemen. While currently in a stalemate, the civil war in Yemen could reignite at any time.
• Potential conflicts in Africa. There are concerns about conflicts in West Africa, potentially involving Russian Wagner Group mercenaries and various terrorist organizations.
• The probability of major power intervention. Experts generally do not expect direct military involvement from major powers like the U.S. or NATO in Middle Eastern conflicts, barring significant escalation.
• Ongoing low-intensity conflicts. Several existing conflicts, such as those in Syria and parts of Iraq, are likely to continue at varying levels of intensity.
• Uncertainty, due to elections. Upcoming elections in the U.S. and Europe, and potentially in Israel, add an element of unpredictability to regional dynamics.
• Humanitarian concerns. Regardless of specific conflict outcomes, experts anticipate significant humanitarian challenges, particularly in Gaza and other conflict-affected areas. 

SAUDI ARABIA 

State firm Aramco’s massive capital budget continues to focus on expanding its crude oil production capacity and gas operations, Fig. 2. The Dammam development project expects to add 25,000 bpd of crude oil production later in 2024 and 50,000 bpd by 2027. The Marjan and Berri crude oil increments are set to increase production capacity by 300,000 bpd and 250,000 bpd, respectively, by 2025. The Zuluf crude oil increment will process 600,000 bpd of crude oil from Zuluf field by 2026. 

Fig. 2. Development drilling in Saudi Arabia continues at a strong pace, as the Kingdom strives to expand crude oil production and gas operations. Image: Aramco.

Aramco is pursuing an ambitious strategy to increase its gas production by more than 60% by 2030 compared to 2021 levels. Ongoing design, procurement, and construction activities at the Jafurah Gas Plant, with Phase One expected to commence production in 2025. Construction and procurement activities for the Tanajib Gas Plant, part of the Marjan development program, expected to add 2.6 bscfd of processing capacity by 2025. Commencement of gas reproduction from the Hawiyah Unayzah Gas Reservoir Storage facility 

Aramco has made strategic moves to expand its downstream and chemicals portfolio. It acquired a 10% interest in Rongsheng Petrochemical Company Limited, securing the right to supply 480,000 bpd of crude oil to its affiliate. It also completed the acquisition of Valvoline Inc.'s global products business, enhancing Aramco's lubricants capabilities. 

The company has been expanding its global footprint. For its first international investment in LNG, it acquired a strategic minority stake in MidOcean Energy. It also did two other transactions: buying Chilean downstream player Esmax Distribución; and buying a 40% stake in Pakistan's Gas & Oil Pakistan. 

Beyond hydrocarbon production, Aramco delivered its first independently-verified carbon offset crude cargo. It signed agreements for the development of three new solar photovoltaic projects with a combined capacity of 5.5 GW. And the company has made continued progress on blue ammonia production, aiming for 11 MMtpa by 2030. 

Aramco reported strong financial results and outlined its investment plans: 

• Free cash flow reached $101.2 billion in 2023. 
• Capital investments in 2023 totaled $49.7 billion, a 28% increase from 2022. 
• The company expects 2024 capital investments to be approximately $48 billion to $58 billion, with plans to increase spending until around the middle of the decade. 

The company will reduce capital investment by approximately $40 billion between 2024 and 2028, due to the directive to maintain Maximum Sustainable Capacity at 12 MMbpd. Over the next decade, Aramco plans to allocate 50% of its capex to upstream, 35% to downstream, and 15% to new energies. 

UAE 

Abu Dhabi National Oil Company (ADNOC) has aggressively pursued LNG expansion. The company plans to invest over $13 billion in domestic and international growth opportunities between 2024 and 2029, with the aim of increasing its EBITDA by up to 40% by 2029. 

A cornerstone of their strategy is the Ruwais LNG project, Fig. 3. In first-quarter 2024, ADNOC awarded a pivotal early EPC contract. The project is set to more than double ADNOC's LNG production capacity by 2028. In July 2024, ADNOC entered into agreements with majors, including BP, Mitsui, Shell, and TotalEnergies, to farm out 40% ownership in Ruwais. This move not only secures significant investment but also brings in valuable expertise from global industry leaders. 

Fig. 3. The Ruwais LNG project is the centerpiece of ADNOC’s LNG expansion effort. Image: ADNOC.

ADNOC has been expanding its international footprint, particularly in the U.S. LNG market. In May 2024, ADNOC acquired an 11.7% stake in Phase 1 of NextDecade's Rio Grande LNG project in Texas, marking its first strategic investment in the U.S. This acquisition aligns with ADNOC's strategy to expand its lower-carbon LNG portfolio and meet growing global gas demand. 

ADNOC Gas, the integrated gas processing unit of ADNOC, has been actively securing long-term supply agreements. In first-quarter 2024, ADNOC Gas signed a 10-year LNG supply agreement with GAIL India Limited for 0.5 MMmt of LNG per annum. A 20-year LNG offtake agreement was established with NextDecade for 1.9 MMt per annum from Rio Grande LNG Train 4. 

ADNOC company is expanding its natural gas pipeline network and developing infrastructure to boost gas supply for petrochemicals growth in Ruwais. ADNOC is working towards increasing its oil production capacity to 5.0 MMbpd by 2027, which will contribute to an increase in associated gas production. 

ADNOC Gas reported strong financial results in first-quarter 2024, with revenues increasing 15% year-on-year to $6 billion. This robust performance underpins the company's ambitious investment plans. 

ADNOC is focusing on decarbonization, digital transformation, and AI-led technology innovation. In 2023, the company successfully completed a pilot project, using advanced robotics for continuous monitoring and inspection of large facilities, enhancing equipment availability and employee safety. 

KUWAIT 

One of the quieter countries in the region, the Emirate of Kuwait is particularly dependent on oil revenues for its income. According to figures from the U.S. International Trade Administration (ITA), oil accounts for around 95% of exports, and roughly 90% of government export revenue. ITA adds that Kuwait holds approximately 7% of global oil reserves and has a current production capacity of about 3.15 MMbopd. 

On July 14, Reuters reported that Kuwait Petroleum Corporation (KPC) announced that its upstream subsidiary, Kuwait Oil Company (KOC), had made a "giant" oil discovery in Al-Nokhatha offshore field. The site is east of the Kuwaiti island of Failaka, with oil reserves in the find estimated at 3.2 Bbbl. KPC CEO Sheikh Nawaf Saud Nasir Al-Sabah said in a video posted on X that the new discovery's reserves were equivalent to Kuwait’s entire oil production for three years. 

According to KPC, the estimated area for the newly discovered field is around 96 km².  The firm added that preliminary reserve estimates at the field were about 2.1 Bbbl of light oil and 5.1 Tcf of gas. The latter corresponds to 3.2 Bboe. KPC said that KOC planned to start production from the field as soon as possible. Meanwhile, drilling in the emirate remains at an elevated level, as the emirate strives to maintain production, Fig. 4. 

Fig. 4. Drilling in Kuwait has increased over the last two years, as the emirate works to maintain oil output. Image: Kuwait Oil Company.

Country risk and research firm BMI says it has revised down its Kuwait total oil production forecast for 2024 to a decline of 6.3%, as a result of the OPEC+ cuts announced in June 2024, and a 1.1% decrease in 2025, due to the additional rollover of cuts announced in September 2024 and the expectation of further cut extensions. 

BMI says that based on the latest OPEC secondary source data available for the first half of 2024, Kuwait demonstrated a high level of compliance with OPEC+ oil production quotas. Thus, the research firm does not expect the emirate’s compliance to weaken, going forward. 

BMI remains bullish on Kuwait's natural gas production over the next two years. One reason is that Kuwait fully commissioned Jurassic Production Facilities 4 and 5. They became operational in February 2024.  

OMAN 

Oman's state-owned oil and gas company, represented primarily by Petroleum Development Oman (PDO) and OQ (formerly Oman Oil Company), has been actively pursuing various investments and initiatives over the past 12 months. The aim is to boost the country's hydrocarbon sector. What follows is an overview of key developments. 

Fig. 5. During 2023, Oman added 309.4 MMbbl of reserves through 15 development and 39 exploratory wells. The country is hoping that 2024’s drilling performance is equally productive. Image: Petroleum Development Oman.

Oman's crude oil reserves increased 1% to 4.971 billion bbl by the end of 2023. The country added 309.4 MMbbl of reserves through 15 development and 39 exploratory wells, Fig. 5. Crude oil and condensate production reached approximately 388.8 MMbbl in 2023, with an average daily production of 1.064 MMbbl. Gas production saw a 2.4% increase, with non-associated natural gas output reaching 48.553 MMcm in 2023. 

Concessions. The Ministry of Energy and Minerals launched a new batch of oil and gas concession areas during September 2024, including both onshore and offshore blocks. Ongoing investments in exploration activities have led to new discoveries, with the government announcing potential increases in production by 50,000 bopd to 100,000 bopd in the coming years. 

Infrastructure and technology have been a major focus. In particular, significant investments have been made in aging oil infrastructure, including pipelines, wellheads and pumps. There's a growing focus on advanced technologies, such as 3-D seismic analysis to facilitate exploration efforts, particularly in complex geological formations and offshore areas. The industry is shifting towards maximizing output from cost-effective reservoirs, using innovative technologies to cut costs and eliminate waste.  

Renewable energy. OQ, through OQ Alternative Energy, is in advanced discussions with TotalEnergies to jointly develop a portfolio of up to 800 MW of renewable energy projects. This includes a 300-MW solar project to supply the Marsa LNG project. PDO has pledged to eliminate routine gas flaring by 2030, aligning with the World Bank's Zero Routine Flaring initiative. 

LNG. The Marsa LNG project, a JV between TotalEnergies (80%) and OQ (20%), received its FID in April 2024. This integrated project includes upstream gas production of 150 MMcfd from Mabrouk North-East field and a new 1 Mt/y liquefaction plant. OQ reported strong financial performance in 2023, with an EBITDA of $5.137 billion and a net profit of $2.518 billion. 

Privatization. OQ has been actively pursuing privatization initiatives, including: 

• Attracting foreign investors to Blocks 48 and 60. 
• Divesting its stake in Gulf Energy Maritime. 
• Selling its 30% stake in Vale Oman. 
• Successfully launching IPOs for Abraj Energy Services and OQ Gas Networks, with the latter becoming the largest IPO listing in the history of Muscat Bourse. 

Oman LNG signed an SPA with TotalEnergies to offtake 0.8 Mtpa of LNG for ten years, from 2025. 

QATAR 

Qatar continues to be an LNG exports world leader. While the Biden administration paused permitting for additional LNG export capacity, increased worldwide demand for gas was necessarily met by other countries. Daigle predicts that “it is likely Qatar and other Middle Eastern countries will lead in export capacity.” 

Over the past 12 months, Qatar's national oil and gas company, QatarEnergy (formerly Qatar Petroleum), has actively pursued various investments and initiatives to strengthen its position in the global energy market.  

The cornerstone of Qatar's oil and gas strategy remains the massive NFE. QatarEnergy is progressing, with $28.75 billion of committed funds. NFE aims to increase Qatar's LNG production capacity from 77 MMtpa to 110 MMtpa by 2025. The company is also moving forward with the North Field South (NFS) project, which will further boost capacity to 126 MMtpa by 2027. In total, these expansions will increase Qatar's LNG production capacity to 142 MMtpa by 2030, cementing its position as the world's largest LNG exporter. 

QatarEnergy has been forming partnerships actively with major international oil companies for the North Field expansion. TotalEnergies, ExxonMobil, Shell, Eni, and ConocoPhillips have all secured stakes in NFE’s various phases. These partnerships bring in valuable expertise and share the project's substantial costs and risks. 

QatarEnergy continues to expand into the U.S. LNG market. The company is planning to invest approx. $20 billion in the U.S. over the next five years. A key focus is the Golden Pass LNG Terminal in Texas, a JV with ExxonMobil, which starts operations in late 2024. 

While maintaining its LNG focus, QatarEnergy is also diversifying into renewable energy. The company has been investing in solar energy projects, including the Al Kharsaah solar power plant, which became operational in 2022. QatarEnergy is exploring opportunities—in hydrogen production and carbon capture and storage technologies—to reduce its carbon footprint. 

While all of the above are underway, QatarEnergy is busy expanding downstream operations. The company is investing in petrochemical projects, both domestically and internationally, to capture more value from its hydrocarbon resources. In 2023, QatarEnergy signed an agreement with Shell to develop a major Qatari petrochemicals complex. 

QatarEnergy is investing in technological innovations to improve efficiency and reduce environmental impact. The company is implementing advanced technologies in its LNG facilities, including the use of carbon capture and storage. Investments in digitalization and artificial intelligence are being made to optimize operations across the value chain. 

QatarEnergy continues to expand its international exploration portfolio. The company has secured exploration rights in several countries, including Brazil, Namibia and Guyana, diversifying its resource base beyond Qatar's borders. 

QatarEnergy also has been focusing on sustainability and environmental responsibility. The company announced plans to reduce greenhouse gas emissions intensity from NFE by 35%, compared to similar facilities worldwide. Investments in flare reduction technologies and methane emissions management are ongoing. 

IRAN 

Despite ongoing international sanctions, Iran's National Oil Company (NIOC) over the past 12 months actively pursued investments. NIOC signed several significant contracts to increase oil and gas production: A $13 billion package of deals with domestic service companies aimed at adding 350,000 bpd of new oil production from six major fields over the next 12 months.  

The largest agreement was an $11.5 billion, 20-year contract for integrated development of Iran's largest oil field, Azadegan, with the goal of more than doubling production to 550,000 bpd from 205,000 bpd. A $1.036 billion, 20-year agreement for Phase 2 of the Azar field development targets an increase of 177 MMbbl of production. 

In addition, contracts have been signed for developing the Soumar, Saman, and Delavaran fields in western Iran. Twenty billion dollars in contracts were awarded to domestic firms, to increase pressure and production from the South Pars gas field, offshore in the Gulf. 

NIOC, through National Iranian Oil Refining and Distribution Company, announced that several investment opportunities, valued at $19 billion, are available for investors in the Iranian refining sector. The dearth of investor interest contrasts with the fact that the Middle East’s largest Izomax unit, with 42,000 barrels of capacity, is set to become operational at the Abadan refinery.  

NIOC plans to launch more than 1,100 km of pipelines, potentially saving 67 million liters of diesel consumption daily. It also wants to expand southern export infrastructure, including new subsea pipelines connecting the Fao terminal to the Al Basra Oil Terminal. 

Despite sanctions, crude exports grew by about 50% in 2023 to a five-year high of approximately 1.29 MMbpd, with around 90% going to China. By May 2024, Iranian oil exports hit 1.7 MMbpd, the highest level since in five years since May 2019, when U.S. sanctions hit. Iran produced 2.859 MMbpd in 2023, about 305,000 bpd more than in 2022.

By May 2024, Iranian oil output had jumped to 3.238 MMbpd, a six-year high. Further growth the rest of this year is expected.    

NIOC has focused on increased cooperation with Russia, including a $40 billion memorandum of understanding with Gazprom for support in expanding gas and oil fields. The emphasis is now on continued sales to non-Western buyers, particularly China, and exploration of markets in countries like Syria and Venezuela. 

IRAQ 

In May 2024, Iraqi National Oil Company (INOC) oversaw the combined “fifth-plus” and sixth oil and gas licensing rounds, which marked a significant milestone in the country’s efforts to attract international investment. Here are some highlights of this effort:  

• Thirteen out of the 29 projects offered attracted investor interest. 
• Chinese companies dominated the bidding, securing contracts for 10 blocks. 
• KAR Group, an Iraqi-Kurdish company, won contracts for three blocks. 
• Profit shares for winning companies ranged from 6.67% to 32%. 
• Only two out of 11 offered gas fields garnered interest: Khliesiea in Anbar and Nineveh provinces, and Qurnain in Anbar and Najaf provinces. 
• Chinese companies expressed willingness to invest in eight out of 14 offered oil fields. 
• Six oil fields remained unclaimed.  

INOC is working towards ambitious production targets, aiming to increase oil production capacity to 6.0 MMbpd by 2027. Current oil production capacity is estimated at just over 5.0 MMbpd, though independent estimates place it closer to 4.8 MMbpd. INOC wants to increase gas production, to reduce flaring and meet domestic demand. The target is to more than double gas output to 4.4 Bcfd by 2030. The aim is to eliminate gas flaring and end reliance on gas imports.  

INOC is working to expand southern export infrastructure, including new subsea pipelines (Sealines 4 and 5) connecting the Fao terminal to the Al Basra Oil Terminal.  Collaboration with TotalEnergies is focused on a water injection project, crucial for increasing oil production, expected to come online by 2027. 

INOC is overseeing expansion in the downstream sector. A contract was awarded to China National Chemical Engineering Corporation to build a 300,000-bpd oil refinery near the Al-Faw Grand Port in Basra. Negotiations are ongoing with Hualu Engineering and Technology for a petrochemical complex at the same site. 

Despite these initiatives, INOC faces several challenges: 

• Limited exploration activity, due to harsh fiscal terms. 
• Infrastructure constraints, particularly in export capacity and water injection. 
• A shifting corporate landscape, with Western majors re-evaluating their presence, and Asian companies, particularly Chinese, increasing their involvement. 

INOC is considering improvements to fiscal terms, to attract more diverse international investors. The focus is on developing non-associated gas fields to meet domestic demand and reduce imports. The company aims to create a more balanced corporate ecosystem, to ensure technology transfer and local workforce development. 

MIDDLE EAST WEIGHS INCREASED PRODUCTION AGAINST FUTURE DEMAND DECLINES

According to Hector Casas Gonzalez, Riyadh-based Principal with Arthur D. Little Corp., “amidst demand uncertainty, the Middle East weighs production and price stability against accelerated reserve extraction.” 

As the global energy transition unfolds, the Middle East is actively adapting, pursuing what Gonzalez considers to be their main aim: “seeking to maximize the exploitation of its vast oil reserves in light of the anticipated future decline in oil consumption.” Recognizing that their oil reserves may exceed what can be commercially viable, the region’s key players are focused on optimizing their economic value, efficiently employing strategies to accelerate responsible resource extraction. 

Despite this interest in increasing production, Middle Eastern oil output has remained constant for the last few months. The major producers in the region, including Saudi Arabia, Iraq, the UAE, Iran, Kuwait and Oman, have maintained a stable output of approximately 23.0 MMbpd. Largely, Gonzalez thinks that “this measured approach is due to voluntary OPEC+ cuts (Fig. 6), aimed at stabilizing prices in the face of lower-than-expected demand growth.”  

Fig. 6. OPEC+ mandated output cuts have kept Middle Eastern oil production at around 23.0 MMbpd. Source: Arthur D. Little Analysis.

Meanwhile, natural gas production is projected to grow at a rate below 5% during 2024. This growth is expected to accelerate, once new developments come online, particularly in the second half of the decade. 

During 2024, oil prices have fluctuated between $70/bbl and $85/bbl, influenced by conflicting forces. Gonzalez says that “economic uncertainty—particularly due to China's slowdown—and geopolitical tensions in the region have had opposing effects on the market. However, macroeconomic concerns have prevailed,” leading to sustained production cuts throughout the year to adhere to production quotas and stabilize total output.  

Gonzalez’s analysis is as follows: “Even with these cuts, the region is planning for the maximization of its reserves' value, marking a continuation of its approach over the past two years. The oil and gas project pipeline, with over $40 billion in projects awarded in 2024 and more than $60 billion in projects in bidding stages, saw a significant increase in 2024,” led by Saudi Arabia, the UAE and Qatar, Fig. 7. Notably, there has been a substantial rise in gas projects, highlighting its potential as a transition fuel, and oil-to-chemicals projects as additional options for oil usage. 

Fig. 7. The number of Middle Eastern oil and gas projects has seen a substantial increase in 2024. Source: Arthur D. Little Analysis.

Yet, maximizing the value of oil and gas reserves is no simple task. Gonzalez says that “a major challenge accompanying the growth in the project pipeline is the timely and on-budget development of these projects to capture their expected value. As demand for equipment, engineering, and construction services surges, costs are rising, and supply of equipment and labor is becoming constrained.” 

These challenges are compounded by multiple infrastructure projects in the region competing for similar resources, intensifying the pressure on O&G projects. Navigating these challenges is not only crucial for meeting production goals but also for positioning the Middle East as a resilient leader in the evolving global energy landscape. 

According to Tarik Abdelfattah, MENATI director at Baker Hughes’ GaffneyCline energy advisory, the region’s national oil companies are under pressure to achieve their hydrocarbon production targets, which call for an increase in overall production. “Many of the region’s biggest operators are expanding their capacity and targeted daily production rates,” said Abdelfattah. “The technical truth is that the assets contributing to a large part of the existing production output are on the decline, and the chase to maintain a healthy organic reserve replacement ratio requires investment in exploration; mature assets solutions, such as enhanced oil recovery; and economically exploiting CAPEX-intensive resources, such as unconventional and tight plays, as well as heavy oil. To date, we are seeing the Gulf’s leading NOCs scale their operations around unconventional plays, and the potential to chase similar plays is high for other countries in the region, particularly the likes of Algeria and Kuwait.”   

In the eyes of Abdelfattah and his colleagues, most NOCs are ensuring that they pursue these production targets in a sustainable fashion, pursuing emission management techniques that yield incremental value, such as CO₂ enhanced oil recovery. “A diversified, sustainable energy mix is also at the forefront of most energy strategies in the region, with commitments and investments being made by several countries to produce blue and green hydrogen. The NEOM Green Hydrogen project is a shining example of the readiness of the region to invest in this space. Currently, investigation into harnessing geothermal energy along the Red Sea is also underway in Saudi Arabia and Egypt.”  

For this and other reasons, Abdelfattah believes the future energy landscape in the Middle East is one of a sustainable and diversified energy mix, with the region continuing to be a critical area for supplying energy security to the world.