Hydrocarbon Processing Issue 01 | Page 4

AN ABUNDANCE OF OIL

Thanks to its unique geology , the Middle East region is the most abundant oil producer in the world .

In 2014 the Middle East ’ s conventional oil was estimated at 800 billion barrels , nearly half of the world ’ s proven recoverable crude oil .

WORLD OIL PRODUCTION

The region has only 2 % of the world ’ s oil producing wells , but these are so prolific that they output more than 30 % of the world ’ s crude oil . The Middle East also holds 40 % of the world ’ s conventional gas reserves .

Analysis firm , Wood Mackenzie , has projected that by 2035 oil production capacity in the Middle East will reach

PROVEN CONVENTIONAL RESERVES almost 40 million barrels per day , far ahead of any other oil-producing region , as Saudi Arabia continues to build capacity , Iran returns to the oil market , and Iraqi supply expands .

The Ghawar oil field in Saudi Arabia is the largest in the world and produces more than half of the country ' s oil .

THE IMPACT OF FALLING OIL PRICES

Being highly oil-dependent economies , countries of the Gulf Cooperation Council ( GCC ) – which consists of all Arab states in the Persian Gulf except Iraq – have been deeply affected by the recent oil price

drop ( approx 60 % since 2013 ), causing macro-economic instability that hinders job creation and slows growth .

The oil price drop has largely impacted GCC public finances , mostly generated by the oil sector , and has hampered Foreign Direct Investment ( FDI ).

GDP growth in GCC countries is forecasted

at + 2.3 % in 2017 , far from the growth experienced in the past . Oil price is the main driver of GCC economy and it is expected to remain around US $ 51 per barrel in 2017 .

However , the forecast may be affected by a number of factors , including the increasing global oil production , uncertain consumption patterns and investments in the oil industry .

DIVERSIFICATION STRATEGIES

The oil production agreements between OPEC ( the organization of the oil producing countries ) and non-OPEC members appear to be effective and this has helped stabilize the price of oil above US $ 50 per barrel .

Higher energy prices will help restore the needed confidence in the market , and an increase in activity for new projects and analysis system upgrades is expected .

However , the overall strategy for the region appears to be to diversify out of oil , and produce more value-added chemicals .

This means expanding downstream activities and integrating the businesses to create greater efficiency . More of these chemicals being produced within the region will result in more of the value being captured and invested locally .

The petrochemical industry in the region has developed rapidly in the last 30 years or so . According to a 2012 report by McKinsey , the chemical industry in GCC countries supported 840,000 jobs , with 110,000 in chemical production , and , indirectly , a further 730,000 jobs , including suppliers and contractors involved in areas such as gas production , outsourced maintenance , transportation services , and other logistics services .

In Saudi Arabia , chemicals represented 4.5 % of non-oil and gas GDP in 2011 — a share that increased to 11 % if indirect and induced contributions were included .

According to Technical Review Middle East ( 2015 ), GCC manufacturers account for about one-fifth of global output of ethylene glycol , and of total linear lowdensity polyethylene ( 18 %); high-density polyethylene ( 17 %); ethylene ( 14 %); polypropylene ( 13 %); and methanol production ( 11 %). The region currently exports around four-fifths of its products to more than 80 countries , amounting to 66.1 million tons .

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From our UAE business centre we provide complete solutions for gas analysis in hydrocarbon processing applications .

Contact the Middle East Business Centre today on + 971 6552 8073 mei _ sales @ servomex . com

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