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.

Talk to our Middle East team

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

P04