“Given the receptive nature of the Middle Eastern countries to future oil and gas projects, oil giants from Europe are also planning to increase their investment in the region’s unceasing oil juggernaut.”
“The notion that the world is moving away from fossil fuels is incorrect, at least as per the production and consumption numbers of oil, gas, and coal worldwide. The Middle East scenario gives a better picture of where the future of oil is headed.”
On Earth Day, President Joe Biden was busy trying to persuade the ‘oil-guzzling’ countries to reduce their fossil-fuel dependency. But the great global oil juggernaut rolls on. Countries in the Middle East, especially, are optimistic about a coming decade of increasing oil and gas exports.
In contrast to the anti-fossil fuel-oriented policies of the West, the Middle East remains very committed to their primary revenue resource: oil and gas. They are right. Their economies depend on such sales, and oil resources are vital to keep the world’s people and economies moving.
This bullish piece of world energy news is scarcely reported. The mainstream media fails to publicize this development since it defies the popular “climate action” narrative of progress (to electrification) in the transportation market.
Climate activists refrain from criticizing the Middle Eastern countries for being major producers of oil. To do so, they would have to acknowledge that these countries’ practices are inconsistent with the narrative of a post fossil-fuel world.
The Middle East’s richest countries are flexing their wealth to increase oil production. Their decision to increase production comes at a time when mainstream media claims that the global demand for oil is falling.
To the contrary, demand for gasoline is rising steeply in the Middle East, and the major oil producing countries there are gearing up to meet the demand.
Saudi Arabia’s Aramco is developing its offshore assets in order to ramp up production. Aramco’s ongoing projects are expected to add 1.15 million barrels per day (bpd) to the world’s largest oil company’s capacity by 2024.
Besides, Aramco has also entered into joint venture agreements with giants like Royal Dutch Shell to explore natural gas in the region. In April 2020, EIG Global Energy Partners LLC invested $12.5 billion in Aramco’s pipeline project in Saudi Arabia.
Likewise, Abu Dhabi is investing $122 billion to add 1 million bpd to its capacity by 2030. The Abu Dhabi National Oil Company (ADNOC) has raised billions of dollars in the recent past by leasing its oil and gas assets globally. One such leasing deal was the ADNOC’s $20 billion energy agreement with a consortium of six global firms, and it is named as the world’s biggest energy deal of 2020.
Even countries that are caught up in geopolitical tensions are betting their future on oil. Iraq, for example, aims to increase production by another 3.2 million bpd by 2029. Iran is looking to double its output capacity once the Biden administration lifts sanctions.
The U.S. presidential election result in 2020 gave hope to Iranian energy companies that inked deals worth $1.2 billion in January 2021. Iran is also in a 25-year energy agreement with China that will bring investments into the oil sector.
EU Majors Join In
Given the receptive nature of the Middle Eastern countries to future oil and gas projects, oil giants from Europe are also planning to increase their investment in the region’s unceasing oil juggernaut.
British Petroleum (BP), headquartered in London, already operates some of the largest oil fields in Iraq, UAE, and Oman. Stephen Willis, BP’s senior vice president for the Middle East, stated: “We will continue to invest in” deposits in Iraq, the UAE emirate of Abu Dhabi and Oman, which “have world-leading operating cost, capital cost and production efficiency performance.”
The Middle Eastern countries are constantly expanding their markets. In India, Saudi Aramco has entered into a $15 billion deal with Reliance industries and will own a 20 percent stake in large refineries that will produce petrochemicals in the coming decades.
This upward trend in oil and gas investment has been similar in Asia, Africa and South America, with global oil giants competing with each other to secure newly discovered basins. There has also been considerable interest in establishing agreements for building oil and gas infrastructure.
The global crude oil and natural gas market is expected to grow by 3.9 percent during the period 2020–2028, and the Middle East will contribute a significant portion to this growth. And this estimate might be low.
The notion that the world is moving away from fossil fuels is incorrect, at least as per the production and consumption numbers of oil, gas, and coal worldwide. The Middle East scenario gives a better picture of where the future of oil is headed. Up.
Vijay Jayaraj (M.Sc., Environmental Science, University of East Anglia, England), is a Research Contributor for the Cornwall Alliance for the Stewardship of Creation and resides in Bengaluru, India.
His previous posts at MasterResource are here.