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Oil firms in Middle East to invest $58 billion this year, says report

Major national oil companies (NOCs) in the Middle East are expected to invest $58 billion in 2017, an increase of 2.5% on 2016, Arabian Business has reported.06 Apr 2017

A new report from BMI Research shows that the Middle East has been affected less than other regions by the fall in the oil price, Arabian Business said. NOCs in the region have benefited from lower cost oilfield services and so continue to spend, it said.

Saudi Arabia plans to invest to maintain production capacity of 12.50 million barrels per day (bpd) holding between 2 million and 2.5 million bpd in spare capacity, the report said, according to Arabian Business.

The UAE expects to reach production capacity of 3.5m bpd by 2018 with production over early 2017 just under 3m bpd, it said. This is likely to be an achievable target, the report said, due to new investors and projects.

OPEC and other oil producers have agreed to cut output by almost 1.8 million bpd in the first half of 2017.

Saudi Arabia issued a statement last month confirming its commitment to the cut. The statement followed an OPEC monthly report showing an increase in production by Saudi Arabia in February, and a 10% drop in the price of crude oil over the previous week.

Khalid al-Falih, Saudi Arabia’s energy minister, said that the production agreement between OPEC and other producers had encouraged "green shoots" of recovery.

The International Energy Agency predicted last year that the international oil glut would end by mid-2017 if OPEC sticks to its production target and non-OPEC producers deliver agreed cuts.