Project Plans, Constraints to Growth and the Impact of Cost Escalation through The Middle East and North Africa (MENA) Prism

About this report

Middle East and North Africa (MENA) national oil companies are targeting ambitious energy expansion, with mid-term plans for a 5.8 million b/d net boost to crude capacity, 1.9 million b/d more natural gas liquids and 400 bcm/year more gas, alongside significant refining and liquefied natural gas additions. Nevertheless, a review of historical project delivery sounds a note of caution over timing – with a number of countries prone to delays and others, outright deferrals, even if market leaders, Saudi Arabia and Qatar, remain more resolutely on course. Cost escalation since 2002 has compounded the regional tendency towards delays, although the impact on project delivery has been moderated by a willingness to increase budgets where project economics remain sound. That leaves political factors as the principal constraint to regional expansion, complicated in part by increasing pluralism in political participation and valid concerns about the management of resources for long-term sustainability, rather than near-term profit. With most constraints to development expected to remain at the political level, there is a clear case for consumers to be more explicit about future needs. There is also a need to engage with growing constituencies in some states favouring a prudent approach to hydrocarbon development where policy makers have made the case for considered expansion.