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MENA sees 29% higher planned gas investments despite demand shock

MENA sees 29% higher planned gas investments despite demand shock
This year saw one of the largest gas demand shocks on record

Mubasher: The MENA region’s committed gas investments remained steady in 2020 compared to last year, despite the severe drop in global demand, a report released by the Arab Petroleum Investments Corporation (APICORP) showed on Monday.

In the meantime, planned investments grew by 29% to $126 billion, primarily supported by “the strong ongoing regional gas drive for cleaner power generation and improved monetisation as a feedstock for the industrial and petrochemicals sectors”, according to the MENA Gas and Petrochemicals Investments Outlook 2020-2024 report.

The report showed that 2020 saw one of the largest gas demand shocks on record as global demand slid by 4% year-on-year (YoY), in contract to 2019 which marked a record year for liquefied natural gas (LNG) final investment decisions (FIDs).

The annual growth rate for global gas demand is expected to decelerate to 1.5% during 2020-2024, compared to a pre-coronavirus estimate of 1.8%.

Moreover, the petrochemicals sector’s planned projects rose by $4 billion YoY compared to last year’s outlook, while committed projects fell by $13 billion as several projects have already been complete in 2019.

The share of government investments in committed and planned gas projects reached 92%, while share in the petrochemicals sector stood at 72%.

 “The decrease in gas demand has put fiscal pressures on government and private sectors alike, and we expect a few committed projects to continue facing strong headwinds in terms of payments, supply chain issues and potential project delays,” CEO of APICORP, Ahmed Ali Attiga, noted.

Overcoming these challenges will undoubtedly require strong policy support from governments, as well as enhanced collaboration between the private and public sector,” he added.

Leila R. Benali, Chief Economist, Strategy, Energy Economics and Sustainability, APICORP, said: “The impact of COVID-19 on MENA gas demand and the petrochemicals sector will accelerate the industrial share of domestic demand.”

Gas demand is forecast to increase by about 3.8%-4% on average in the MENA region, compared to 6% in 2019, she added.