Planned gas investments in MENA jump 29pc

industrial and petrochemicals sectors. Notably, the petrochemicals sector witnessed a y-o-y increase of $4 bn in planned projects compared to last year’s outlook, while committed projects decreased by $13 bn due to the completion of several projects in 2019.

The share of government investments in committed and planned gas projects (92 per cent) is higher than it is in the petrochemicals sector (72 per cent). Given the increasing size of projects, such investments typically rely on a 70:30 or 80:20 debt/equity ratio.

Dr Ahmed Ali Attiga, Chief Executive Officer, APICORP, commented: “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.

Overcoming these challenges will undoubtedly require strong policy support from governments, as well as enhanced collaboration between the private and public sector. To this end, APICORP has continued to play a critical countercyclical role in alleviating these fiscal pressures and bridging the financing gap caused by the pandemic to strengthen the energy sector’s sustainability.”

Dr Leila R Benali, Chief Economist, Strategy, Energy Economics and Sustainability, APICORP, added: “The impact of COVID-19 on MENA gas demand and the petrochemicals sector will accelerate the industrial share of domestic demand. As outlined in our MENA Gas & Petrochemicals Investments Outlook 2020-2024, gas demand is expected to grow by approximately 3.8 per cent-4 per cent on average in MENA compared to 6 per cent in 2019.

This downward revision is due to slower GDP growth and industrial output, the effect of price reforms, nuclear power projects coming online and increased share of renewables. Additionally, a prolonged depression of LNG prices will put further pressure on a few LNG exporters in the region during a time when pipeline exports were already taking a hit.”