GRM 2010 GRM 2011

Abstract Details

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Title of Paper:
MENA Oil and Gas: Upstream Challenges And Geopolitical Headwinds
Paper Proposal Text :
Paper Abstract for GRM conference 2012

This paper will examine two central and overlapping themes that will govern the MENA region’s capacity to meet the call on its oil and gas resources over the medium term. Major forecasters expect hydrocarbons to hold their place in the energy supply picture in the long term and the conventional wisdom is that major OPEC resource holders will increasingly meet the growth in demand as supply from other resource holders dwindles.
However with some notable exceptions, MENA producing countries have overstated hydrocarbon reserves, underestimated domestic demand growth for energy and most recently, failed to keep pace with upstream investment with domestic unrest forcing governments to divert spending towards salaries, subsidies and other measures aimed at allaying unrest.
Highlighting several countries in the region, the paper will look at recent energy policy both from the sovereign perspective and through the lens of international fora like OPEC and the GECF and assess whether these countries are able and likely to expand production to meet growing oil demand. The discussion will look at rising energy investment costs, strategies for meeting those costs and some of the technology challenges facing producers as they move from easy oil to higher cost secondary and tertiary recovery.
In terms of gas, the paper will examine why despite holding some of the largest gas reserves in the world, MENA countries have been unable to meet their own regional demand for gas and have failed with a few exceptions to develop cross-border gas trade, which has forced producing countries to burn crude oil that could otherwise be exported.
Having summarized some of the economic challenges facing regional producers, the paper will then explore some of the geopolitical headwinds that threaten to undermine economic progress in the region. Specifically, the paper will examine Iraq’s recent political evolution and ask whether the country will be able to meet its long-term oil targets. Iran will also be discussed in light of its deepening international isolation and the paper will also look at Egypt as a post revolutionary example for energy management.
Finally, the paper will look at fiscal oil price requirements for MENA producers and examine whether long-term oil prices will meet those targets and whether they are compatible with long-term economic growth both for OECD countries and the developing countries of Asia, Middle East and Latin America.
The paper will look at the recent trajectory of oil prices and look at price sustainability given global economic strains, the growth in competition from non-conventional hydrocarbons and the move towards a new wave of energy efficiency.