Worldwide: ADIPEC Showcases The Major Themes And Opportunities For 2014 In The Middle East Energy Sector

ADIPEC, the Abu Dhabi International Petroleum Exhibition, has been firmly established as the Middle East's premier event of its kind, on par with the likes of OTC and Offshore Europe; this was emphasized by the scale and calibre of the most recent event held in the UAE's capital last month. There were 55,000 visitors and delegates present over the four days of the exhibit, which included major national pavilions from China, the USA, UK, Germany, France, Italy, the Netherlands, Norway, Turkey, Spain, Korea, Canada, Singapore and Belgium.

ADIPEC re-emphasized that the Middle East and North Africa (MENA) contains 51 percent of the world's proven conventional oil reserves and 42 percent of the world's proven conventional gas reserves. The region has 13 of the world's 20 giant oilfields including Ghawar in Saudi, Rumaila in Iraq, Zakum in Abu Dhabi and Burgan in Kuwait, as well as the largest gasfield in the world – the North Field in Qatar/South Pars in Iran. Five countries in the MENA region produce more than two million barrels per day – Saudi, Iraq, Iran, Kuwait and the United Arab Emirates.

During the event, we identified a "top 10" list of major MENA opportunities and challenges which clients should assess in their strategic positioning for 2014 and beyond.

1. Volume, Scale and Complexity of Energy Projects

The Middle East Economic Digest (MEED) now estimates that there are over US$3 trillion of projects underway or planned in the Middle East region (defined for this purpose as comprising the six GCC countries – Saudi Arabia, United Arab Emirates, Kuwait, Oman, Bahrain and Qatar – plus Iraq and Iran). The majority of these relate to upstream oil and gas, downstream (including refineries, LNG and GTL), petrochemicals and related infrastructure projects. Capital investment of over US$10 billion is focused on:

  • The Jubail, Yanbu and Petrobigh refinery projects, and the Manifa and Safiyanah offshore fields developments in Saudi Arabia
  • Rumaila, West Qurna and Majnoon in Iraq
  • The Zadco Upper Zakum artificial islands field development, ADCO onshore fields development programmes, ADMA-OPCP offshore fields development and Shah and Bad sour gas development projects in the United Arab Emirates
  • The Al Zour and Clean Fuels refinery projects in Kuwait
  • The Khazzan tight gas project in Oman
  • The Barzan Gas development project in Qatar

MEED anticipates that Iraq will overtake Saudi Arabia as the biggest projects market in the region in the next five years but Saudi Arabia and Abu Dhabi will continue to attract huge capital intensive projects. This represents a major prize for EPC contractors and their supply chain.

2.  Advanced Technology & Know-How and the Return of the International Oil Companies (IOCs) to the Middle East

It was no coincidence that the Society of Petroleum Engineers (SPE) chose Dubai as the venue for its most recent Intelligent Energy conference and exhibition. The Middle East has long been associated with "easy oil" and "low tech, low cost" production models. However, such factors as the rapidly increasing need for enhanced oil recovery (EOR), sour gas, heavy oil, tight gas, LNG, GTL, "clean fuels" refineries, carbon capture and storage, nuclear and solar technologies have given a boost to advanced technologies and know-how, much of it garnered by joint ventures with international oil companies (IOCs) and their supply chain.

The retreat of IOCs from the region seen in the 1970s, when a major programme of nationalization pushed them out, has been reversed. Perhaps the most important development anticipated in the region in a generation is the expiration and replacement of the ADCO onshore concessions in Abu Dhabi in early 2014, which is anticipated to bring a host of new IOC operators in the emirate, including Statoil. The petroleum industry is balancing the politics of "resource nationalism" with the need for IOCs and their technology, and this is most acute in Kuwait where politics have slowed the rate of progress. It can be expected that there will be an increasing use of Enhanced Technical Services Agreement (ETSA) contract models as a partial solution to this challenge, such as the one Kuwait Oil Company placed with Shell to develop its tight gas Jurassic Field in the north of the country.

A further drive to advanced technology will certainly follow if the current and prospective Red Sea and East Mediterranean exploration and appraisal programmes bear their anticipated fruit, as these will bring deepwater fields into play in a region dominated by onshore and shallow water production apart from the existing offshore fields to the north of Egypt.

3. Regional Gas Demand and Supply in the Middle East – Gas Imports and Diversification to Nuclear and Solar Power

Despite hosting an estimated 40 percent of the world's gas reserves, the region cannot keep up with the rapid demand for gas needed to guarantee and expand power supplies for economic and population growth. This is particularly acute in Saudi Arabia, Kuwait and the UAE, and it is driving major new exploration campaigns, production of unconventional and sour gas, importation of LNG and diversification of supply to embrace nuclear and solar energy production in the region. It is ironic that we may soon see LNG produced in the USA being exported to the Middle East to meet this demand and supply challenge.

4. Impact of the Shale Gas Revolution in the USA

The rapid rise of the unconventional gas industry in the USA and the prospect that the USA will emerge as a net exporter of gas will have multiple impacts. The security of supply fears so prominent in Western countries at the start of the last decade are rapidly diminishing, the achievable sale price of exported LNG from the Middle East is under pressure and Middle East national oil companies are increasingly turning eastwards to China, India, Japan and other major Asia Pacific markets rather than to the USA and European Union as their major clients and partners. If the USA shale gas industry is also considered in tandem with Canada's oilsands, Venezuela's heavy oil, Brazil offshore petroleum and the anticipated 60 billion barrels of reserves in the South Atlantic, it is becoming clear that the security of energy supply for the Americas will continue to strengthen. This could mean that the decision to source petroleum from the Middle East will be more driven by choice and economics rather than by need and politics.

5. Iraq

The momentum in Iraq is now clearly gathering speed. Although original claims and ambitions that Iraq could be producing 12 million barrels a day in the foreseeable future are now generally accepted as over the top, Iraq is now back in the 3 million barrels a day club and is expected to produce 6-8 million barrels per day by the end of the decade. Iraq has more or less been operated and managed as three distinct areas, with the Shia-dominated south centred on Basra, the Sunni-dominated central area around Baghdad, and Kurdistan all requiring separate strategic approaches by foreign players. However, the recent production sharing awards to Exxon-Mobil, Chevron and Total in Kurdistan have removed the previous distinction in which the south was considered IOC territory and Kurdistan being for the independents. The political differences between the central Government and the Kurdistan Regional Government, the ongoing security challenges (apart from Kurdistan) and the alleged high levels of corruption permeating parts of the petroleum industry will continue to be formidable challenges. Even so, there will be increasing commercial advantages for, and pressures on, industry players to expand their presence and activities in Iraq.  

6. New Dawn with Iran and the Emergence of the Emirates of Fujeirah as the Bypass to the Straits of Hormuz

A major theme throughout the ADIPEC 2013 event was the prospective return of Iran to more normalized relations with the USA and the West in general. Iran daily production has fallen, allegedly, from a peak of over 6 million barrels per day to less than 2 million. The Iranian economy and currency are toiling under the weight of sanctions, and its energy industry has been all but starved of technology and capital investment for the best part of a generation. The election of President Hassan Rohani in the summer has opened the door to what appears to be proper geopolitical dialogue, with the Iranians making major concessions on their nuclear energy programme in return for the loosening and ultimate removal of the sanctions. Although it is early in this process, if relations with Iran were to normalize this could open a raft of opportunities. However, it would remain to be seen whether or not Iran persisted in a resource nationalism posture or embrace the NOC/IOC partnership approach which has operated so successfully in Qatar and now Abu Dhabi.

A further development which may have had a partial impact is the new ADCOP pipeline linking Abu Dhabi's onshore Habshan field to the port of Fujeirah on the east coast of the UAE. Fujeirah is also the scene of major LNG, refinery and bunkering project developments and this is loosening the need for the UAE to use the Straits of Hormuz bottleneck between Iran and northern Oman. This could reduce Iran's ability to threaten to disrupt its supply lines.

7. Arab Spring Legacy and the Ongoing Impact on Local Employment and Local Content

The so-called Arab Spring has resulted in major disruption to the economies and petroleum industries of certain Middle East countries. Egypt and Libya have been particularly affected and the plans of many players for these areas are on the back burner until the political situation settles down. This is not expected to happen quickly. The Arab Spring has also had implications for Saudi Arabia and Oman – unlike the UAE and Qatar, both countries have large and young local populations with unemployment challenges. This is resulting in significant and increasing pressure on foreign players in those countries to commit their support for local employment and local content.

8. Cyber Security Replaces Terrorism as the Biggest Risk and Challenge

It should be noted that cyber security has now firmly replaced terrorism threats as the number one security concern for the region's petroleum industry. Major "cyber attacks" have been launched on the IT systems of Saudi Aramco and Qatar Petroleum earlier this year, causing major disruption to operations. The need to manage and contain this risk will be major opportunity for specialist service providers who can contain and defeat these attacks.

9. Role of the Independent E&P Companies in Frontier and High-Risk Opportunities

The activities of national oil companies (NOCs) as well as of IOCs are being complemented by independent exploration and production companies focused on niche or frontier opportunities, often at the high risk/high reward end of the spectrum. This is especially so in the case of Kurdistan in the north of Iraq, where independents such as Genel Energy and DNO are making their mark. But the independents also play a key role in Oman, Yemen and the northern emirates of the UAE. These companies may well serve as a source of future farm-in and even full merger and acquisition activity from the IOCs and/or NOCs when the development capital requirements of the independents, reserve replacement targets of the IOCs and advanced technology and know-how appetites of the NOCs align.  

10. Sovereign Wealth Funds, Regional Operators and Outwards Investment

Finally, the Middle East region has traditionally been associated with inward investment of capital and technology but the region is now home to many of the world's largest sovereign wealth funds, especially in Abu Dhabi, Kuwait, Saudi and Qatar. These are now major outward investors with US$2 trillion dollars of combined investments. Abu Dhabi has gone a step further – the emirate's state-owned TAQA and Mubadala Petroleum are operators of petroleum assets and not simply investors. Mubadala Petroleum is a subsidiary of Mubadala Developments, which is now a leading player in the international renewables industry, recently commissioning the Shams 1 solar 100 MW energy project in Abu Dhabi. This massive buying and investment power will continue to exert its presence in the international petroleum industry in the years ahead.


In conclusion, it is clear to see that ADIPEC has emerged as the major petroleum event of the year in the Middle East. In our view the themes emphasized at ADIPEC and discussed above represent major opportunities across the supply chain for international oil companies, independent exploration and production companies, EPC contractors and suppliers of specialist technologies and know-how. At the same time, threats and risks will need to be managed.

Click here to download a PDF of the December 2013 Andrews Kurth Middle East Newsletter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions