A new era of GCC power relations? UAE, Oman, Iraq now represent 60% of regions’ upstream oil transactions
The combined number of oil and gas transactions in the UAE, Oman, and Iraq represented almost 60 per cent of the total number of upstream transactions in the Middle East during 2013, according to Ernst & Young’s Global Oil & Gas Transactions report.
Overall, the number of transactions in the region fell by 40 per cent from 44 in 2012 to 26 in 2013, whereas the overall transaction value increased from $2.7 billion (Dh9.93 billion) in 2012 to $3.1 billion in 2013.
“Rapid-growth markets have been, in recent years, the engine room of the world’s economic growth. This provided oil and gas companies with brighter prospects, attracting them to invest in regions such as the Middle East to supply such growth,” said Dr Thorsten Ploss, MENA oil and gas leader at Ernst & Young.
In terms of the overall oil and gas transaction activity, the upstream sector dominated, both in terms of number and overall transaction value during 2013. Relative to the total global upstream transaction value, the Middle East upstream transaction value saw an upward trend increasing from 0.8 per cent in 2011 to 1.5 per cent in 2012 and 1.8 per cent in 2013.
“Generally, Mena [Middle East and North Africa] oil and gas transactions are quite limited compared to the amount of reserves and the importance of oil and gas to the region. This is because NOCs [National Oil Companies] dominate the landscape,” Ploss told Gulf News.
In the downstream sector, there were five transactions of which two were in the petrochemicals sector.
“There has been a recent announcement that Occidental Petroleum is looking to sell a minority stake in their Middle East oil and gas business. If this sale is to proceed, then it would represent a substantial transaction in the context of the Middle East market,” said David Baker, Mena Oil and Gas Transaction Advisory Services leader at Ernst & Young.
Oilfield services transactions remained low in the region with five transactions completed in 2013, three of which were located in the UAE.
“The level of transactions in the oilfield service sector remains modest, even though there continues to be a desire by governments and NOCs to attract oilfield services companies in the region. This will become increasingly important, if the developments of unconventional resources in countries such as Saudi Arabia are to proceed,” Baker said.
In consistency with the past two years, no midstream transactions were completed in 2013 as a result of the very high level of state ownership.
As for the outlook for 2014, Ploss said, “Generally, the outlook for oil and gas transactions in 2014 is positive with hopefully a fairly stable oil price and improving downstream margins as the global economy picks up, and with better access to capital.”
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