Economies in the Gulf Cooperation Council (GCC) namely, Saudi Arabia, United Arab Emirates (UAE), Qatar, Kuwait, Bahrain and Oman, after decades of growth following the first discovery of oil in the sixties, have come a long way to dominate the world hydrocarbons market Accounting for over 40 percent of the world’s hydrocarbon reserves (40 percent comprises oil, 23 percent natural gas) as of 2012. This share is also likely to grow to 70 percent by the end of the decade according to a study by Kuwait based Diplomatic Center for Strategic Studies promising a large growth potential in the closely government guarded and highly regulated GCC upstream sector. Recent years have witnessed GCC economies reaping rich dividends from the burgeoning global demand for oil and gas and the high oil prices on the one hand. On the other, these economies have been forced to walk a tight rope to balance their equally fast growing domestic demand for the fossil fuels with maintaining enough export surpluses and augmenting capacities from the fast depleting non-renewable reserves. As the hydrocarbon industry matures, these economies have begun to realize the value of diversification of their economies so as to reduce their dependence on hydrocarbons and begun judiciously ploughing back their hydrocarbon surpluses into ambitious programmes of industrialization, diversification and expansion.
While hydrocarbon industry continues to form the backbone of these economies accounting for more than three fourths of their government revenues and over half of their exports, the hydrocarbon industry on its own has witnessed a subtle shift from core upstream projects into downstream activities of refining, petrochemicals and storage tanks, each vying with the other to enhance their refining capacities to exploit this trend to the maximum. Investments in the energy sector across the GCC total US$ 470 billion between 2010 and 2015, of which oil and gas accounted for 47 percent and 36 percent, respectively of the total. Contracts worth US$ 39,405 million were awarded across the GCC hydrocarbon sector in 2012 of which downstream projects accounted for 82 percent with a large focus on petrochemicals, overtaking the earlier emphasis on refining, reflecting the maturing nature of the industry and its need for diversification. The GCC petrochemicals sector has witnessed promising growth with a Compound Annual Growth Rate (CAGR) of 26 percent between 2007 and 2011 despite financial instabilities across the region and among its trading partners and continues to demonstrate strong potential in spite of the worsening global economic conditions, especially its key trading partner Europe with its financial woes and other prime markets. The challenges likely to be faced by the industry in the prevailing economic climate are manifold, including external financing, retaining economic growth while reducing vulnerabilities to external shocks.
GCC Oil and Gas Industry Overview-January 2013 examines the nature of the GCC hydrocarbon industry, its regulatory structure and its growth trajectory, the developments across its upstream and downstream sectors including top projects and contracts awarded with forecasts up to 2014 and concludes with a comparative analysis of economic growth versus hydrocarbon growth across the GCC countries in 2012 and its absolute performance over a period of time.