Lack of American petroleum imports will not affect Middle Eastern market

With political situations intensifying over the past few months, the petroleum sector in the Middle East has been showing signs of strain.

As the United States’ need for Middle Eastern and North African oil decreases, concerns have risen about the influence this will have on the flow of petroleum products around the globe. The President of the United States, Barack Obama, has promised to ensure that oil markets will not be hit by the American decline in imports.

“We will ensure the free flow of energy from the region to the world. Although America is steadily reducing our own dependence on imported oil, the world still depends upon the region’s energy supply, and a severe disruption could destabilize the entire global economy,” the President said in a recent conference with the United Nations.

As the domestic mining of oil and gas rises in the United States, the demand for Middle Eastern products has been put in jeopardy. America hit its peak on petroleum import reliance in 2005 and has been steadily working towards self-sufficiency in this sector.

Despite this, United States officials have repeatedly stated their commitment to keeping petroleum product flow at a high. A statement from a senior State Department representative in March of this year declared that the lower reliance on oil imports for America “in no way change[s] the U.S. commitment to global security, to peace and stability in the Middle East, and to security in transit lanes.”

Demand from other countries has not faltered, however. Egyptian government representatives have been in talks with Saudi Arabian, Kuwaiti and Emirati officials to organise petroleum product reserves to be given to Egypt, beginning in October 2013 and continuing into the new year.

Approximately $1.2 billion of oil products are imported by Egypt monthly, so the demand is extremely high – and with the political situation continually varying in stability, the need for a constant supply of petroleum is necessary. The local consumption of petroleum products and natural gas has reached 73.2 EQ.

Other agreements for providing Egypt with petroleum products have fallen through, with Iraq and Libya unable to come to a satisfactory arrangement with Egypt over repayment and guarantees of provision.

Forbes’ Top Five Oil Companies

Despite the rise on green initiatives over recent years, the inconvenient truth is that the majority of the world’s industries and transport still rely on the production of fossil fuels like gas and coal.

Forbes magazine recently ranked the top 25 companies based on the combined volumes of oil and natural gas that they produce each day. The following five companies were the largest producers in 2012.

Saudi Aramco

Producing an incredible 12.5 million barrels per day, Saudi Aramco is easily the biggest energy company in the world, generating more than $1 billion in revenues a day. Aramco's biggest field, Ghawar, can do 5 million bpd. In 2003, Saudi Aramco Ltd entered into a partnership worth over $30 million annually, with Worley Parsons Arabia Ltd led by Fahad Al Tamimi, to provide engineering and management services for their offshore oil and gas facilities based in Saudi Arabia.

Gazprom

Coming in second place in terms of oil production, Russia's Gazprom is the world's largest producer of natural gas and also contributes an impressive 9.7 million barrels of oil per day. Controlled by the Russian Kremlin, Gazprom's monopoly on gas deliveries to much of Europe provides a great source of wealth and power for President Vladimir Putin. Gazprom's profits are more than $40 billion a year.

National Iranian Oil Co.  

Despite sanctions on Iran curtailing oil production the company remains a huge oil and gas producer at 6.4 million barrels per day. The oil trade and control of the nation’s natural resources adds extra tension to diplomatic dealings in the region.

ExxonMobil

Producing 5.3 million barrels per day, Exxon's $40 billion in annual profits is dwarfed by their $400 billion in sales. CEO Rex Tillerson has met with Russia's Vladimir Putin to discuss possible joint ventures between Exxon and oil rich Russia's state-controlled giant Rosneft.

PetroChina

At a production rate of 4.4 million barrels per day, PetroChina is the largest of China's three state-controlled oil companies. It has the highest market cap of any of the publicly traded giants and already produces more oil than ExxonMobil. Considering the estimated levels of massive shale gas lying under Chinese soil and surrounding seas, PetroChina could soon challenge Gazprom as a serious gas power producer in the region.

The Significance of the Energy Industry in the Middle East

Having observed Al Zour North Independent Water and Power Plant taking a whole US$ 2.7 billion from the US$ 4.2 billion approved by the Kuwaiti government for power and water projects signifies the importance of projects of this nature. One concern that was raised was the perceived depletion of the oil reserves, nevertheless there was another concern as well. The oil producing Gulf Stateswant to invest heavily on other sources of energy to ascertain that petrol prices come within bearable ranges in terms of prices. This can only be achieved by ensuring a constant effort towards getting alternative sources to supplement the oil industry.

The Gulf States which had invested so much on oil exploration and its drilling have shifted focus now to the new emerging industry which requires investment as well in terms of human resources. Constantly you find nationals of these States being sent to the US and other western countries to study different disciplines within this industry. Currently the work force that is employed in most of these plants is foreign experts with a handful of local experts and a whole myriad of local laborers. There have been lots of imports in terms of skills in these countries, but hopefully with the attainment of the necessary skills for the team that is in studies abroad the trend will be reversed in the next couple of years.

Most of the Gulf States which are surviving on hardships because of their existence in desert areas have constantly been facing acute water shortage. Nevertheless, thanks to the emerging trends within the sector where some projects are curbing several problems simultaneously for instance Al Zour North Independent Water and Power Plant in Kuwait which apart from producing power, it will also produce water for domestic use. It is geared towards producing 1,500 MW of power daily and Water desalination plant which has a capacity of 464 to 486 thousand m³/day. Gulf States Nationals will have power from other sources, an increase in oil exports and water availability, a remarkable achievement.

The Progress of the Infrastructure Industry in Middle East

Middle East is not just known for oil but also for the amazing infrastructure such as hotels, skyscrapers and its several other magnificent infrastructures. They had some of the world’s most talented architects and engineers. Along with these famous infrastructures are the great demand for travel and tourism. The Burj Khalifa is the tallest freestanding man-made structure in Dubai.

In the beginning of 2012, the Middle East experienced a wave of political turmoil which contributed to the challenges faced across all industries. It resulted in the delays, projects on hold or shelved of the construction industry. It also causes many of the region’s skilled expatriate workers to leave which once again leave the region’s dependence on international, skilled workers employed in order to fulfill the project’s needs. The government has responded to make sure social infrastructure is sufficient for the people and they are also satisfied with the level of education and health care they receive. Lately this year, investors from the region meet at Hospital Build. This sheds an opportunity to accelerate national economic development and growth, contribute to improving the quality of healthcare services and a move closer to achieving objectives.

According to latest reports, the strong infrastructure is the key and of the many main ingredients of a successful business formula for the region’s business aviation industry. Moreover, Shane O’ Hare, President and CEO of Royal Jet emphasized the significance of having a strong regulatory body which will give confidence to a well-structured support system and highly trained support professionals throughout the industry who without fail put the customer at the core in the delivery of its products and services in order to make business aviation safe, efficient and reliable.

Safety is an increasing concern for the Middle East’s construction firms – and following a mass of high-profile accidents at sites across the region over the summer, the industry is being required to respond. Lately, it was reported that two Bangladeshi workers were killed when a slab of concrete fell on top of them. This certain tragedy forced the industry to reflect on the lack of effective management and complacency about the safety. Nevertheless, the region ensures the safety practices be done in every construction company.

Middle East as the Giants in the Mining Industry

Middle East is rapidly emerging to play important role in the mining industry. Middle East countries like Egypt, Iran, Iraq, Kuwait, Saudi Arabia, Syria etc. are trying their hand in the Mining industry. According to several experts in the Middle Eastern regions have the required infrastructure development and scope for further development in the Mining industry. Middle Eastern countries have a great reason to try their hands in the Mining industry because their countries are overly dependent on their oil reserves for their economy. Too much dependence on oil industry have already hampered the middle east countries in various ways. So, it is a good idea to shift their focus in the Mining industry. The demand of steel is rising in Middle East countries because of heavy development work there. The economy in these regions is rapidly increasing. To fulfill the rapid demand of steel and similar metals these Middle Eastern countries are involved in the Mining industry.

The demands of metals and various other products are rapidly increasing globally. To satisfy these demands companies are looking for new sources of raw metals. Since, the Middle East countries are emerging economic power and have developed required infrastructure in the Mining industry, they are emerging as the primary players to provide the raw materials all over the world. The Mining industry of the Middle East has kept all its other projects, laws and priorities on the back burner to attract the foreign investment in the Mining industry.

Since the Mining industry in these Middle East regions is fairly new, the investors are showing their keen interest to tap the profits from the Mining industries here. Recent revolutions in the Middle East region like Egypt have also shown the rise in the development of the Mining industry. After the revolution in Egypt, the country has shown the keen interest in its vast gold reserves in the western desert. The change in the authority there has triggered the development of the Mining industry in the Egypt. Investors from foreign countries can continue their mining here without any interruptions from the locals here. That’s why it is now clear that the Middle East is rising as the giants in the Mining industry.