The Middle East outperforms every other region in BMI’s upstream risk/reward ratings. This is due to an exceptionally high Industry Rewards score, reflecting the region’s vast resource base and strong growth potential.
According to data from the US Energy Information Administration, the Middle East holds more than 40% of the world’s recoverable gas resources, and almost half of its recoverable oil. It also hosts several highly prospective resource plays. Large areas of the Middle East remain heavily underexplored, and there has been a growing interest in the region’s unconventional resource potential.
The region also has an impressive production profile. According to a report by GEO ExPro, in recent years global production averaged 30,515 barrels (bbl) per well. In the Middle East, the average was 452,459 bbl per well. The region’s upstream sector continues to draw substantial investments internationally, and BMI forecasts strong output growth over a 10-year forecast period.
However, the countries at the top of BMI’s upstream rankings are not those with the greatest reserves or the strongest production profiles, but those with the best above-ground environments.
In particular the UAE, Qatar, and Iraq, received strong Country Reward scores due to the broad participation of non-state competitors, and the comparatively low level of state ownership of assets in these countries.
In contrast, those that fall to the bottom of the rankings, in particular Saudi Arabia and Kuwait, suffer from both low Country Rewards and Industry Risk ratings due to the closed nature of their upstream sectors, and the limited opportunities accruing to prospective investors. Poor licensing terms and opaque regulatory environments weigh on the countries’ scores.
