Highlights

  • Civil unrest in Yemen has caused limited disruption to LNG exports so far, but the threat remains
  • Regional supply disruptions and plant maintenance may not be enough to boost global LNG prices
  • While low oil prices are a concern for LNG exporters in the MENA region, they have increased the appetite for LNG among key consumers

Economic overview

Persistent weakness in the global oil price is affecting hydrocarbon export revenues and is a concern for the economic growth prospects of key oil and gas exporters in the region.

In its latest biannual Regional Economic Outlook, released in January, the International Monetary Fund predicted that Gulf Cooperation Council (GCC) countries will lose a combined $300 billion in hydrocarbon export revenues this year. This may discourage upstream investment among smaller GCC members. However, low oil prices have also boosted the appetite for oil-indexed gas and LNG imports by regional consumers.

Quarterly year-on-year GDP growth rates

  Q2 2014 Q3 2014 Q4 2014 2014 2015 2016
Qatar 5.7% 6.0% *6.5% *6.5% *7.7% *7.8%
Egypt 3.7% 6.8% *2.2% *2.2% *3.5% *3.8%
Saudi Arabia 3.8% 2.4% 2.0% *4.6% *4.5% *4.4%
Nigeria 6.5% 6.2% *7.0% *7.0% *7.3% *7.2%
South Africa 1.3% 1.4% *1.4% *1.4% *2.3% *2.8%
Source: Regional government sources, *IMF WEO projections

Kuwait opted for an austerity budget for the fiscal year starting on 1 April, based on an oil-price assumption of $45 per barrel, down from $75/bbl in the current fiscal year. Low oil prices are hurting countries outside the GCC as well. The Angolan cabinet asked the country’s parliament to revise the oil price assumption in its 2015 budget to $40/bbl, down from its earlier projection of $81/bbl. Nigeria slashed its 2015 GDP growth forecast to 5.54% from the government’s previous forecast of 6.75%, partly because of oil price declines (see Oil price drop hitting Nigerian LNG, 22 January 2015).

Saudi Arabia’s stance of not reducing its oil production is unlikely to change now Salman bin Abdulaziz has taken over following the death of King Abdullah bin Abdulaziz in January. This will also limit gains in oil prices.