Middle Eastern oil-producing countries need to avoid unwanted consortia | The National

Middle Eastern oil-producing countries need to avoid unwanted consortia | The National:



"In the 1970s, the president of Egypt, Anwar El Sadat, launched his “Infitah” – opening – to foreign investment. The 1990s brought Venezuela’s similarly-named Apertura in its petroleum sector. And during 1998’s price slump, all the oil exporting countries in the Middle East made plans to bring in foreign investment. Now, with the return of lower oil prices, the region should again seek international partners to meet the economic challenge.



There are four reasons a country might open up to foreign investment in its oil sector – to raise capital, find new resources, improve efficiency and gain value from linked investments. Qatar’s late 1990s opening succeeded because it had a clear idea of what it wanted – the world’s biggest liquefied natural gas industry – and allowed its foreign investors attractive returns in the process. Many other countries had either no clear objectives, or too many.



The UAE and Iran have made some progress, but deals in Kuwait and Saudi Arabia never got off the ground. Just as the bureaucratic machinery geared up, prices began to recover, and the incumbent national oil companies resisted. The bidding systems were apparently designed to be as convoluted as possible."



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