The Middle East is a region that remains an investment target for major gas companies and regional players alike, despite a significant downturn in mature gas markets elsewhere. In the Middle East, investment in oil and gas segments, and in the primary metals sector, has followed a different path than investments in these same markets in other world regions.
In late 2007 and the first half of 2008 — when global markets were still booming — the Middle East was experiencing a slowdown in project activity well before the more developed markets even began to suffer.
The reason? A number of large projects were going up around the world, especially in Asia and Western Europe. This put pressure on infrastructure and construction materials costs in the Middle East, which became relatively high when compared to costs in other world regions. In addition, the Middle East suffered from a dearth of engineering skills. These factors led to hyper-inflation in project build costs in the Middle East and caused major oil and gas companies to rethink investment strategies in this region. Several projects were put on hold — including further gas-to-liquid projects in Qatar. As we all know, the bottom fell out of world markets in late 2008 resulting in an oil price slump, with a barrel of oil going from the $140+ a barrel in late 2007 to $40 a barrel by the end of 2008 and early 2009.
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