The energy sector, which consists of all the activities involved in the production, transformation and sale of energy, including the petroleum, gas, electricity, coal, nuclear power, and renewable energy industries, is one of the main drivers of socio-economic development. In other words, hydrocarbon resources play an important role in the development and economic growth of countries with large reserves of oil and gas, alongside the rising importance of renewable sources and the increasing efforts to implement the Paris Agreement.[1]

The Arab region is one of the world’s richest regions in terms of oil and natural gas resources. Given that 79.4 percent of the world’s oil reserves are located in OPEC member countries, it is estimated that around 44.8 percent of the world’s proven oil reserves are located in the six Arab member states of OPEC, with additional 11 out of the 22 Arab countries holding proven oil reserves. Saudi Arabia held the second largest proven oil reserves in the World with 267.03 billion barrels in 2018, followed regionally by Iraq and Kuwait at 145.02 and 101.5 billion barrels, respectively.[2] In addition, 28 percent of the world’s proven natural gas reserves are located in the Arab region, with Qatar having the third largest reserves in the world at 24.5 trillion cubic meters in 2016.[3]

The existence of large oil and gas reserves impacts the production of energy products that amounted to a total of 1970 million tonnes of oil equivalent (toe) in the Arab region in 2018.[3][4] The energy consumption reached 470 million toe in 2018, with the GCC countries consuming more than half of the supplied energy. It is noteworthy to mention that the most energy consuming sector in the region is industry at 30.8 percent, followed by transport at 30.5 percent and households at 15.5 percent. The abundance of hydrocarbon resources and the high production rates make the Arab region a large exporter of energy products, with 72 percent of the energy produced being exported.[4]

Crude oil production amounted to 1.4 billion toe in the Arab region in 2018 with Saudi Arabia producing 586 million toe. Out of the crude oil and oil products produced in the Arab region, 82 percent were exported in 2018,[3] mainly to China, Japan, India and Europe, among other countries.[4][5] On the consumption side, the average oil products consumption per capita amounted to 588 Kilogram of oil equivalent (kgoe) for the whole region and 2246 kgoe for the Gulf region, compared to the World average of 529 kgoe per capita in  2018.[6] The transport sector was the most oil consuming sector in the Arab region at  58.7 percent, followed by the industry sector (16.8 percent) and households (7.5percent).[4]

Globally, 15 percent of the World natural gas production and 17.2 percent of the World natural gas exports derived from the Arab region in 2018. Natural gas production in the Arab region amounted to 495 million toe in  2018, with Qatar producing 147 million toe, followed regionally by Algeria and Saudi Arabia at around 82 million toe and 79 million toe respectively. Out of the total production in the Arab region, 35.5 percent of the natural gas was exported. On the consumption side, 123 million toe were consumed in the Arab region in  2018, with the industrial sector consuming 62.5 percent of the total natural gas supplied, followed by the households sector at 6.3 percent.[4]

Electricity production in the region relies heavily on conventional fuel sources, with a production amounting to 1,227 TWh in 2018, of which only 40 TWh were produced using renewable and waste sources. The consumption of electricity amounted to 80 percent of the total electricity produced in  2018, reaching 983 TWh. At the sectoral level, 42.4 percent of electricity was consumed by households, followed by commerce and public services at  27.6 percent, and industry at 19.9 percent.[4] On the other hand, the electrification rate in 13 Arab countries was above the World average of 89.6 percent in 2018, with 10 countries reaching 100 percent electrification rate. Somalia, Sudan and Mauritania have electrification rates of  35.3, 44.5 and 59.8 percent respectively.[7] In 2017, GCC seven members had an installed power capacity of 146 GW, yet renewables’ share of production was less than 1 percent. Saudi Arabia, for example, is planning to generate 9.5 GW of electricity from solar and wind by 2023.[8]

Given the high economic impact of energy subsidies on national economies, the international drop in the prices of petroleum products, and the aspirations of some countries to drive green solutions forward, some Arab countries are phasing out energy subsidies. In 2019, almost half of the Arab countries had energy subsidies, where the subsidies share of GDP varied from 0.3 percent in Qatar to 13.6 percent in Libya.[9]



This overview was last updated by the ADP team based on latest available data as of November 2020. ​ 

Sources:

[1] United Nations Climate Change. The Paris Agreement. [ONLINE] Available at: http://unfccc.int/paris_agreement/items/9485.php [Accessed 16 November 2020].[2] Organization of the Petroleum Exporting Countries (OPEC). 2020. Data/Graphs. [ONLINE] Available at: https://www.opec.org/opec_web/en/data_graphs/330.htm [Accessed 16 November 2020].
[3] ADP calculations based on data extracted from the World Energy Council. World Energy Resources. [ONLINE] Available at: www.worldenergy.org/data/resources [Accessed 16 November 2020].
[4] ADP calculations based on data extracted from the International Energy Agency. Energy balances. [ONLINE] Available at: https://www.iea.org/statistics/?country=WORLD&year=2016&category=Energy%20supply&indicator=TPESbySource&mode=table&dataTable=BALANCES [Accessed 16 November 2020].
[5] British Petroleum. June  2020. BP Statistical Review of World Energy. [ONLINE] Available at: https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2020-full-report.pdf [Accessed 16 November 2020]. 
[6] ADP calculations based on data extracted from the International Energy Agency. Energy balances. [ONLINE] Available at: https://www.iea.org/statistics/?country=WORLD&year=2016&category=Energy%20supply&indicator=TPESbySource&mode=table&dataTable=BALANCES and from the Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. World Population Prospects. [ONLINE] Available at:
https://population.un.org/wpp/Download/Standard/Population/ [Accessed 16 November 2020]. 
[7] The World Bank. 2019. World Development Indicators. [ONLINE] Available at: https://databank.worldbank.org/data/reports.aspx?source=world-development-indicators [Accessed 16 November 2020]. 
[8] International Renewable Energy Agency. 2019. Renewable Energy Market Analysis. [ONLINE]. Available at: 
https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Jan/IRENA_Market_Analysis_GCC_2019.pdf [Accessed 16 November 2020].
[9] International Energy Agency. 2018. World Energy Outlook. [ONLINE]. Available at: https://www.iea.org/weo/ [Accessed 16 November 2020].