Investment Potentials in the Energy Sector of the Middle East (PDF)

Master's Thesis from the year 2016 in the subject Business economics - Investment and Finance, grade: 1.6, TU Dortmund, language: English, abstract: The Middle East countries Iran, Iraq and Saudi Arabia that were analyzed for investment potentials possess natural energy resources in copious amounts, share a high dependency on oil or gas while renewables barely play any role and have strong religious tendencies in politics as well as differences compared to western countries when it comes to aspects of cultural, religion, understanding and business practices.

The most promising investments that were stated out are: LNG liquefication facility in Iran, since Iran has large natural gas reserves and production capacities, but doesn't export gas at all. PV modules for Iraq, since expensive projects are comparably risky in this country and some of the population has no or just limited access to electricity - the demand exceeds the supply. For Saudi Arabia, larger scale solar power plant projects like Parabolic Troughs are most promising, since Saudi Arabia is very dependent on oil and has a very high carbon dioxide emission and a weak energy diversity.

Especially the liquefication facility in Iran seems to have enormous potential on the long run. The implementation of PV in Iraq is highly dependent on the business model and governmental support. Such support is also needed for the solar power plant in Saudi Arabia, since the electricity prices are subsidized in a way, that the electricity generated through a Parabolic Trough would most likely be not competitive without any form of support. However, such support is likely, since the project is very beneficial for Saudia Arabia and huge investments in the energy sector are planned anyways.

For the further realization of such projects its mandatory to make a sophisticated economically and feasibility analysis that considers all the relevant variables and more specific information and data. But especially renewable energies which are massively underrepresented in the Middle East seem to have a good potential which will probably increase further since more experience and better technologies are achieved.

The Middle East is a region with large natural resources and therefore with a theoretically enormous amount of investment possibilities. However, big players, state-owned companies, restrictions and difficulties regarding law, culture and business practices can overall decrease the attractivity of investments in this area.