Although it has been generally viewed for decades as one of the world’s most restive regions, the Middle East holds nearly half of all total proved oil and gas reserves in the world.

Middle Eastern oil producers continue to look for ways to develop more of their reserves, to replenish declining production from mature fields, and to invest in the downstream and petrochemicals business to prepare for the future oil market when petrochemicals are expected to lead global oil demand growth.

The countries in the Middle East had combined 807.7 billion barrels of proved oil reserves at the end of 2017, accounting for 47.6 percent of all global proved crude oil reserves, according to the BP Statistical Review of World Energy 2018. The Middle East also has the largest share of total proved reserves of natural gas—at 79.1 trillion cubic meters, countries in the Middle East held 40.9 percent of the world’s proved natural gas reserves at the end of 2017.

Middle Eastern gas producers are keen to further expand production and exports of their gas, to seize the opportunity to meet rising natural gas demand, both domestically and on the Asian markets.

Over the past few months, many national companies in the Middle East have announced plans to boost production capacities and invest more in the downstream business both in the region and in Asia.

The Abu Dhabi National Oil Company (ADNOC) sees a lot of opportunities for investment, expansion, and growth for the oil and gas industry amid rising global energy demand, Sultan Ahmed Al Jaber, UAE Minister of State and ADNOC Group CEO, said at the 39th Oil and Money Conference in London on 10 October.

“Never before in history has the map of the world’s energy needs looked so promising and so rewarding. Today’s evolving energy landscape is filled with opportunities for achieving greater success for our companies, our shareholders and our customers,” said Al Jaber.

The Abu Dhabi government has opened up six new onshore and offshore oil and gas exploration blocks to competitive bidding for the first time, with 39 parties having filed bids a few weeks until the end-October deadline.

Earlier in October, ADNOC announced a strategic partnership with Baker Hughes, under which the US firm will buy 5% in ADNOC Drilling for US$550 million. That deal values ADNOC Drilling at around US$11 billion, including some US$1 billion of net debt. The partnership with Baker Hughes will help ADNOC reach its target to reduce drilling time by 30 percent by the end of 2019.

ADNOC is also looking to expand its cooperation with the key markets driving Asian demand—China and India.

ADNOC sees enormous potential for boosting collaboration with Chinese companies. especially in the downstream, while it remains focused on market expansion in China and Asia, where demand for petrochemicals and plastics is expected to double by 2040.

The Abu Dhabi firm is also seeking closer ties with India’s energy sector. In June, Saudi Aramco, Indian Oil, Bharat Petroleum, and Hindustan Petroleum signed a deal making ADNOC a strategic partner in the Ratnagiri refining and petrochemicals complex. ADNOC will be a key supplier of crude to the 1.2-million-bpd refinery, which will have the capacity to produce 18 million tons of higher value petrochemical products for the Indian market.

In Saudi Arabia—OPEC’s largest oil producer—Saudi Aramco will spend more than half a trillion Saudi Riyals (US$133 billion) on drilling activities over the next decade, Saudi Aramco’s Senior Vice President for Upstream Mohammed Al-Qahtani said in September.

That same month Aramco awarded to Baker Hughes the first integrated services contract for capacity expansion of its large offshore Marjan oilfield, the Saudi firm’s biggest upstream development this year and the first of three planned major offshore expansions in the country.

Aramco also awarded a contract to China Harbour Engineering to build two manmade drilling islands to support the Berri field production capacity islands. Saudi Aramco’s Berri Increment Program (BIP) aims to produce an additional 250,000 bpd of Arabian Light crude oil from the Berri Oil field to reach 500,000 bpd to maintain Saudi Aramco’s maximum sustained capacity by early 2023.

Apart from upstream investments, Saudi Arabia and its state-held oil giant are also preparing for the petrochemicals future of oil demand growth. Aramco and France’s energy major Total signed in early October the joint development agreement for the front-end engineering and design (FEED) of a giant petrochemical complex in Jubail on Saudi Arabia’s eastern coast.

“The petrochemicals sector has been undergoing significant growth globally and is one of the future growth engines,” Saudi Aramco CEO Amin Nasser said.

According to an October 2018 study by the International Energy Agency (IEA), petrochemicals are turning into the largest drivers of global oil demand, in front of cars, planes, and trucks. Petrochemicals are expected to make up more than a third of global oil demand growth to 2030, and nearly half the growth to 2050, adding nearly 7 million bpd by then, the IEA said.

The Middle East remains the lowest-cost centre for many key petrochemicals, and a host of new projects have been announced across the region, the agency noted.

OPEC’s second-biggest producer Iraq aims to rehabilitate oil fields that were shut in during the war with ISIS, and is gradually ramping up production at the Qayara oil field in north Iraq.

OPEC’s currently third-largest producer, Iran, has been the centre of the oil market’s attention over the past few months, with analysts and experts trying to guesstimate how much Iranian oil exports the US sanctions would stifle. OPEC’s secondary sources already point to falling oil production in Iran as a result of the returning US sanctions on its industry. Iran, for its part, insists that its oil exports can’t be driven down to zero—as the US wants—and that no one, not even Saudi Arabia, can compensate for lost Iranian barrels.

While the sanctions and tensions in the Middle East have been key drivers of most of the oil price swings in recent months, some countries, like Qatar, announced major plans for more gas developments.

Qatar, the world’s largest exporter of liquefied natural gas (LNG), said in September that it would boost the capacity of its expansion project, adding a fourth train that would raise Qatar’s LNG production capacity by 43 percent— from 77 million tons annually now to 110 million tons a year by 2024.

“Since Qatar announced its initial plan, the market environment has improved. Forecasts of future oil prices are higher and forecasts of future LNG demand have grown stronger, particularly in Europe and China,” Giles Farrer, research director, global gas and LNG supply at Wood Mackenzie, said, commenting on the announcement.

“Having already taken the decision to compete for LNG market share, Qatar is doubling down, making sure that it will be fully able to benefit from LNG market upside,” Farrer noted.

A couple of weeks before that Qatargas announced the signing of a 22-year agreement with PetroChina to supply China with 3.4 million tons of LNG annually—a sign that the world’s biggest LNG exporter is looking to lock in market shares in a key fast-growing LNG importer.

The Middle East is and will be a key global oil and gas supplier as the world’s energy demand continues to grow. Companies and countries also plan downstream and petrochemical investments to seize market opportunities as demand growth drivers evolve.