Following a year of slow economic recovery, oil spill incidents and price fluctuations, the oil and gas industry is set to witness healthy investment in exploration and market opportunities in the Middle East this year, said a survey.

However, the Middle East operators will face tough competition from a new breed of Asian international national oil companies (NOCs) in this sector, the Economist Intelligence Unit said in its survey entitled 'Deep water ahead? The outlook for the oil and gas industry in 2011' .

While the traditional NOCs, as seen in large parts of the Middle East, are still focused on developing the domestic resource base where it holds a monopoly, these international NOCs have become a disruptive competitor in recent years, it stated.

With the natural gas emerging as a key industry “game changer,” Qatar is set to play a key role, the survey pointed out.

Natural gas has gained widespread credibility as a relatively low-carbon “transition fuel”, especially for electricity generation, it added.

The global demand for liquefied natural gas (LNG) has grown as countries in Asia and Europe have sought to increase their supply options. However, both the recession and the sense of abundant supply have depressed natural gas prices.

'Asia is an emerging market for the oil and gas industry, for both demand and supply. Industry investment remains on track, with 58 per cent of respondents seeing the greatest opportunities coming from South-east Asia, China and the Far East this year.'

'North America is the next significant region, identified by 30 per cent of respondents.  However, strong growth for the Middle East is forecast. Increased exploitation of Iraqi crude oil in the next five years will temper rising prices and could lead to a shortage of manpower and services, it added.

The survey by Economist Intelligence Unit covered 194 board-level executives and policymakers from some of the industry’s leading international companies. It was sponsored by GL Noble Denton, an independent technical adviser to the industry with considerable insight into many of the issues faced.

'Despite concerns over tougher industry regulation and increased operating costs, those surveyed for the report were optimistic that 2011 will be a key turning point for industry growth, thanks to a period of relative price stability, particularly in the fast-growth economies in Asia,' the Economist stated.

John Wishart, president of GL Noble Denton, said: “This report helps to bring clarity to a sector that has faced significant challenges in recent years. While it forecasts an upturn in growth with guarded confidence, the industry must concentrate on overcoming significant technical challenges if the market is to pick up dramatically.'

According to him, the demand for energy is taking the exploration, production and distribution of oil and gas to even tougher extremes of geography and climate, and pushing the boundaries of the industry’s technical knowledge to its very limits.

'Against this backdrop, key players in the industry will need to find more innovative solutions to mitigate risk, while operating more efficiently and sustainably. Their success will define their position and reputation in the market this year,' he noted.

Tony McAuley, managing director, Energy, at the Economist Intelligence Unit said: 'The inaugural oil and gas barometer takes the pulse of senior executives at a challenging time for the industry. New risks are emerging, and 'black swan' events like the Gulf disaster have shown that the operating environment and the perception of risk can change seemingly overnight.'

'But our survey shows that there is room for optimism too. Companies are prepared to invest for the future, and meet new safety and environmental standards.'

'There is an appreciation that the industry must do its bit to reform, yet there is equally a clear message that policymakers must not allow knee-jerk reactions to influence regulations,' he added.-TradeArabia News Service