The oil majors are clinging to their upstream assets in the Middle East by the skin of their teeth. Margins and returns on investment are shrinking with rates of return across the region scraping along on a 10% basis. The next few months will tell whether industry giants Shell, Total, BP and ExxonMobil win a renewal of their Abu Dhabi onshore concession that makes up a material part of their global production, or whether they have lost their appetite for low value barrels.

Wood Mackenzie estimates the current value of the oil majors’ global upstream assets at $1.4 trillion, of which the Middle East makes up 10%. On a regional level, Qatar is the largest contributor, at 74% of total NPV (net present value), due to the monetization of the North Field. Oman at 14% is an important part of the value story because of the extensive drilling work being undertaken in a relatively low reserve base. In third place is Yemen, with 4% of total regional NPV, also due to high exploration activity, while the UAE comes in fourth at 3% and Iraq with its high volumes and low value is at 2%. Iran is not part of the calculation as it remains off limits to the foreign majors and reliable data is inaccessible. (CONTINUED - 1060 WORDS)