UAE & Qatar prove the wisdom of foreign direct investment

The contrast to the situation in the northern oilfields of Kuwait could not be more dramatic. More than 14 years since Project Kuwait was announced, this $7 billion scheme to add 500,000 barrels per day to national oil output remains stuck in disagreements about whether to allow foreign oil companies to return to Kuwaiti soil.

Originally it was an upsurge of Arab nationalism that pushed the energy majors out of the region in the 1970s. Today this feeling lingers on, mixed with some interpretations of religious teachings.

Yet the cost to these nations is a high one. Next year the UAE will benefit from an extra 750,000 barrels per day of crude oil. At yesterday's closing price that is some $37.5 million a day, or $13.7 billion for the full year.

Kuwait is clearly much the poorer for its failure to get its national act together for Project Kuwait. Of course, it is necessary to be prudent when dealing with multinational energy groups; these are publicly owned companies with shareholders to satisfy, and not charitable institutions.

But they are the experts in the energy business. They know how to make the hugely complex technology work. They have the international clout and downstream integrated structures. And they can raise and mobilize capital to ensure that energy investments happen.

Why block the lifeblood of a nation? Why leave future generations with less income and reduced prospects? It is not as though the energy companies have any interest in importing an alien culture to a country. They will be happy to donate money to local bodies dedicated to preserving national culture and identity.

It is a rather bizarre situation that the Middle East has two-thirds of the world's oil reserves and yet only produces one-third of global oil output. This is because misguided people in the past have rejected inward investment, and that investment has gone elsewhere.

There is no doubt the Middle East has the lowest costs of energy production in the world, and surely the future of the next generation lies in properly exploiting this asset for the benefit of all the people.

This will not happen if good projects remain blocked to the international energy companies, and other countries should be looking to follow the example of the UAE and Qatar where foreign oil and gas companies have been welcome for a long time. Needless to say the GDP per capita in the UAE and Qatar is the highest in the region.