Investment in global refinery industry needs to reach $20billion a year for 25 years

In an exclusive interview with MEED magazine (Middle East Economic Digest, available in the GCC on June 4), Birol said: "We don't see enough oil supply coming to the market, while downstream activities to transform this oil into products are also lagging, but demand is increasing."

Looking to the next couple of years, he said: "We are seeing oil producing countries pushing oil and gas in favour of their foreign policy. If this trend continues, and if it is accompanied with something like a hurricane, this may probably push prices to even higher levels, especially in the absence of spare capacity."

Worldwide oil demand is expected to increase by about 1.5 per cent this year, according to the IEA; much of this growth is fuelled by demand from China, India, Latin America and the Middle East.

However, adding refinery capacity globally has not increased in line with demand; low or negative margins have prevented most refiners from investing in new plants, while environmental regulations in the US and Europe have effectively barred any new refineries from being built.

Oil companies and investors are looking to China, India and the Middle East, with the last-mentioned taking advantage of the oil boom and high liquidity levels.

According to MEED projects, the Middle East's leading online business opportunity tracker, there are more than $59 billion worth of refinery projects alone in the GCC, Iran and Iraq.

Leading the way is Saudi Arabia, where Saudi Aramco is moving ahead with two 400,000 barrels per day (b/d) export refinery projects and further integrated refining and petrochemicals projects.

Kuwait National Petroleum Corporation (KNPC) is working on the world's biggest refinery, the 650,000 b/d Ras al-Zour facility.

Birol explained: "According to our projections between now and 2030, around $480 billion will be required for downstream investments.

"The lagging behind of refining is a significant question and both OPEC and the IEA member countries have to push it forward.

MEED projects tracks all projects worth more than $50 million in the GCC, Iran and Iraq. The Middle East's leading online business opportunity tracker now provides information on more than 1,400 projects.