Tuesday, March 15, 2011

Bahrain's central location and geopolitical importance to the US and KSA

The tsunami in Japan has not only swept away many cities and town in Japan, it has also swept away the main-stream media's coverage of continuing civil unrest in some of the MENA countries.  What perfect cover for the Kingdoms of Bahrain and Saudi Arabia, and UAE, to take strong action against the protesters in Bahrain:

Troops from Saudi Arabia and police officers from the United Arab Emirates crossed into Bahrain on Monday under the aegis of the Gulf Cooperation Council to help quell unrest there, a move Bahraini opposition groups denounced in a statement as an “occupation.”
....
Sheik Abdullah said the U.A.E. had dispatched 500 police officers with the Saudi forces and that other Gulf states would also send troops. His remarks suggested an escalating intervention.

Opposition groups said Monday that the Saudi intervention was a declaration of war. Protests that began with calls for democratic reform and an end to Shiite discrimination are now calling for regime change.

“The entry of the Saudis does not mean these people are going to go back to their villages quietly,” says Toby Jones, a Gulf expert at Rutgers University. “It raises the stakes.”

Meanwhile, a pro-government parliamentary bloc on Monday called on the king to impose martial law after 100 people were reportedly wounded Sunday. Police attacked the mostly Shiite protesters who were blocking a highway leading to the financial district in the capital Manama. They used tear gas and rubber bullets against the demonstrators, but were unable to disperse them.

Clashes between protesters and Sunni government supporters also erupted on the campus of a university in Sakhir. Those events followed large protests on Friday, in which hundreds were wounded when protesters marching to government offices were attacked by police and government supporters who carried sticks and clubs.
...
Saudi Arabia has moved quickly to quell stirrings of protest within its own kingdom in recent weeks. It’s unclear whether Bahrain actually asked for assistance, or whether it was imposed by its larger neighbor, says Jones. “It could very well be that Riyadh made a phone call and said ‘we’re coming,’” he says.
Bahrain, a small island with a population of about 1 million people (about half being an ex-pat labor force; Background Note: Bahrain), has a number of features that make it an important geopolitical pawn:

1) Most of the Kingdom of Saudi Arabia's (KSA) oil fields are located in its Eastern Province, near Bahrain or in the Persian Gulf

Oil Field
Production Rate
Reference
Ghawar
5 mbd
Safaniya (offshore)
1.5 mbd
Khurais
1.2 mbd
Manifa
0.9 mbd
Khusaniya
0.5 mbd
Qatif
0.5 mbd
Abqaiq Field
0.4 mbd
Abu Safah (offshore)
0.3 mbd


There are several other smaller fields and some additional fields farther away (Map of Oil and Gas Fields in Saudi Arabia (2005)), but the eight fields in tha table account for about 10 mbd, which is about what KSA's crude oil production equaled in 2009, according to the BP statistical review.

2) Bahrain's government derives most of its income from the oil and gas industry and this is heavily supported by the KSA.

The first Gulf state to discover oil, Bahrain's reserves are expected to run out in 10-15 years. Accordingly, Bahrain has worked to diversify its economy over the past decade and has stabilized its oil production at about 40,000 barrels per day (b/d). Revenues from oil and natural gas currently account for approximately 10% of GDP yet currently provide about 75% of government income. The state-owned Bahrain Petroleum Company refinery built in 1935, the first in the Gulf, has a capacity of about 260,000 b/d. Saudi Arabia provides most of the crude for refinery operation via pipeline. Through an agreement with Saudi Arabia, Bahrain also receives half of the net output and revenues from Saudi Arabia's Abu Saafa offshore oilfield.
....
Government revenues continue to be largely dependent on the oil industry. Bahrain has received significant budgetary support and project grants from Saudi Arabia, Kuwait, and the United Arab Emirates.  Background Note: Bahrain

As I recently demonstrated in Survey of Oil Exports from North Africa, Bahrain's net petroleum exports are reaching zero right now, and therefore net exports as a source of government income has dried up. However, the income generated from the Abu Safah field, apparently given as a gift from the KSA, will continue to sustain the Bahrain government, at least until it also runs out.
3) Bahrain is majority Shiite, but the region has been ruled by Sunni kings for the past 200 years. The ruling family and the majority of government, military, and corporate leaders are Sunni Muslims (Background Note: Bahrain).

Shi'ite villages are marked by unpainted concrete walls, potholed streets and poor lighting. Few have access to the beaches and harbors that were once the mainstay of a pre-oil boom fishing and pearling industry — massive reclamation projects have stolen the sea front. Sunni villages are well maintained, have good drainage and many even claim a small harbor or beach. Shi'ites control 30% of the economy, even though they represent 65% of the population.
...
"You won't see many Sunnis here," Sharif told TIME. "They have been told by the government that the Shi'ites want to take over the country." Of course it isn't true — "We want to choose our leaders, not be the leaders," one protestor said — but the fear is deeply ingrained in a Sunni minority population that has ruled over this Shi'ite-majority nation for more than 200 years.

The Bahrain protests are led by resentful Shia Muslims, who live in the only country in the world where a Shia majority population is ruled by a Sunni minority. They make up 60 to 70 per cent of the population and are demanding more political freedom from the ruling al-Khalifa family.

The family has close relations with Saudi Arabia’s Sunni rulers (part of the majority in that country) and it is via Sunni-Shia relations that events in Bahrain could have repercussions in Saudi Arabia, which is connected to Bahrain by the 25km King Fahd Causeway.

4) KSA is majority Sunni, but the Eastern Province, next to Bahrain, is majority Shiite. For instance, the March 11 "day of rage" protests that did occur, occurred in Hofuf and Qatif in the Eastern Province:

Hundreds turned out in two Saudi Arabian cities Friday to protest on what had been billed as a "day of rage," according to activists, though a planned demonstration in the Middle Eastern nation's capital failed to materialize.
...
The streets of Qatif, a predominantly Shiite city in eastern Saudi Arabia where several protests have taken place in recent days, were quiet early Friday.
...
These demonstrations came a day after more than 100 people had gathered in Qatif, according to two witnesses and an activist.

At some point, the witnesses said, Saudi security forces shot to disperse the crowd. It was unknown if the forces fired rubber bullets or more lethal ammunition. Those injured were taken to Qatif Central Hospital for treatment, the activist and witnesses said.


A veteran Middle East hand concurs: "I don't see any revolution in Saudi Arabia. There, the problem lies in the Eastern Province, and this is linked to the troubles in Bahrain, for both are majority Shia." Even if not on the brink of collapse the Saudi regime has a choice: merely repress demonstrations or begin a process of gradual reform.

Much more troubling is the situation in Bahrain. The Middle East vet­eran e-mails: "Bahrain seems to me in very deep trouble. The hope is that somehow cooler heads in the royal family and among the Shia leadership can work out progress toward a constitutional monarchy. If that fails, disaster looms. Repression by force by the King will leave the place a powder keg with constant demonstrations and low-level violence, which inter alia will ruin the economy. If the Saudis intervene, it means a kind of colonial war against the Shia and means even more violence; the country will be lost. All that helps only Iran."

5) The US navy fifth fleet is headquartered at Barain, and the Muharaq Airfield and Sheik Isa Airbase are used by the US air force as a base of operation in the Persian Gulf, including its patrol of the Strait of Hormuz. Graphic: Bahrain’s strategic importance

6) Iran (majority Shiite) gets blamed for insighting the protests in Bahrain.  I have little doubt that the USA, KSA and Sunni King of Bahrain will play this up as justification for the recent actions to put down the protests.

Bahrain-Iran relations have been strained since the discovery in 1981 of an Iran-sponsored coup plot in Bahrain. Bahraini suspicions of the Iranian role in local unrest in the mid-1990s remain. Background Note: Bahrain

Saudi Arabia has the world’s largest oil reserves, which Iran would like to control as well.  A pro-Iran Bahrain would provide Tehran a platform from which to seed Saudi Shia insurrection much as it did in Iraq.  No telling what might happen if Saudi Shiites sitting atop the kingdom’s oil fields cooperate with Iranian agents.    
...
The Bahrain crisis is different from the unrest elsewhere, because Iran is likely at its center.  For now, America’s best course of action is to be silent, unlike our interference in the Egyptian crisis.  Let the affected nations—Bahrain and Saudi Arabia—resolve the situation without our meddling.
...
Bahrain would also provide Iran access to transit channels for oil tankers leaving Saudi Arabia’s loading facilities.  Iran’s Revolutionary Guard navy could use that access to create coastal minefields—a capability it possesses—to control shipments, or soldiers could sabotage ships, as in a terrorist group's attack on a Japanese oil tanker last summer.  Both ways, the effect is to slow exports, making crude oil prices skyrocket, which helps Iran’s economy and its hegemonic leverage.
Mr. Maginnis, retired Army lieutenant colonel Bahrain's No Egypt

The toppling of the government of Bahrain by a Shiite movement would potentially embolden Shia in Saudi Arabia, who live primarily in the oil-rich northeast near Bahrain. It also would weaken the U.S. military posture in the region. And it would demonstrate Iranian power.

If the Saudis intervened in Bahrain, the Iranians would have grounds to justify their own intervention, covert or overt. Iran might also use any violent Bahraini government suppression of demonstrators to justify more open intervention. In the meantime, the United States, which has about 1,500 military personnel plus embassy staff on the ground in Bahrain, would face the choice of reinforcing or pulling its troops out.
...
Unlike Libya, where the effects are primarily internal, the events in Bahrain clearly involve Saudi, Iranian and U.S. interests. Bahrain is also the point where the Iranians have their best chance, since it is both the most heavily Shiite nation and one where the Shiites have the most grievances.

But the Iranians have other targets, which might be defined as any area adjoining Saudi Arabia with a substantial Shiite population and with American bases. This would include Oman, which the United States uses as a support facility; Qatar, headquarters of U.S. Central Command and home to Al Udeid Air Base; and Kuwait, the key logistical hub for Iraqi operations and with major army support, storage and port facilities. All three have experienced or are experiencing demonstrations. Logically, these are Iran’s first targets.

I doubt that regime change will happen in Bahrain, at least not this time around.  The stable flow of oil out of KSA, and other OPEC member in the Persian Gulf, is just too important to the West (and the Kings) to allow anything like what happened in Eygpt, or, what may happen in Libya.  I think that the recent intervention taken by the KSA and UAE in Bahrain sets the roadmap that will be followed should civil unreast other countires (e.g., Kuwait, Qatar, Oman, Yeman) in the Middle East puts the existing regime in jeapordy.

As the KSA heads towards zero net exports in the 2020s, and consequently, their petroleum income declines, I expect to see these kind of uprisings to occur more and more frequently.  Eventually, regime change will occur in KSA, and, Bahrain and the Eastern province of KSA, will likly be a focal point of conflict.

---March 17, 2011 followup---

The events of the last 48 hours demonstrate the hard put-down of the protesters, with Bahrain security forces leveling the protester's encampment in the Pearl Roundabout in the capital, Manama, and, the leaders of the protesters being arrested:

"The US, which counts both Bahrain and Saudi Arabia among its allies, has called for restraint, but has refrained from saying whether it supports the move to deploy troops.

Hillary Clinton, the US secretary of state, who was speaking in Egypt, said Bahrainis must "take steps now" towards a political resolution of the crisis.

Iran, meanwhile, has warned against "foreign interferences".

"The peaceful demonstrations in Bahrain are among the domestic issues of this country, and creating an atmosphere of fear and using other countries' military forces to oppress these demands is not the solution," Hossein Amir Abdollahian, an official from the Iranian foreign ministry, was reported by Iran's semi-official Fars news agency as saying."


A day after hundreds of Bahraini troops forcefully cleared out a central square of reform-seeking protesters, the authorities arrested major opposition figures early Thursday, the next stage of a crackdown that has the opposition in a tailspin.
....
A number of other political opponents were also detained by security officials as it became clear that the Bahraini government, which sought last month to mollify protesters clamoring for democratic reform, had decisively shifted tactics to forceful repression.
...
The crackdown placed the United States in an awkward bind. The United States, which bases its Fifth Fleet here, has struggled to balance its strategic interest in placating Bahrain and its ally, Saudi Arabia, its fears that Iran is exploiting the anger of Bahrain’s majority Shiite protesters, and American democratic principles. American officials have held off backing the protesters while urging Bahrain’s leaders to exercise restraint. That advice was ignored.


I think that it is signifcant that the Saudi’s, UAE and other members of the Gulf Coalition Council (GCC) pretty well ignored the USA’s pleas for a “political resolution” and to “exercise restraint,” and instead put down the protesters hard in a show of force.  The signal to protesters in other GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) should be clear: if you protest we will also put you down hard.  This will not be like Egypt or Libya.  The USA during this whole affair appears to be irrelevant.

The other thing that I find significant is the solidarity of support for the Bahrain protesters from the other Shiite-majority countries in the MENA: Iran, Iraq, Lebanon:

The Shi'ite ruling bloc in Iraq has denounced the deployment of troops from Saudi Arabia and other Gulf states in Bahrain, where a Sunni royal family has called in aid from its neighbors to help quell an uprising by mainly Shi'ite protesters.

Confrontation between Shi'ites and Sunnis in the Gulf risks worsening Iraq's own sectarian divide after years of war.
....
Since U.S. forces toppled Sunni dictator Saddam Hussein in 2003 and allowed Iraq's Shi'ite majority to take power, Baghdad has had uneasy relations with its Sunni Arab neighbors who are wary of the rising clout of regional Shi'ite power Iran.

In a parliamentary session on Thursday, some Iraqi Sunni lawmakers joined Shi'ites in calling on the Bahraini government to meet the demands of protesters and urging Arab countries not to meddle in Bahrain's affairs.

"We call on all the countries not to interfere in Bahraini affairs ... we don't want to flood the region with foreign interventions where the only losers would be the people," lawmaker Salman al-Jumaili of the Sunni-backed, secularist Iraqiya bloc told parliament.

Iran has strongly criticized the intervention in Bahrain by Arab states. Street protests against the intervention have also been held in Lebanon, which along with Iraq and Bahrain is one of three Arab states where Shi'ites outnumber Sunnis.


The power vacuum created by USA military’s planned exit from Iraq in Dec 2011 (US troops and military posts in Iraq) and the heavy-handed tactics of Sunni Kingdom's military against Shiite citizen protesters in Bahrain, could be a unifying force for Shiite-majority countries, with of course, Iran leading the way.  This could put the GCC, led by the Saudis, in direct confrontation with a coalition of Iran, Iraq, and Lebanon, with Bahrain (and the Eastern Province of KSA) as the focal point. 

---March 18, 2011 followup---
The recent turmoil and regime change in the MENA could be signaling a broader change in relationship between the US and certain key countries in the MENA. 

McAlvany’s weekly commentary (The End of Oil and Dollar Stability; ~18 min mark) presented an interesting perspective on the MENA countries, especial KSA.  In particular, is the suggestion that the US approval of regime change in Egypt and Tunisia could signal the end of a longstanding strategy for the US to support these regimes, in exchange for “strategic interests,” such as the oil.  In essence, the grand strategy in the past has been that US acts as a protector of these regimes in exchange for petrodollar status.    See also Thicker than Oil: America’s Uneasy Partnership with Saudi Arabia.

KSA’s King Abdullah, and other king/leaders in the GCC are likely feeling betrayed, and, are wondering if the US would also be happy to see them to be deposed, similar to Egypt’s Hosni Mubarak.  

The GCC’s unilateral action in Bahrain, and now, the hesitance of some GCC members to send troops into Libya are signs of this change:

Jordan and Qatar have signaled willingness to help in the effort to stop Qaddafi from wiping out the final pocket of the rebellion against his 42-year rule. But, Saudi Arabia and the United Arab Emirates, the most significant players in the Arab League, are resisting American and European pleas to put a Muslim face on the action.

In statements to the Wall Street Journal and others, Saudi diplomats have suggested that given the lack of trust between the Sunni royal houses of the Persian Gulf and the Obama administration, the Arab powers are resisting Western requests for help.

The Saudis on Thursday moved swiftly to suppress protests in their own nation and continue to aid their Sunni cousins in Bahrain with an effort to crack down on an Iranian-backed Shiite uprising there.

American opposition to the Saudis’ use of force to quell the conflict in Bahrain and silence the small but growing protest movement in their own country has deepened the rift between Washington and Riyadh that first opened when Obama ignored Saudi pleas and cut loose longtime U.S. ally, Egyptian President Hosni Mubarak.

The concern among the Saudis centers around setting standards for the use of force to intervene against regimes in the region. The Saudi royals are clearly bracing for things to get worse with unrest there and don’t want to set a precedent that could leave them fighting Shiite rebels under the threat of Western military intervention.

King Abdullah's planned speech today is expected by some to announce reforms such as replacing some government ministers, steps to reign in government corruption and more food subsidies.  However, we should also be looking for signs in the speech that portend a change in relationship with the USA.

King Abdullah's short speech today reflected the Saudi version of kick-the-can-down-the-road: more money for everyone!  More for the civil servants, military and the religious police.  The handouts including those announced earlier in the month now total about $100 billion, or about $40000 per capita for KSA’s 26 million population.  There was one interesting item that caught my eye, however: the creation of 60,000 more military and security jobs (employment for the young men).  This suggests to me that KSA is expecting trouble (internal and external) and that they will have to deal with it themselves.  

Meanwhile there are more protests in Iraq Iraqi Shiites Protest Bahrain Crackdown at the behest of Moktada al-Sadr:

The protests were a show of Shiite solidarity against the Sunni ruling class of Bahrain with echoes of Iraq’s own sectarian history – the American invasion here upended decades of oppression by a Sunni government over an impoverished Shiite majority – but the demonstrations were also weighted with deeper meaning for Iraq’s own current politics.

In his ability to move his supporters from the mosque to the street, Mr. Sadr is perhaps the most pivotal Iraqi public figure aside from the prime minister, and the Friday protests were another signal to the political class here of Mr. Sadr’s power.

 ---March 19, 2011 followup---

Well, I’m going to leave this topic for now, but for readers interested in more background, I refer you to this recent article: The ancient loathing between Sunnis and Shi'ites is threatening to tear apart the Muslim world:
The consequences of this split have been devastating. For although only 10 to 15 per cent of the Muslim world are Shi’ites, they are concentrated in strategically vital areas.
A  round 85 per cent of the Iranian population is Shi’ite. Similarly, 70 per cent of Bahrain is Shi’ite, though the Sunnis rule the nation. In Yemen, around half the population are Shi’ite. In Saudi Arabia, where Sunnis make up 85 per cent of the population, the Shi’ites are the majority in the eastern province where most of the oilfields are.
This is a recipe for worsening conflict. We could now be witnessing a repeat of the storm that swept through the world after the Iranian revolution of 1979, when the Shi’ites overthrew the Shah of Persia, and Ayatollah Khomeini urged the overthrow of Sunni dictatorships and monarchies throughout the region.
There is a chilling echo of that today as the Iranian regime vociferously backs the Shi’ite rebels in Bahrain and encourages upheaval in the eastern province of Saudi Arabia.
In response, the Sunni rulers of Saudi Arabia are determined to crush all sparks of Shi’ite rebellion in Bahrain, which is why they have sent in troops. We may be in the first stages of a major conflagration between the Saudi Wahabbi bigots and the Iranian Shi’ite zealots.
Although the rhetoric in this article is a bit over the top, it does do a nice job of comparing the Shiite and Sunni populations in some of the MENA countries:


Sunday, March 13, 2011

Relating Per Capita GDP to Petroleum Consumption and Exports for the MENA Countries

In a previous article, I reproduced a plot relating per capita oil consumption to per capita GDP for selected countries, from a presentation, Energy and the Economy, by Adam Sieminski, chief energy economist for Deutsche Bank.   Sieminski’s plot showed a linear correlation between per capita oil consumption and per capita GDP for a selection of countries from Europe, Asia, North and South America. No countries were selected from the MENA (Middle East and North Africa) countries, however.

In this article, I look at the MENA countries, that I recently surveyed, to test whether these countries show the same general trend of increasing GDP per capita with increasing petroleum consumption per capita.  Additionally, I also examine, for the first time, as best I can tell, the relationship between petroleum exports per capita and GDP per capita.  In both cases, I examined these relationships separately for the exporting and importing MENA countries. 

Why relating GDP to oil consumption and exports is important
In my previous article, I used Sieminski’s plot, and several others, to support my argument that oil consumption and standard of living (as approximated by GDP per capita) are tightly linked.  My thesis was that if a country’s oil consumption goes down (e.g., because domestic production declines, or, because there is less oil to import) then that country’s standard of living will go down more of less contemporaneously and proportionately. 

I acknowledge that an economic decline (decreases GDP per capita) may precede an oil consumption decline.  Or alternatively, decreasing oil consumption, because prices go up and therefore oil less available, or, because there is a disruption in exportable oil, could precede and contribute to an economic decline. I don’t see good evidence saying that one must always precede the other.   I do believe, however, that the time delay between the changes in these two parameters must be fairly short, otherwise we would not see the kind of linear relationships illustrated in Sieminski’s plot. 

If there is a linear relationship between GDP per capita and the rate of petroleum consumption per capita, and this is general to all countries and within countries, then, if I can estimate how much consumption will decline, then I can also estimate how much standard of living will decline.

GDP per capita and petroleum consumption raters per capita for the MENA countries
Figure 1 shows my calculation of petroleum consumption rates per capita versus GDP per capita using the 2009 data I collected for the 28 MENA countries examined in the two previous articles: Survey of Oil Exports from the Middle East and Survey of Oil Exports from North Africa.
There is a very wide range of data in this plot, so the data for several countries gets jammed together at the origin.  Figure 2 shows this detail region:

Overall, this plot suggests that the MENA countries have the same strong linear correlation as shown in Sieminski’s plot, between petroleum consumption per capita versus GDP per capita.

The black line shows the best fit linear regression line for all 28 countries (slope = 0.51; intercept = 2.8 bs/p), which has a regression coefficient (r2) equal to 0.77.  That is, 77% of the variation in petroleum consumption rates per capita can be explained by GDP per capita.  Or, 77% of the GDP per capita can be explained by petroleum consumption rates per capita. 

The slope of about 0.5 suggests to me that every ½ barrel of petroleum consumed per person corresponds to a change in GDP of about 1000 USD.  Or, 1000 USD worth of economic activity corresponds to the consumption of ½ barrel of petroleum. 

If I just consider the 15 petroleum exporter countries (green circles and line), then the best fit linear regression line is almost the same, although the intercept is slightly higher (slope = 0.48; intercept = 5.50; r2 = 0.74). 

The 13 importers also follow the same trend, although the slope and intercept is slightly lower (slope = 0.41; intercept = 1.1; r2 = 0.80). 

It is interesting to note that, compared to a number of the higher consumption rate per capita countries (i.e., Qatar, Kuwait and UAE), Saudi Arabia has a relatively lower GDP per capita.  That is, compared to these countries, Saudi Arabia consumes more petroleum at a rate that corresponds to a comparatively lower standard of living (GDP per capita).  I don’t know why that would be the case, but perhaps it is related to Saudi Arabia’s relatively higher population and larger geography area compared to Qatar, Kuwait and UAE. 

Israel has about the same level of petroleum consumption and GDP per capita as some developed European countries, and, Lebanon is not too far behind Israel.  Several of the North Africa countries with no petroleum production and very low consumption rates are all close to the origin with GDP per capita at or below 1000 USD.   I see these countries as representative of the standard of living we might expect to see for the MENA countries if they were all to become substantially non-petroleum based societies. 

Yemen, Sudan and Chad are net exporters, but, the GDP per capita of these three countires are all not much different from net importers like Mauritania, Palestine and West Sahara.  It would seem that Yemen, Sudan and Chad’s exports are insufficient in magnitude to make much difference in the GDP per capita.

Standing apart from the other exporter is Bahrain (circled in red).  Its GDP per capita of $40,000 is much higher than I would expect for a country with almost no net exports.  In the past, petroleum production and refining accounting for more than 60% of Bahrain's export receipts and 70% of government revenues.  Perhaps this high GDP per capita reflects income from refining.  However, with exports hitting zero right now, I wonder if this is not a “Wile E Coyote” moment for Bahrain, where consequences of no longer having income from petroleum export income has not yet effected the economy.

Tunisia, Egypt and Algeria are similar to Bahrain in that GDP per capita is relatively high for their petroleum consumption rates.  Egypt is a little bit ahead of Bahrain, having recently hit net zero exports, and Tunisia is still further ahead of Egypt, having hit net zero exports in the early 2000s (and actually a small net exporter once again).  Algeria looks a few decades out from hitting zero exports; in an earlier article I estimate that Algeria would reach zero-net exports by about 2029, although the trend for declining exports was underway now.  Still, it seems that Algeria’s GDP per capita is higher than I would expect based on its consumption rate per capita.  Perhaps its cushion of $150 billion in foreign currency reserves and hydrocarbon stabilization fund helps to mitigate the declining foreign income from declining exports. 

GDP per capita and petroleum consumption per capita for the MENA countries
Figure 3 shows my calculation of petroleum exports per capita versus GDP per capita using the same 2009 data for the 28 MENA countries. 

Figure 4 shows a detailed view of the data close to the origin.


The slopes of the linear regression best fits for the 15 exporting countries and 13 importing are quite different, although they both have high r2 values.

For the 15 exporter MENA countries, there is a strong positive correlation between the quantity of petroleum exported per capita and GDP more capita (slope = +3.4; intercept 0.2; r2 = 0.83).  This makes sense to me: the more petroleum exported, the greater the domestic income, and this translates into a greater standard of living.  The slope of 3.4 suggests that exporting 3.4 barrels of petroleum correlates with an increase the per capita GDP of about 1000 USD. 

Once again Bahrain stands apart from the group (if I omit Bahrain, from the regression analysis, r2 = 0.9, but the slope, 3.5, is not changed by much).  With essentially no exports but a very high GDP per capita, I wonder how long this high standard of living will last, if the present increasing consumption trend continues and Bahrain needs to import petroleum in the very near future.

In contrast to the exporters, for the 13 importer MENA countries, is a strong negative correlation between the quantity of petroleum imported per capita and GDP per capita (slope = -0.41; intercept  -0.68; r2 = 0.74).  This also makes sense: the more petroleum imported, the greater the domestic productivity, and this translates into a higher standard of living.  The slope of -0.4 suggests that importing 0.4 barrels of petroleum increases the per capita GDP by about $1000. 

I find the difference in the magnitudes of these two slopes: +3.4 versus -0.4 quite interesting.  An exporting country exports 3.4 barrels per capita and that corresponds to an increase in GDP per capita of 1000 USD.  But if an importing country can import 3.4 barrels per capita, that corresponds to an increase in GDP per capita of about 6600 USD (i.e., (6.5 * -0.41)–0.68 = 3.4. 

I was surprising to see that the corresponding increase in GDP per unit of imported petroleum is substantially greater per unit of petroleum exported.  Of course, that assumes that there is some source of income with which the petroleum can be purchased. 

Does a corollary of this result mean that, if a country can no longer afford to import, or, the petroleum is no longer available to import, then would the GDP per capita fall by the same amount?  For example, would the inability to import 3.4 barrels per capita mean that GDP per capita would correspondingly fall by -$6600 per capita?

Thursday, March 10, 2011

Survey of Oil Exports from North Africa

Twitter is ablaze with talk of the protests planned by some Saudi citizens next Friday. Saudi troops are already being deployed around the Kingdom. Before there was any sense that contagion might spread even to Saudi Arabia, some analysts were warning of $220 oil ….”only” if Libyan and Algerian oil production was affected. Now one analyst says this of the prospect of Saudi disruption: “this is when you can come up with pretty much any silly number you want.” from: A time of consequences
As we reach March 11, 2011, the designated “day of rage” in Saudi Arabia, and perhaps in other countries in the region, speculation is running rampant that oil will reach $200/b, and up, on fears that civil unrest will curtail the ~9 mbd of Saudi Arabia production, thereby causing oil exports to Europe, Asia and North America to sharply decline. 

This article rounds out my survey of petroleum export trends for the countries of the Middle East and North Africa.  In a previous article, I surveyed the 14 countries of the Middle East; this article surveys the 14 countries of North Africa. 

The survey examines the effects such a curtailment might have on oil exports from North Africa, and the Middle East. 

A Brief Geography Lesson
Solar navigator gives a concise definition for the MENA (Middle East and North Africa) countries:
Northern Africa is the northernmost region of the African continent, generally divided by the formidable barrier of the Sahara from Sub-Saharan Africa. Geopolitically, the UN definition of Northern Africa (which coincides with common reckonings of the region) includes the following seven territories:  Algeria Egypt  Libya Morocco  Sudan Tunisia  Western Sahara *

Geographically, the Azores, Mauritania, Mali, Niger, Chad, Ethiopia, Eritrea, and Djibouti are sometimes included.

The Maghreb includes Western Sahara (claimed by Morocco), Morocco, Algeria, Tunisia, Mauritania and Libya. North Africa generally is often included in common definitions of the Middle East, since they in many respects have closer ties to Western Asia than to sub-saharan Africa. In addition, the Sinai Peninsula of Egypt is part of Asia, making Egypt a transcontinental country.

For the purposes of these two articles, I have defined the countries of the Middle East and North Africa geographically, as shown in this map (from Nations online):

Survey of the North African Countries
Unless otherwise indicated, my data sources are the same as identified in the first article in this series.  Additionally, to better estimate the percentages of Middle East and North Africa exports going to EU and USA, I relied on 2009 data presented in the EU’s Market observatory: EU Crude oil imports and the EIA’s U.S. Total Crude Oil and Products Imports, respectively. I am not aware of similar statistics available for Asian countries.  However the EIA country analysis briefs gave enough commentary for me to make a reasonable estimate for Asia. 

For the graphs to follow, the left axis is in units of billions of barrels of petroleum per year (bbs/yr); the right axis is in units of millions of people.  Note that the vertical scale is not constant from country to country.

Algeria
Religion: 99% Sunni Muslim (state religion)
Population: 34.6 million; growth rate 1.2%
CIA:
GDP per Capita: $7,400 (2010 est.)
Public Debt: 25.7% of GDP (2010 est.)
Population below Poverty line 23% (2006 est.)
  • Hydrocarbons have long been the backbone of the economy, accounting for roughly 60% of budget revenues, 30% of GDP, and over 95% of export earnings. It ranks 16th in oil reserves. Thanks to strong hydrocarbon revenues, Algeria has a cushion of $150 billion in foreign currency reserves and a large hydrocarbon stabilization fund.
EIA:
  • In 2008...Algeria was the fourth largest crude oil producer in Africa and the largest total oil liquids producer on the continent.  As a member of OPEC, Algeria's crude oil production can be constrained by the group’s crude production allocations, but Algeria also produced 450,000 bbl/d of condensate and 357,000 bbl/d of natural gas liquids, which are exempt from OPEC quotas, bringing total oil liquids production for the year up to a total of 2.23 million bbl/d. Domestic oil consumption accounted for about 13 percent of total production.
  • Top petroleum export destinations: Europe (34%); USA (28%)
Recent Petroleum Export Trend: Declining (production flat to declining; consumption increasing)

Chad
Religion: 51% Muslim, 35% Christian, 7% animist
Population: 10.5 million; growth rate 2%
CIA:
GDP per Capita: $1,800 (2010 est.)
Public Debt: no data
Population below Poverty line 80% (2001 est.)
  • Chad's primarily agricultural economy will continue to be boosted by major foreign direct investment projects in the oil sector that began in 2000. At least 80% of Chad's population relies on subsistence farming and livestock raising for its livelihood.
  • A consortium led by two US companies has been investing $3.7 billion to develop oil reserves - estimated at 1 billion barrels - in southern Chad. Chinese companies are also expanding exploration efforts and are currently building a 300-km pipeline and the country's first refinery. The nation's total oil reserves are estimated at 1.5 billion barrels. Oil production came on stream in late 2003. Chad began to export oil in 2004.
EIA:
no Country Analysis Brief

Recent Petroleum Export Trend: declining (declining production; no consumption)
Chad has very little domestic oil production and very low domestic consumption

Djibouti
Religion: Muslim 94%, Christian 6%
Population: 0.7 million; growth rate 2.2%
CIA:
GDP per Capita: $2,800 (2010 est.)
Public Debt: no data
Population below Poverty line 42% (2007 est.)
  • Two-thirds of Djibouti's inhabitants live in the capital city; the remainder are mostly nomadic herders. Scanty rainfall limits crop production to fruits and vegetables, and most food must be imported.
  • Djibouti provides services as both a transit port for the region and an international transshipment and refueling center.
  • Djibouti is home to France's largest military base in Africa, and since 2001, the U.S. military's Combined Task Force, Horn of Africa, now numbering about 3,000 troops, has been based there. from Djibouti Rebels Threatening Stability in Strategic Country
EIA:
no Country Analysis Brief

Recent Petroleum Import Trend: increasing (no production; increasing consumption)
Djibouti has no domestic oil production and very low domestic consumption.


Egypt
Religion: Muslim (mostly Sunni) 90%, Coptic 9%, other Christian 1%
Population: 80.5 million; growth rate 2%
CIA
GDP per Capita: $6,200 (2010 est.)
Public Debt: 80.5% of GDP (2010 est.)
Population below Poverty line 20% (2005 est.)
EIA:
  • Hydrocarbons play a sizeable role in Egypt’s economy both from oil and natural gas production and also in terms of revenues from the Suez Canal, an important transit point for oil shipments out of the Persian Gulf. Total oil production, however, has declined since the country’s 1996 peak of close to 935,000 barrels per day (bbl/d) to current levels of about 660,000 bbl/d. Egypt’s consumption is slightly higher than production and the country has begun to rely on a small volume of imports to meet domestic demand. Egypt also has the largest oil refining sector in Africa and since refining capacity now exceeds domestic demand, some non-Egyptian crudes are currently imported for processing and re-export
  • Decreases in oil production have been offset by the rapid development of the natural gas sector for both domestic consumption and export. Over the past decade, Egypt has become a significant natural gas producer and a strategic source for European natural gas imports. Egypt currently has a pipeline network for exports to Eastern Mediterranean countries in addition to liquefied natural gas (LNG) exports to Europe, Asia, and the Americas. However, increasing domestic demand for natural gas has led the government to stall natural gas export expansion plans. The government has been actively working to attract foreign investments in the sector to increase exploration, production and downstream activities.
Recent Petroleum Export Trend: Egypt hit net zero petroleum exports in 2009
 (decreasing production; increasing consumption)

Eritea
Religion: Muslim, Coptic Christian, Roman Catholic, Protestant (no percentages given by the CIA)
Population: 5.8 million; growth rate 2.5%
CIA
GDP per Capita: $700 (2010 est.)
Public Debt: no data
Population below Poverty line 50% (2004 est.)
  • Like the economies of many African nations, a large share of the population - nearly 80% - is engaged in subsistence agriculture, but they produce only a small share of total output. Since the conclusion of the Ethiopian-Eritrea war in 2000, the government has maintained a firm grip on the economy, expanding the use of the military and party-owned businesses to complete Eritrea's development agenda
  • Eritrea has been accused by the West and the United Nations of supporting Islamist insurgents in Somalia as part of a proxy war against Ethiopia. from Djibouti Rebels Threatening Stability in Strategic Country
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: flat (no production; flat consumption)
Eritea has no domestic oil production and very low domestic consumption

Ethiopia
Religion: Orthodox 43.5%, Muslim 33.9%, Protestant 18.6%, traditional 2.6%, Catholic 0.7%, other 0.7% (2007 Census)
Population: 88 million; growth rate 3.2%
CIA
GDP per Capita: $1,000 (2010 est.)
Public Debt: 39.3% of GDP (2010 est.)
Population below Poverty line 38.7% (FY05/06 est.)
  • Ethiopia's poverty-stricken economy is based on agriculture, accounting for almost 45% of GDP, and 85% of total employment; Under Ethiopia's constitution, the state owns all land and provides long-term leases to the tenants.
  • Ethiopian troops, backed by the USA, moved into Somalian territory from 2006-2009 at the invitation of the Transitional Federal Government (TFG) and Somali troops from Puntland in a failed attempt to overcome the Islamic Court Union (ICU), and other affiliated militias for control of the country. War in Somalia (2006–2009)
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: strongly increasing (no production; strongly increasing consumption)  Ethiopia has no domestic oil production and increasing domestic consumption, probably due to a rapidly increasing population

Libya
Religion: 97% Sunni Muslim
Population: 6.5 million; growth rate 2.1%
CIA
GDP per Capita: $13,800 (2010 est.)
Public Debt: 3.3% of GDP (2010 est.)
Population below Poverty line 33%
  • The Libyan economy depends primarily upon revenues from the oil sector, which contribute about 95% of export earnings, 25% of GDP, and 80% of government revenue. The weakness in world hydrocarbon prices in 2009 reduced Libyan government tax income and constrained economic growth.
  • Substantial revenues from the energy sector coupled with a small population give Libya one of the highest per capita GDPs in Africa, but little of this income flows down to the lower orders of society.
EIA:
  • The Libyan economy is heavily dependent on the hydrocarbon industry which, according to the International Monetary Fund (IMF), accounted for over 95 percent of export earnings in 2010
  • Top petroleum export destinations: Europe (85%); USA (3%)
Recent Petroleum Export Trend: Flat (production and consumption both flat)

Mali
Religion: Muslim 90%, Christian 1%, indigenous beliefs 9%
Population: 14 million; growth rate 2.6%
CIA
GDP per Capita: $1,200 (2010 est.)
Public Debt: no data
Population below Poverty line 36.1% (2005 est.)
  • Among the 25 poorest countries in the world, Mali is a landlocked country highly dependent on gold mining and agricultural exports for revenue.
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (no production; increasing consumption)  Mali has no domestic oil production and very low but increasing domestic consumption.
Mauritania
Religion: Muslim 100%
Population: 3.2 million; growth rate 2.4%
CIA
GDP per Capita: $2,100 (2010 est.)
Public Debt: Mauritania qualified for debt relief under the Heavily Indebted Poor Countries (HIPC) initiative and nearly all of its foreign debt has since been forgiven.
Population below Poverty line 40% (2004 est.)
  • Half the population still depends on agriculture and livestock for a livelihood, even though many of the nomads and subsistence farmers were forced into the cities by recurrent droughts in the 1970s and 1980s.
  • Oil production from the country's only oil field, the Chinguetti Field, has been disappointing. Production at the field plummeted from an estimated 30,620 b/d in 2006 to 14,900 b/d in 2007, according to the Energy Information Administration (EIA). Output at Chinguetti struggled from the outset of production in 2006 due to a complex, fractured reservoir. Production is expected to fall further. from Petronas Hits Gas Offshore Mauritania
  • Petronas has failed to find hydrocarbons in the Gharabi-1 well in Block 6 offshore Mauritania. The well has been plugged and abandoned. from Petronas Drills Duster Offshore Mauritania
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (a brief spurt of production is rapidly declining and consumption is slightly declining constant) Mauritania has little domestic oil production and very low domestic consumption

Morocco
Religion: 98.7% Muslim, 1.1% Christian
Population: 32 million; growth rate 1.1%
CIA
GDP per Capita: $4,900 (2010 est.)
Public Debt: 58.2% of GDP (2010 est.)
Population below Poverty line 15% (2007 est.)
  • Morocco's market economy benefits from the country's relatively low labor costs and proximity to Europe, which aid key areas of the economy such as agriculture, light manufacturing, tourism, and remittances.
  • Morocco is the world's largest exporter of phosphate, which has long provided a source of export earnings and economic stability.
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (almost no production and increasing consumption) Moroco has no domestic oil production and low domestic consumption

Niger
Religion: Muslim 80%, other (includes indigenous beliefs and Christian) 20%
Population: 16 million; growth rate 3.7%
CIA
GDP per Capita: $700 (2010 est.)
Public Debt: 58.2% of GDP (2010 est.) Niger qualified for enhanced debt relief under the International Monetary Fund program for Highly Indebted Poor Countries (HIPC) and concluded an agreement with the Fund on a Poverty Reduction and Growth Facility (PRGF).
Population below Poverty line 63% (1993 est.)
  • Niger is a landlocked, Sub-Saharan nation, whose economy centers on subsistence crops, livestock, and some of the world's largest uranium deposits. Drought, desertification, and strong population growth have undercut the economy. 
  • Niger is one of the poorest countries in the world with minimal government services and insufficient funds to develop its resource base.
EIA:
no Country Analysis Brief

Recent Petroleum ImportTrend: increasing (no production and increasing consumption) Nuger has no domestic oil production and low domestic consumption

Sudan
Religion: Muslim Sunni Muslim 70% (in north), Christian 5% (mostly in south and Khartoum), indigenous beliefs 25%
Population: 44 million; growth rate 2.5%
CIA
GDP per Capita: $2,200 (2010 est.)
Public Debt: 94.2% of GDP (2010 est.)
Population below Poverty line 63% (1993 est.)
  • Military regimes favoring Islamic-oriented governments have dominated national politics since independence from the UK in 1956.  The Darfur conflict, the aftermath of two decades of civil war in the south, the lack of basic infrastructure in large areas, and a reliance by much of the population on subsistence agriculture ensure much of the population will remain at or below the poverty line for years to come despite rapid rises in average per capita income.  
  • While the oil sector continues to drive growth, services and utilities play an increasingly important role in the economy with agriculture production remaining important as it employs 80% of the work force and contributes a third of GDP.
EIA:
  • In 2009, according to the International Monetary Fund, oil represented over 90 percent of export earnings. For South Sudan (Juba), oil represented 98 percent of total revenues for the year compared to Khartoum at 65 percent.
  • The majority of reserves are located in the South in the Muglad and Melut basins. Due to civil conflict, oil exploration has mostly been limited to the central and south-central regions of the country.
  • The United States prohibits U.S. nationals are prohibited from engaging in any transactions or activities related to the petroleum or petrochemical industries in the entire territory of Sudan (including Southern Sudan) as a result of the conflict in Darfur.
  • Top petroleum export destinations: over 97% of exports go to Asia: China (65%) ; Indonsia (15%) ; Japan (12%) ; India (5%); Ethiopia imports most of its fuel from Sudan but official data on trade volumes is not available
Recent Petroleum Export Trend: Rapidly Increasing (production increasing faster than increasing consumption)

Tunisia
Religion: Muslim 98%, Christian 1%, Jewish and other 1%
Population: 10 million; growth rate 1%
CIA
GDP per Capita: $9,500 (2010 est.)
Public Debt: 49.5% of GDP (2010 est.)
Population below Poverty line 3.8% (2005 est.)
  • The country's first president, BOURGUIBA, established a strict one-party state. He dominated the country for 31 years, repressing Islamic fundamentalism and establishing rights for women unmatched by any other Arab nation. In November 1987, BOURGUIBA was removed from office and replaced by BEN ALI in a bloodless coup.
  • Street protests that began in Tunis in December 2010 over high unemployment, corruption, widespread poverty, and high food prices escalated in January 2011, culminating in rioting that led to hundreds of deaths. On 14 January 2011, the same day ALI dismissed the government, he fled the country, and by late January 2011, Prime Minister GHANNOUCHI announced the formation of a "national unity government" with the head of the Chamber of Deputies, M'BAZAA, as the interim president.
  • Tunisia has a diverse economy, with important agricultural, mining, tourism, and manufacturing sectors. Governmental control of economic affairs while still heavy has gradually lessened over the past decade with increasing privatization, simplification of the tax structure, and a prudent approach to debt.
EIA:
no Country Analysis Brief

Recent Petroleum Export Trend: Increasing (increasing production and declining consumption) after hitting zero net exports in about 2001 Tunia has increased production and decreased consumption sufficiently to be a slightly net positive exporter once again.

West Sahara
Religion: Muslim
Population: 0.5 million; growth rate 3.2%
CIA
GDP per Capita: $2,500 (2007 est.)
Public Debt: no data
Population below Poverty line no data
  • Morocco annexed the northern two-thirds of Western Sahara (formerly Spanish Sahara) in 1976 and claimed the rest of the territory in 1979, following Mauritania's withdrawal. A guerrilla war with the Polisario Front contesting Morocco's sovereignty ended in a 1991 UN-brokered cease-fire
  • Western Sahara has a small market-based economy whose main industries are fishing, phosphate mining, and pastoral nomadism. The territory's arid desert climate makes sedentary agriculture difficult, and Western Sahara imports much of its food.
EIA:
no Country Analysis Brief

Recent Petroleum Import Trend: Increasing (no production and consumption increasing)


Summary and Conclusions
As with the Middle East Survey, by just looking at these plotsm you can see that the overall trend in production rates is flat or down while consumption rates are up—even for the countries with no production.

Similar to the Middle East survey, there are a few North African countries have increasing exports, but their rapid population growth will tend to mitigate any increase in exports as domestic consumption increases.  An exception to this is Sudan, but the relative amount of oil produced by Sudan is quite small.

Of these fourteenNorth African countries, nine are importers: Djibouti, Egypt (starting 2009), Eritea, Ethiopia, Mali, Mauritania, Morocco, Niger and West Sahara.  Several of these are among the poorest countries in the world.  The percentage of the population below the poverty line ranges for 36 to 63% for all of these importing countries, except Egypt (20%) and Morocco (15%).  Morocco has other income sources, while Egypt just recently hit net zero exports.  I expect the percentage of the population falling below the poverty line Egypt will soon joining the percentages of other importers.

One point made very clear by this survey is that that population growth does not require oil consumption, at least not directly.  Just look at Ethiopia  and Niger with +3% population growth rates, but still very low oil consumption rates.  These are insanely high population growth rates, but on a per capita basis, oil consumption is about as low as you will see anywhere in the world: less than 0.2 b/p•yr. Perhaps the population growth is fueled indirectly by petroelum through foreign aid and food imports. More on the population growth from these, and the other importing countries later on.

Tunisia was a petroelum importer for several years in the early 2000s, but recently has become an exporter again, although the amount of exports is very small.  Tunsia does have other sources of income, which helps to explain why the percentage of the population below the poverty line (3.8%) is the lowest in North Africa, and why the country has a relatively high GDP per capita.  It would seem that the civil unrest that started in Tunisia and spread across the Middle East has less to due with oil and poverty, and more to due with religious repression, and a forced move towards western style secularism, that is not supported by the majority Muslim population.  You don’t hear this in the mainstream media, but, Tunisia is not rushing to democracy, rather it is about to become a fundamentalist Islamic republic similar to Iran (Secular Tunisia may face a new, younger Islamist challenge; End to hijab ban mooted in Tunisia – the end of secularism?; Islamist movement at forefront of Tunisia's protests). 

Of the five petroelum exporters, only three: Algeria, Libya and Sudan have exports that are large enough in magnitude to be of much global significance. Algeria splits its exports between Europe (34%), North America (28%) and probably the remainder to Asia, while Libya send almost all its exports to Europe, and Sudan send almost all of its oil to Asia. 

Surveying the Middle East and North Africa Exporters as a Group
The bar graph below shows the 15 countries with net position petroleum exports in order of the quantity exported.  The green arrows show the recent export trend for each country.
Petroleum exports from the Middle East and North Africa in total equaled 8 bbs/yr in 2009, corresponding to about 48% of total global exports. 

Saudi Arabia is the dominant exporter for the region, accounting for one-third (2.7 bbs/yr) of the 8 bbs/yr exported in 2009.  North African exports accounts for another 19% (1.5 bbs/yr) and the other countries of the Middle East make up the remaining 42% of exports.

The curtailment of exports from the Middle East and North Africa would impact Asia the most, then Europe and then the USA, as this table shows:

Region
Exports from ME & NA
Asia
3.8 bbs/yr
Europe
1.2 bbs/yr
USA
0.8 bbs/yr


Looking at this, one might be tempted to say that the civil unrest in the Middle East and North Africa and potential loss of petroelum exports is mainly Asia’s problem, and, there is some truth to that.  But, so long as petroelum remains a fungible quantity, Asia’s lost imports would rapidly translate into higher prices for all importers (and greater profits for the exporters).

The figure below shows the sum of petroelum production, consumption and exports for the 15 exporting countries of Middle East and North Africa, their populations, and projected future populations, as predicted by the US census bureau. 


The trends for production rates peaking (blue) and consumption rate increasing (red) has a clear consequence: flat to falling export rate (green). 

The total population for the 15 exporting MENA countries in 2010 was estimated to be 297 million—that's a little less than the USA’s population.  But at a composite 2%/yr growth rate, by 2030, that population is expected to grow to 400 million.  I would expect the domestic consumption rate to at least match the population growth and increase by 2%/yr.  However, the recent 5 year trend is for petroleum consumption rates to be more than double this rate: 4.1%/yr.  Therefore, even if production stays flat, I expect export rates to decline.

What about the oil importing neighbors of the 15 exporting countries?

The dashed red line in the figure adds in the consumption rates from the 13 oil importing MENA countries.  As expected from the country by country survey, their total consumption rate is small (20%) compared to the sum of consumption rates of the 15 exporting countries.

The dashed black line adds in the population of the 13 importing countries, which in 2010, equaled about 154 million. That puts the total population of the MENA countries at over half-a billion (554 million).  By 2030, the population of the 13 importing countries is projected to grow by another 200 million people, putting the total population for the MENA at 800 million.  A population of one-billion is projected to be reached by 2045. 

If the population increases anything close to these numbers, I expect that the entire region's economy to be disrupted by the additional stresses to the environment, the food supply, the water supply that this will cause, and all this in the face of declining revenues from petroelum exports. 

Except for Ethiopia and Israel, all of the MENA countries are majority Muslim in religious belief system.  I expect that if the general population in these countries get their way, then eventually all of these countries will shift to a fundamentalist Islamic republic style of government that is less friendly towards the West and less inclined to export as much of  their declining petroelum resourse as they have in the past.  However, they will still probaly have to export petroelum, essentially in exchange for food to feed the exploding population in the region.  And when the oil exports end?  Well....I think that you can see the likely result as well as I can: increasing poverty, starvation, civil unrest and war.