The GCC is forecasted to award a little over $50 billion worth of contracts in the oil, gas and petrochemical projects market in 2013, almost double the $27 billion expected to be awarded this year, according to the GCC Oil & Gas Projects Market 2013, the latest report by MEED Insight, the research and consultancy arm of the MEED business.
The pick-up in activity will be good news to contractors, which have suffered from a slowdown in activity since the market saw a record $52 billion worth of contracts awarded in 2009.
Since then, contract award levels have dropped as national oil companies evaluated their project plans; in 2010, some $40 billion worth of contracts were awarded, while this slipped to just $25 billion in 2011.
However, while the market is expected to rebound next year, it will be dependent on two major projects proceeding. “The forecast is predicated around the assumption that the $14 billion fourth refinery in Kuwait and BP’s $15 billion Khazzan tight gas scheme in Oman will go ahead,” says Ed James, Head of MEED Insight.
“While Kuwaiti bureaucracy and politics are the main obstacles in the path of the refinery project, the final investment decision on Khazzan will not be taken until the first quarter of 2013 and as such both schemes could suffer from delays.”
Developments in Kuwait and Oman are also likely to determine whether the $50 billion forecast for 2014 is met as the total includes awards on Kuwait’s $18 billion clean fuels programme and the proposed $6 billion Duqm refinery in the sultanate.
Nonetheless, there will still be a host of other major projects awarded over the next two years, including further contracts on Saudi Aramco’s Jizan refinery, major work offshore Abu Dhabi, and new world-scale petrochemical complexes in Qatar.
The coming two years are also likely to see Korean contractors maintain their dominance of the market. As of September 2012, four out of the top five biggest contractors in the region’s oil and gas sector were Korean.
In terms of contracts under execution, the largest was Samsung Engineering at $12.4 billion, followed by Daelim Industrial Company at $10.1 billion and GS Engineering & Construction at $8.6 billion. All picked up substantial new orders in the first nine months of 2012 with Daelim being particularly successful winning work on the Sadara, PetroRabigh 2 and the Kemya elastomer projects in Saudi Arabia.
“Recent contract awards to European and Japanese contractors on the Jizan refinery scheme indicate that Korean firms will not have it all their own way over the next few years,” says James. “However, we still expect Korean contractors to remain the dominant force in the market.”
From Gulf Today