Mideast growth hinges on $2.7 trillion projects’ success
$2.7 trillion worth of various projects are planned or under way in the GCC, laying the foundations for a long-term, sustainable development of the region that will support the ambitions of the Gulf’s future generations, leading industry experts said.
But as oil prices continue to fall, pressure is on Saudi Arabia as well as on all the GCC’s to cut oil production so as to maintain higher oil prices. Riyadh however appears reluctant to take this approach, preferring instead to maintain its share unchanged within the global production.
On the projects side, new contractors will be invited to work in the kingdom to take pressure off the existing often overloaded ones.
The move is part of a broader initiative to open up the Saudi economy to foreign investment.
In 2014, KSA is expected to award nearly $44 billion worth of projects, mainly to the Riyadh Metro project. That scheme, valued at about $22.5 billion, accounted for one quarter of the GCC’s total projects contract awards and about one half of Saudi Arabia’s total.
For Qatar’s project market, the outlook from now to 2020 is extremely strong. Although much of this has been attributed to its staging of the 2022 football World Cup but it is really about meeting the country’s National Vision 2030 than hosting the international sporting event.
The combination of these two drivers leads to an active projects market estimated by regional projects tracker MEED Projects to be worth $285 billion.
Significant investments have gone into Qatar’s transportation and shipping infrastructure, including the construction of the New Hamad International, the New Doha Port and several megacities such as Lusail and Msheireb. Additionally, the railway network project, estimated at $35 billion, entails plans to extend shipping railways by 325 km, and to connect Qatar’s rail networks to those of the other GCC countries.
While this year is set to be the most active for oil and gas contractors in Oman, 2015 will see several large schemes move ahead. With an estimated $2.4 billion of engineering, procurement and construction (EPC) deals awarded in the year to date, 2014 has been the most active year for projects in Oman since 2006.
The most important project in Oman is the $16 billion Khazzan tight gas project being carried out by BP of the UK.
The government is planning to develop infrastructure across the sultanate and also bolster Oman’s status as a luxury destination with several five-star hotel projects under way. The number of hotels rose from 224 to 282 in the five years to 2013, increasing the number of rooms by 37%.
In 2013 the value added to the economy by the tourism sector increased by 45% to $1.8 billion and the government is aiming to increase this further and welcome four million tourists by 2015.
In Bahrain, the government is embarking on a major capital spending programme that includes transport projects, investment in utilities, the construction of low-cost housing, and a series of energy schemes intended to generate income for the country. GDP growth is forecast to be a healthy 3.5to 4% this year, led by expansion in the non-oil sector.
Consumer sentiment is said to be strong, with the private-sector employment rising and high frequentation of the shopping malls.
In Kuwait this year, the country is expected to compete strongly as the projects market has $3.7 billion-worth of new orders placed so far in 2014, mostly in the transport and social infrastructure sectors.
It has been a steady 2014 for contractors as work continues on existing projects and new work is awarded on major schemes. For existing work, there are currently $19 billion of contracts in the execution phase, with just over $3 billion set for completion this year.