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A full 30% by value of hydrocarbon projects in the Gulf Arab countries have been put on hold or cancelled according to a new report published today by Dubai-based research house Proleads Global.
The report shows, however, that the Gulf Co-operation Council (GCC) countries remain the most active construction markets in the world for the oil, gas and petrochemical industries with projects budgeted at more than US$690 billion.
Proleads investigated a total of 578 hydrocarbon projects across the six GCC countries, and found that 30% by value have been placed on hold or cancelled with a further 30% currently in construction and 40% in the pre-construction phase.
Commenting on the report, Emil Rademeyer, Director of Proleads, said: “GCC countries have been taking a long, hard look at spending in the wake of the global recession, falling demand and the volatility of oil markets with projects rescheduled to take advantage of lower costs or cancelled.
“Overall, however, there remains a huge amount of activity in the GCC oil, gas and petrochemical sectors, earnings from which constitute about 85% of the region’s export revenues. Demand for hydrocarbons and refined product can also be expected to pick up as the global economy gradually pulls out of recession.”
The Proleads Insight report covers projects in the oil and gas production and refining sectors with values greater than US$10 million each in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
The report projects cashflow in the GCC hydrocarbon market to stabilise in 2010 at levels similar those found in late 2007. “However, the cashflow picture could rapidly deteriorate if projects in the pipeline scheduled to begin construction do not start as planned,” said Rademeyer. The report finds, for example, that almost one third of petrochemical projects in Saudi Arabia are currently on hold.
Overall, the GCC oil sector – of which Saudi Arabia contributes most – currently has 281 projects worth US$304 billion, 89% of which are in the construction or pre-construction phases. The gas sector – with Qatar leading the way – has 155 projects worth US$178 billion with 85% in construction or pre-construction. Saudi Arabia is the largest contributor in the petrochemical sector with 142 projects worth US$207 billion – 72% of which are in construction or pre-construction.
