The Kingdom of Saudi Arabia and the United Arab Emirates are set to lead Middle East/North Africa sending in the upstream energy industry.
Should contracts go ahead as expected, this quarter could be the biggest spending period since the final quarter of 2011 as a number of projects move toward the construction phase, according to Middle East projects tracker MEED Projects.
On the other hand, Contax Partner’s Kalpesh Ramwani, senior consultant, says that “at the beginning of 2013, project owners had planned to award a total of $195bn in energy and energy related projects in 2013. Within the first six months of 2013, $102bn worth of energy and energy related projects were planned for award in the GCC, as compared to $ 114bn that were planned for award during the same period in 2012.”
He adds that, “At the end of June 2013 only $20.2bn worth of energy projects have been awarded this year, as compared to $35bn that were awarded in the first half of 2012 (Figure 1). Project realization rates are seen to have dropped sharply (11%) compared with H1 2012. A deeper look at the reasons for the poor realization rates has revealed that $66bn or c.65% of the project value that was planned for award in H1 2013 was associated with mega projects ($1bn and up), of which, only $8bn (12%) was awarded while $32bn was pushed to H2 2013, while the others were either cancelled, put on hold or are still in early stages of the project cycle.”
An article published by the Saudi Gazette pointed out that the UAE leads the MENA region in value of contracts awarded in the oil and gas sector with Zakum Development Company (ZADCO) awarding a $3.7bn contract on the development of the offshore Upper Zakum field. The contract is more than 50 percent of the total $6.7 billion worth of engineering, procurement and construction (EPC) deals awarded so far in the region in the second quarter of 2013. The groundbreaking Upper Zakum Field Development project has a total budget of around $ 15.6 billion.
The UAE was likely to award two more major contracts – both on the Umm Al-Lulu offshore oil field development – which combined are worth in excess of $2 billion. The first package on Umm Al-Lulu is set to be awarded to Abu Dhabi’s National Petroleum Construction Company (NPCC). The second package is still to be decided after France’s Technip and South Korea-based Samsung Engineering were asked to resubmit bids in April, said the article.Â
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