Who are the region’s most active operators and contractors, EIC’s MENA Report finds out
Long recognised as a major global supply region, the Middle East and North Africa (MENA) region’s energy industry is thriving in the face of unprecedented global and domestic demand.
A race to meet soaring domestic power demand in GCC countries, post-war reconstruction in Iraq, and a desire to ensure global competitiveness in the face of the US shale boom, mean that national operators are investing aggressively in oil and gas programmes across the region.
According to the EICDataStream global project tracking database, there are currently 315 projects proposed or under development across the Middle East and North Africa region, worth a total potential investment of US$573.5 billion.
Between January 2010 and August 2013 there were 185 major contracts (EPC, FEED and PMC) awarded in the region’s upstream sector. In this period, the top 12 operators awarded 107 (58%) of these contracts and the top 10 contractors won 95 (51%) of the total number of contracts awarded.
Figure 1 illustrates a steady decline in the number of contracts awarded since 2010, largely due to slowing project realisation rates. Nonetheless, the urgent need for feedstocks for power plants in order to meet soaring domestic demand mean that, in the mid- to long-term, contracting levels will remain healthy as project realisation rates improve.
Geographically, the highest level of contracting activity has been in the UAE, where a total of 58 major contracts have been awarded (see Figure 2). The majority of these contracts (53) are for work on projects in Abu Dhabi, where the Government is aggressively pursuing gas developments to fuel its shift to gas-fired power generation.
The UAE is followed by Iraq, where a total of 40 major contracts have been awarded. Half of these contracts (20) have been awarded on five major projects – West Qurna One, West Qurna Two, Majnoon, Zubair and South Rumaila – that are expected to account for 75% of Iraq’s future oil production.
Then follows Iran where 27 major contracts have been awarded, and Saudi Arabia where 21 major contracts have been awarded.
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Operators
Figure 3 shows the top 12 most active operators across the MENA region in terms of the number of major contracts awarded across 36 developments between January 2010 and August 2013.
As would be expected given the UAE has awarded the most major upstream contracts, there are four Emirati operators in this list, all of which are Abu Dhabi-based.
Abu Dhabi National Oil Company (ADNOC) has led contracting activity in recent years, awarding 20 contracts across two major developments in Abu Dhabi: the Satah al-Razboot (SARB) gas field development in the Persian Gulf, and the Shah sour gas development in the south-west of the Emirate.
In total ADNOC has awarded 16 EPC, 1 FEED and 3 PMC contracts on the projects, which both include the construction of artificial islands to accommodate drilling, production and processing operations in shallow water.
The majority of these contracts, 11 EPC and 2 PMC contracts, were awarded for the US$10 billion Shah project to develop 1 bcf/d sour gas. ADNOC is also a majority shareholder in the remaining three Abu Dhabi-based operators in the top 12.
The Zakum Development Company (ZADCO), a joint venture company between ADNOC, Japan Oil Development Company and ExxonMobil, has awarded 14 contracts across 3 developments in Abu Dhabi; Abu Dhabi Company for Onshore Oil Operations (ADCO) has awarded 11 contracts across 2 developments; and Abu Dhabi Marine Operating Company (Adma-Opco) has awarded 5 contracts across 3 developments.
ADNOC is followed by Saudi Aramco, who has awarded 14 contracts across 8 developments in Saudi Arabia since January 2010. Similar to Abu Dhabi, Saudi Arabia’s upstream sector is dominated by a mix of large-scale gas field developments, such as the Wasit and Midyan fields, and maintenance of oil production levels through new and redevelopment oil field projects.
Three Iranian oil companies – National Iranian Oil Company (NIOC), Petropars and PEDEC – appear in the list of top 12 most active operators, accountable for 19 contracts across 11 developments. Over half of these contracts (9) are on the North and South Pars projects in the Persian Gulf to recover significant volumes of gas from two of the largest gas fields in the world.
Three international companies also appear in the list, Gazprom, LUKoil and Shell, who together account for 17 contracts across the Badra, West Qurna Two and Majnoon oil field developments in Iraq.
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Contractors
Figure 4 shows the top ten most successful contractors across the MENA region in terms of number of FEED, EPC and PMC contracts awarded across 40 developments between January 2010 and September 2013. The top ten companies have been awarded a total of 50 EPC contracts, 18 FEED contracts and 6 PMC contracts in the period January 2010 to September 2013.
WorleyParsons has been the most successful contractor in the MENA region, securing a total of 14 contracts, followed closely by Saipem with a total of 13 contracts. WorleyParsons figures are fairly evenly spread across work scopes with 4 EPC, 5 FEED and 5 PMC contracts secured.
WorleyParsons has been prosperous in Iraq, having secured the FEED contract, and then the subsequent PMC and EPC contracts for the giant South Rumaila oil field, where a BP-led consortium is planning to raise production levels from the field to 2.85 MMbbl/d from the current 960,000 bbl/d.
Additionally, the contractor has been awarded one PMC contract for the West Qurna Two oil field, and three in UAE. As a FEED contractor, WorleyParsons has operated in Saudi Arabia and Kuwait, securing two such contracts in both countries.
In contrast, Saipem has secured 10 EPC contracts and 3 FEED contracts, almost a third of which (4) are in Saudi Arabia. Saipem has also been prolific in Abu Dhabi where the contractor has been awarded three EPC contracts worth a total estimated value of US$3.6 billion for pipelines, the sulphur recovery unit and the process plant for the Shah sour gas development.
Reflecting the dominance of Abu Dhabi in the region in terms of project activity, on the contractor side, the top ten contractors in the region have secured a total of 24 major contracts in the UAE, 22 of which are in Abu Dhabi.
Technip and Fluor have both fared well in Abu Dhabi, winning a series of FEED contracts. Technip has secured four such contracts, including the contract to carry out FEED work on the North East Bab Phase 3, being developed in association with the 1.8 Million Project.
Fluor has secured 3 FEED contracts in the Emirate, with involvement in two of Abu Dhabi’s offshore projects, the SARB development and the Nasr Offshore Oil Field.
In total, French contractor Technip has been awarded a further two FEED contracts and three EPC contracts, with the remaining contracts in Dubai, Egypt, Iraq and Saudi Arabia. Due to the scale of many projects in the Middle East, high-value EPC contracts are prevalent, and these are frequently awarded to consortiums that together can combine specialist skills to address complex work scopes.
Summary
Abu Dhabi is leading oil and gas development in the MENA region and, although contracting activity has cooled off this year elsewhere, this is largely due to delays rather than a lower level of project activity. Significant projects in Iraq, Oman and Saudi Arabia are expected to start awarding contracts next year, while new phases will come into play on existing projects.
These major investments will provide abundant opportunities for the supply chain, and with investment levels expected to remain high, the data from EICDataStream underlines the scale of the market.
