The year 2018 saw one of the lowest overall energy project spends within the last decade with decent project spends of c.USD 10bn in Q1 2018 and project awards worth only c.USD 8.2bn, c.USD 8.6bn and c.USD 8bn in Q2, Q3 and Q4 2018 respectively. 2019, however, started off on a positive note with the first quarter witnessing c.USD 11.7bn worth of spends – an increase of c.35% from the average seen in 2018. This increase in spends stems from the fact that there were numerous projects that were in advanced stages – under bidding – and due for award last year but were postponed; some of these projects were finally awarded.
Analysis of the projects awarded in Q1 2019 illustrates that a majority of the projects took place in Saudi Arabia (c.59%) and UAE (c.26%) – typically the largest spenders in the region. While Saudi Arabia witnessed a majority of its spends across the water & waste and oil & gas production sectors, UAE witnessed a majority of its spends in the oil & gas production and power sectors. Some of the key project awards which took place in the aforesaid countries include: ADNOC Sour Gas’ Hail & Ghasha Reclamation package worth c.USD 1.4bn, SEWA’s Hamriyah IPP worth c.USD 800mn, Saudi Aramco’s Zuluf Field Expansion worth c.USD 640mn and Saudi Aramco’s Marjan Offshore Water Injection Package worth c.USD 600mn.
With 2019 commencing with a healthy start, in terms of project spends, market sentiment suggests that the Middle East energy industry will continue to remain relatively positive for the remainder of the year – particularly within Saudi, UAE and Qatar. These three countries are likely to witness stronger awards than its neighboring countries due to several mega projects in the pipeline, increasing international investment taking place and a stronger focus on project awards.
"market sentiment suggests that the Middle East energy industry will continue to remain relatively positive for the remainder of the year"
Saudi Arabia:
UAE:
Qatar:
Looking ahead, the remainder of 2019 has c.USD 120.2bn worth of spends planned of which, approximately c.USD 49bn is expected to be awarded based on our proprietary Tiering methodology (where Tier 1 projects have a 70% or greater probability of going ahead and Tier 2 projects have a 30% probability of being awarded). Analysis of data reveals that a majority of the Tier 1 projects (Figure 1) this year are anticipated to take place in Saudi Arabia (c.34%), Qatar (c.29%) and UAE (c.17%). A sector analysis of the Tier 1 projects for this year illustrates that the LNG (c.28%), oil & gas production (c.18%) and gas processing (c.16%) sectors will likely witness the most project spends in the remainder of this year.
Although it is likely that the next quarter will witness a slight slowdown in project activity due to religious holidays such as Ramadan coming up, 2019 overall is expected to be a better year in terms of project activity compared to last year. With the energy market looking relatively positive with numerous mega-projects expected to be awarded over the next couple of quarters, get in touch with Contax Partners for holistic market intelligence & insights on various upcoming opportunities and strategies in order to take advantage of the current market. For more information, contact the VP of Business Advisory Services, Ann-Marie Carbery, at
This email address is being protected from spambots. You need JavaScript enabled to view it.
.
-Shamlee Epari, Research Consultant
Contax Partners
Contax Partners assists project owners, contractors and suppliers to maximize opportunities associated with these projects, guide them on the underlying risks related to execution and the effects of increasing project workload.
Office 241, 19th Floor
Platinum Tower- Seef
P.O. Box 31005, Manama
Bahrain
Tel: +973 (1) 7224456
Fax: +973 (1) 7212204
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.