Sunday 24 / November / 2024
Muscat: Total value of GCC contracts awarded increased by 11.7 per cent year-on-year during the second quarter of 2022 to $22.8 billion against $20.4 billion in the same period of 2021, according to a new report.“Saudi Arabia and Oman reported higher contract awards during the quarter that more than offset a dip in awards in Kuwait, Bahrain, Qatar, and the UAE, the Kuwait-based Kamco Invest, said in its latest report.
Saudi Arabia, the GCC’s largest projects market, recorded the biggest year-on-year (y-o-y) increase in the value of contracts awarded during the second quarter (Q2) of 2022 reached $16.5 billion in 2022 as compared to $9.3 billion in Q2-2021. Contracts awarded as part of the $500 billion Neom project boosted the kingdom's project awards during the quarter. According to MEED, three out of the 10 biggest contracts awarded in the Kingdom during Q2-2022 were from the Neom project.
Comparatively, the UAE recorded a 46.4 per cent fall in y-o-y projects awarded in Q2-2022 which reached $3.1billion.
Saudi Arabia represented 77.2 per cent of Gulf Cooperation Council (GCC) contract awards in Q2-2022. Total projects awarded in Kuwait during Q2-2022 declined by 67.9 per cent to $521 million down from $1.6 billion for Q2-2021.
In terms of sector classification, the Transportation sector witnessed the biggest increase in terms of absolute value during the quarter with an increase of $4.8 billion in new contracts to reach a total of $7.7 billion during Q2-2022. Similarly, the value of new contracts in the GCC Oil Sector increased almost threefold to reach $4.5 billion during Q2-2022 rising from $1.6 billion during Q2-2021. On the other hand, the Gas, Construction and Power sectors witnessed a y-o-y decline in awards. Project awards in the Construction sector contracted 36 per cent y-o-y to $4.3 billion during the quarter.
Saudi Arabia has enjoyed the best Q2 contract awards since 2014 mainly reflecting elevated oil prices, although the Kingdom has clearly stated that it wants to separate project awards and oil market performance. Total Saudi project awards in Q2-2014 stood at $19.5 billion as compared to $16.5 billion during Q2-2022. The value of contracts awarded in the Kingdom during Q2-2022 witnessed a quarter-of-quarter (q-o-q) increase of 106.7 per cent or 8.5 billion from $8.0 billion in Q1-2022.
In terms of sectors, the Transportation sector leapt into the lead as the largest sector by the value of awarded projects among the sectors accounting for 36.1 per cent of the total projects awarded in the Kingdom during Q2-2022 mainly due to Neom awards of transport and utility infrastructure during the quarter.
Rest of GCC
Total Q2-2022 contracts awarded in Qatar fell by 27.3 per cent to reach $1.3 billion as compared to $1.8 billion during Q2-2021. Despite the fall in total contracts during the quarter, Qatar has managed to award notable contracts such as the $850 million contract to build four LNG carriers to South Korea’s Daewoo.
In Oman, total projects awarded during the quarter jumped almost three times to reach $1.1 per cent up from $390 million during Q2-2021. One notable project awarded in the Sultanate during Q2-2022 is the $195 million project to construct a plaza, and commercial and residential buildings as parts of the $1.6 billion Yiti Sustainable City project.
Project awards in Bahrain also showed a decline during the quarter to reach $228 million down from $1.4 billion in Q2-2021.
Project pipeline
Despite varying trends during Q2-2022, the project's pipeline in the GCC region continues to remain strong. Data from MEED Project showed around $2.65 trillion worth of projects planned or underway in the GCC as of the end of June-2022 as compared to $2.59 trillion at the end of March-2022.
Data showed that around $77 billion worth of construction and transport projects are at the tender stage and an additional $352 billion at the design and study stage and these are mainly in the infrastructure schemes funded/initiated by the government including railways, highways, bridges, airports and sewerage systems.
Along with existing projects in the Oil & Gas sector, the pipeline also reflects new emerging trends in the project market. This includes a number of real estate projects, especially in the UAE, as supply remained constrained, projects that are aimed at energy transition, rail projects that are back in the headlines in the GCC and projects in the metals and mining industry as the global hunt for new deposits picks up pace. Data showed that around 12 per cent of projects underway in the transportation sector are related to railways in the GCC and the share increases to 32 per cent of the sector in terms of the future pipeline.
In the Oil & Gas sector, Qatar’s North Field South onshore project is estimated to be worth around $10 billion aimed at increasing Qatar’s LNG capacity. Moreover, Aramco’s increase in project spending will include a number of upcoming projects in the feed and study phase including the $2.5 billion worth Shedgum & Uthmaniya gas compression plant: package 1 & 2 and an estimated aggregate of $3 billion in three projects namely Marjan field development: phase 3, Manifa offshore field expansion and Sanafiya field increment.
