Monday 05 / May / 2025
Muscat: Total value of contracts awarded in the Sultanate of Oman increased by 69.70 percent to reach $1.5 billion in the second quarter of 2023 compared to $871 million in Q2-2022, according to a new report.
“This was driven mainly by year-on-year growth in the Sultanate’s power and gas sectors which reached $475 million and $728 million, respectively,” the Kuwai-based Kamco Invest said in its latest report titled 'GCC Projects Market Update July-2023'.
“Oman’s projects market is expected to witness significant growth during 2023,” the report further added.
According to MEED Projects, Oman is expected to sign a $6.7 billion hydrogen contract with a consortium led by the South Korean steel manufacturer Posco.
Meanwhile, the report further stated that Gulf Cooperation Council (GCC) project awards surged by 86 percent during the second quarter of 2023 to reach $49.70 billion compared to $26.70 billion during the second quarter of 2022.
This underlines the determination of the Gulf Cooperation Council (GCC) countries to execute and reach their diversification targets.
“The strong rise in the total value of project awards in the GCC is also a significant indicator of the health of the economies in the GCC region. This was the highest quarterly project awards value for over five years.”
All GCC project markets witnessed year-on-year (y-o-y) growth during the second quarter of 2023 except for Bahrain which remains the smallest project market in the region while Saudi Arabia remained the largest projects market in the GCC during Q2-2023.
Saudi Arabia’s project awards recorded 33.70 percent growth during the quarter to reach $24.40 billion as compared with $18.30 billion in the second quarter (Q2) of 2022. Comparatively, the UAE project awards jumped 127 percent to reach $12.20 billion during the quarter. Contract awards in Kuwait increased from $922 million in Q2-2022 to $1.30 billion during Q2-2023, the second-highest project value in the last six quarters.
Saudi Arabia alone accounted for over 49.10 percent of the contracts awarded in the GCC region during Q2-2023, while Saudi Arabia, UAE and Qatar combined represented 94.4 percent of the overall projects in the GCC. Saudi Arabia’s growth in contracts during the quarter was mainly fuelled by the continuous uptick in the number of Neom projects awarded during the quarter. According to MEED Business Review, the Neom project awards in 2023 stood at $13.60 billion which surpassed the total value of contracts awarded in the Saudi capital Riyadh and Dubai which reached $11 billion and $9.30 billion respectively. The four major elements of the Neom project (the Line, Trojena, Oxagon and Sindalah) have already been launched and are already under construction.
In terms of sector classification, the gas sector witnessed the biggest increase in the value of projects awarded during the year recording a $10.30 billion y-o-y increase in new contract awards to reach a total of $11.90 billion during Q2-2023.
GCC projects market outlook
According to MEED Projects, total GCC contracts that are in tender or most likely to be awarded this year are expected to surpass $110 billion in 2023 led by Saudi Arabia, Qatar and UAE project markets which are poised to witness significant growth each this year. Moreover, Kuwait and Oman are also expected to witness sharper increases in the value of contract awards during 2023.
The GCC projects market is expected to be resilient to global economic headwinds. The IMF lowered its 2023 Saudi GDP forecast to 2.1 percent due to the oil cuts by Opec+ countries and allies. However, the reduction of economic forecasts and the oil production cut is expected to have minimal impact on the Kingdom’s project market and capital spending due to the availability of other revenue sources such as sovereign and private assets.
Saudi Arabia remains the largest projects market both in the GCC and in the Middle East and North Africa (Mena) region. Saudi Arabia’s project awarded averaged around $42.50 billion in the past five years.
In terms of un-awarded and planned projects, Saudi Arabia has the largest number of planned and unawarded projects in the MENA region estimated at $1.18 trillion of which a total of $836.70 billion is the construction sector while $117.70 billion is in the power sector.
Similarly, in the UAE there are $409.20 billion in planned and unawarded projects of which $228.70 billion is in the construction sector, $91.70 billion is in the oil and gas sectors and $41.60 billion is in the transportation sector. Moreover, MEED Projects estimates the pipeline of un-awarded and planned projects in Kuwait to be $142.70 billion of which $44.30 billion (31 percent) is in the construction sector, $37.50 billion (26 percent) is in the transport sector while $35 billion (25 percent) is in the power sector.
