Wednesday 18 / September / 2024
Muscat: Total project awards in the GCC witnessed a drop during the second quarter of 2024 mainly due to the unprecedented slump of project awards in Qatar coupled with steep fall in awards in the UAE.
Aggregate Gulf Cooperation Council (GCC) project awards declined by 19.7 percent to $51.7 billion during the second quarter of 2024 as compared to $64.3 billion during the second quarter of 2023. GCC contract awards were evenly distributed during Q2-2024 as three out of the six countries in the GCC registered year-on-year (y-o-y) growth in their project awards while the remaining three markets witnessed y-o-y declines during the quarter.
Despite continuing lower oil output, contracts awarded by Saudi Arabia during Q2-2024 recorded a 9.9 percent increase to reach $30.6 billion as compared to $27.8 billion during Q2-2023. One of the main drivers of project activity growth in the Kingdom during the quarter is the acceleration of Neom projects as the Kingdom maintains its focus on delivering the 2030 Vision programme on time. In its latest Regional Economic Outlook, the IMF has revised down real GDP growth of all the six GCC member states citing regional insecurity and continuing oil production cuts. On the back of this economic environment, it is understandable that GCC contracts awarded in the region retreated y-o-y during the quarter.
Total contracts awarded in the UAE declined by 23.6 percent y-o-y during Q2-2024 to reach $16.3 billion as compared to $21.4 billion during Q2-2023. On the other hand, aggregate projects awarded in Qatar dropped 98.5 percent y-o-y during Q2-2024 to reach $162 million as compared to $10.5 billion in Q2-2023. This steep fall of Qatari contracts awarded has dragged down the aggregate growth of GCC contracts awarded during Q2-2024. It is noteworthy to underline that Qatar has had one of its best years in 2023 in terms of value of contracts awarded as a result of the $10 billion LNG project awarded to develop the North Field South. Aggregate projects awarded in Kuwait jumped 33 percent y-o-y to reach $2.3 billion up from $1.7 billion in Q2-2023.
In terms of sectors, Q2-2024 witnessed a jump in the value of projects awarded in the Gas, Power and Transport sectors. Total GCC Gas Sector contracts awarded during the quarter jumped 17.3 percent to reach $14.0 billion as compared to $12 billion during Q2-2023. Moreover, the total value of contracts awarded in the GCC Power and GCC Transport sectors reached $9.8 billion each recording a growth of 9.7 percent and 27.3 percent respectively.
GCC projects market outlook
According to MEED Projects, the total value of projects that are planned or in pipeline in the GCC stood at $3.5 trillion as of 2, July, 2024. Saudi Arabia comprised the lion’s share of ongoing or upcoming GCC projects (54 percent or USD 1.87 trillion) followed by the UAE which has $856.9 billion and Oman with estimated ongoing or upcoming projects at $245.5 billion. However, the picture was different in terms of only upcoming projects in the region excluding ongoing contracts. Total GCC projects in the pipeline (upcoming projects) reached $1.43 trillion as of 2 July, 2024. Expectedly, Saudi Arabia also dominated the Mena region’s projects in the pipeline representing 51.6 percent ($737.2 million) followed by the UAE which comprised 20.4 percent ($291.4 million)
Total value for upcoming projects for Kuwait reached $112.4 million during July-2024 comprising 7.9 percent of the total GCC upcoming projects. In terms of sector representation, the Construction Sector comprised the largest sector, 29.8 percent or $426.4 billion, of upcoming projects in the GCC followed by the Transport Sector which comprised 20.8 percent or $297.9 billion of upcoming projects in the region.
Future oil and gas projects are expected to play a significant role in the GCC and MENA regions’ future contract awards.
According to MEED Projects, currently there are over $408 billion worth of planned and an awarded oil and gas projects in the Mena region of which Saudi Arabia comprises nearly 19 percent ($77 billion) followed by the UAE at 16.5 percent ($67.4 billion) and Qatar at 8.7 percent ($35.3 billion). Two of the top ten largest by value of upcoming oil and gas projects in the Mena region were in the UAE; namely the Upper Zakum full field development project valued at $16 billion and the Upper Zakum full field development : UZ1000 expansion project valued at $6.6 billion.
