Posted on 24 Nov 2023
The rebound in Gulf Cooperation Council construction, transport, and oil and gas projects in 2023, with a total of $178.6 billion in contracts awarded year-to-date, has broken the full-year record of $173.5 billion in 2014, the highest amount in the past 15 years, notes Kallanish.
In the largest market, Saudi Arabia, the year-to-date value of awarded contracts has reached $82.5 billion, benefiting from a sharp increase in spending on its gigaprojects programme, as last year's full-year contract awards closed at $58.3 billion, according to MEED.
The Neom development has an investment cost of $500 billion, the Diriyah Gate project $64 billion, and the Red Sea and Amaala tourism projects over $15 billion. Other major capital expenditure contributors this year include the $23 billion of contracts led by Saudi Aramco, $15.3 billion of power sector deals and $14.3 billion of transport projects.
The United Arab Emirates has also achieved year-to-date spending of $68.4 billion, surpassing 2014's $48 billion and more than doubling last year’s $27.1 billion.
"Sector-wise, the bloc's most active sectors have been construction and gas, with $28.1 billion and $19.5 billion of contract awards, respectively. The highest value single contract was the engineering, procurement and construction (EPC) package on Qatar’s $10 billion-plus second phase liquefied natural gas (LNG) expansion project," MEED observes.
This year's performance has been driven by the hydrocarbons and construction sectors linked to Saudi Arabia's Vision 2023, the UAE real estate market and long-awaited gas and petrochemicals projects, as well as two years of higher oil prices.
"The current momentum will continue in 2024 and beyond when considering $105 billion worth of contracts in the market under bid evaluation, plus a further $130 billion worth of deals at the prequalification and tender issuance stages,” MEED adds.
However, challenges lie ahead. Saudi Arabia alone will require more than 800 million tonnes of cement by 2030 for the projects along with 1 million plus additional labour force and 100,000 extra engineers. The availability of materials, equipment and labour to complete the more than $2 trillion worth of projects raises questions, the projects intelligence service concludes.
Source:Kallanish
