Gulf project awards slumped in 1H but will pick up

DUBAI: Contracts awarded to build economic projects in the Gulf’s rich Arab oil exporting states slumped in the first half (1H) of this year but are expected to pick up in 2H, a data service tracking the industry said.

Awards in the six-nation Gulf Cooperation Council (GCC) dropped to US$56.1 billion in the January to June period from US$69.3 billion a year earlier, according to MEED Projects. Low oil prices have forced governments in the region into tough austerity policies.

With the exception of Saudi Arabia, where contract awards rose 12 per cent from a year ago to US$15.8 billion as the government showed signs of spending a little more freely with a modest improvement in its budget position, awards fell in every GCC state.

Kuwait saw a 46 per cent drop to US$6.9 billion and awards in Bahrain plunged 84 per cent to US$917 million. Even Dubai experienced a slight fall, MEED said; awards in the United Arab Emirates dropped 13 per cent to US$21.3 billion.

However, MEED forecast US$61 billion of project awards in the GCC during the second half of this year, bringing the total for 2017 to about US$117 billion, roughly the same as in 2016.

“There’s no doubt that the past two years have been tough for the projects supply chain as government spending has slowed,” said Ed James, director of content and analysis at MEED Projects.

“But with construction companies now more efficient, the private sector more active and the number of public-private partnership projects growing by the week, there is cause for optimism.”

This year’s total is expected to be boosted by Oman, where the venture planning a 230,000 barrel of oil per day refinery at Duqm said in early August that it was likely to award over US$5 billion of engineering, procurement and construction contracts to Petrofac, Samsung Engineering, Technicas Reunidas, Daewoo Engineering and Construction and Saipem. — Reuters