Special Report: Oil & Gas Contractor Survey - Caution slows contract awards
On paper, the number of pending contract awards on oil and gas projects in the Gulf is healthy. There are 55 such projects worth more than $1bn, each in various stages of planning.
But for 2009 to be a busy year for oil and gas contractors, the market is relying on the return of one factor above all others: confidence.
With project costs almost one-third lower than when material prices were at their peak in mid-2008, the motivation for clients to award contracts and take advantage of the lower pricing is strong.
Many clients are keen to point out that the largest projects, such as the $10bn Jizan refinery in Saudi Arabia, are long-term schemes, and the current financial downturn will have passed by the time they start operating.
But lower costs and taking the long-term view are not enough to ensure that contracts will be awarded in great numbers in 2009.
It is confidence that remains elusive in the Gulf oil and gas market - just one $500m-plus contract was handed out between October 2008 and the end of January 2009, for example.
Any clients who are bold enough to award contracts in 2009 will enjoy the benefits of lower prices. The number of clients that do so will indicate just how much optimism and confidence has returned to the oil and gas market.
Index of all stories in the Oil & Gas Special report:
Compromise keeps projects on track *with full contractor survey data*
Tehran’s struggle for oil and gas self-sufficiency *with data&
Cairo reviews free zone tax *with data*
Manama seeks fresh energy supply *with data*
Comment: GCC hydrocarbons contract awards - Sas negotiations show the way
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