Now, several major fertiliser projects are being threatened with delays because of a shortage of resources, adding to a list of major projects hit by rising costs.
In Qatar, the Pearl Gas-to-Liquid (GTL) development, originally budgeted to cost $5bn, will cost more than three times that amount. In Kuwait, the budget for the new refinery project at Al-Zour, initially set at $6.3bn, has been hiked twice in 2007 and now stands at $14bn.
The construction of the new infrastructure is essential for the diversification of the region’s economy and to create jobs for its growing population. But if delays are to be avoided and costs mitigated, project sponsors need to modernise supply chain management techniques and innovate contracting strategies.
Improved management should place emphasis on more detailed forward-planning and long-term partnering arrangements with key suppliers. This will ensure initial budgets more closely reflect the reality of project costs. Phasing projects in more manageable stages would help develop a clearer picture of schedules.
The time is right for the Gulf to take advantage of its rich mineral resources and low-cost fuel supplies. But given the lack of strategic planning and co-ordination of the region’s overheating projects market, there is a risk this could become a lost opportunity.
Only through improved planning based on a greater appreciation of the current pressures on the region’s supply chains can delays and critical under-budgeting be avoided.