Doha plays a waiting game with contract awards

10 February 2010

Firms will have to get used to a very different landscape in the emirate. Doha knows that it has the chance to force contractor bids ever lower

Qtar’s economy is at a crossroads. Work is nearing completion on the liquefied natural gas (LNG) trains at Ras Laffan and, by the end of the year, Doha expects to meet its target of increasing production to 77 million tonnes a year, which will make it the world’s largest LNG producer.

While this is great news for Qatar’s economy, it creates problems for its projects sector, as companies which have relied on the booming energy sector for work in recent years are left wondering what comes next.

They will have to get used to a very different landscape as the emirate moves to the next stage in its development. With the country predicted to earn more than $59bn from gas exports this year, state-owned Qatar Petroleum can afford to invest, but energy is no longer Qatar’s main priority.

Doha plans to spend $20bn on new roads over the next five years and $25bn on a rail
network. Having expanded its energy sector, Doha’s focus is shifting to civil infrastructure.

There is still a future for energy projects. Further upstream schemes, along with downstream petrochemicals and refining projects, will go ahead, but they will be more limited in their scope.

The area with the greatest potential is the giant North field, but no decision will be made on new projects there until 2015 at the earliest, when technical studies are completed.

For now, delays to contract awards in the emirate appear to be becoming more common. Doha has already driven down engineering, procurement and construction costs by delaying a number of contract tenders in the latter half of 2009 while it sought lower bids.

Such delays are something contractors in the country will have to accept. They should also be prepared to be far more competitive. Even with its vast wealth, Doha knows that, with so many companies in the market chasing fewer contracts, it has the opportunity to force bids ever lower.

Energy projects: Qatar is scaling back activity

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