Contract spending on industrial projects has dropped for four years with only $1.5bn awarded to date in 2014
Spending on industrial projects in the GCC has declined significantly over the last four years as awards on new projects slowed in Saudi Arabia and Qatar.
The six-country bloc has awarded $1.6bn in engineering, procurement and construction (EPC) deals on non-oil industrial projects in 2014 to date, according to regional projects tracker MEED Projects.
This compares with $3.1bn awarded in the whole of 2013, which itself is a major drop from the $7.5bn spent in 2012 and the $12.5bn awarded in 2011.
Industrial projects in much of the GCC are a key plank of economic policy as, on average, manufacturing industries provide jobs and help diversify economies dependent on oil or gas exports.
The regions largest economy Saudi Arabia has seen the largest drop in industrial spending, falling from $9.2bn in 2011 to $960m last year.
In the first three quarters of 2014, according to regional projects tracker MEED Projects, the kingdom has only awarded $140m in industrial EPC contracts. This includes $80m awarded to US-based Fluor Corporation to build a reserve osmosis element plant at Ras Tanura.
The UAE has been responsible for most of the industrial spending in the GCC, so far in 2014 having awarded $770m. EPC deals for a large number of small-scale manufacturing projects have been awarded in Abu Dhabi and Dubai this year. Mid-sized awards included the $40m spent by Al-Ghurair Iron and Steel to build phase two of its steel plant in Mussafah, Abu Dhabi.
Elsewhere in the Gulf, Qatar National Cement Company (QNCC) awarded a sole $260m contract to FCB Ciment to build a fifth cement line at Umm Bab. Awards in Qatar have dropped over the past four years, with the Gulf state spending $1.1bn in 2011.
In Oman, Moon Iron & Steel Company (Misco) awarded a contract to SMS Holding and Essar on its $240m steel billet and rebar plant in Sohar.
Total awards for industrial projects in Bahrain and Kuwait in the first nine months of 2014 were small by comparison.
Although the GCC has seen a dip in industrial spending, several major projects due to be awarded next year are set to lead a resurgence in construction in the sector.
Aluminium Bahrain (Alba) is expected to push ahead with its estimated $2.5bn sixth phase of its smelter expansion.
Major metals projects are also expected to enter the construction phases in the UAE and Saudi Arabia, with the former set to award contracts on a major aluminium rolling mill and an alumina smelter at Khalifa Industrial Zone Abu Dhabi (Kizad).
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