Kuwait leads spending as Saudi Arabia has weakest year for contracts since 2004
Contract awards in the GCC oil and gas sector have reached a four-year high in 2014, with a surge in Kuwaiti spending offsetting a slower year for other major producers.
The six-country bloc awarded $34.8bn-worth of engineering, procurement and construction (EPC) contracts in the year to 15 December, compared with $24bn in 2013 an increase of 31 per cent.
The value is about the same as the total for 2010 and significantly higher than spending in a range of $24bn-26bn a year for the 2011-13 three-year period.
With the oil price dropping more than 40 per cent in the second half of 2014, it remains unclear whether there will be a slowdown in project spending in 2015 and beyond, with a period of lower crude prices anticipated.
Kuwait was by far the years biggest spender on oil and gas projects, with a total of $16.4bn of EPC contracts awarded. This is largely from the $12bn-worth of EPC contracts awarded in April on its Clean Fuels Project (CFP) to upgrade the countrys refineries.
Kuwait only made $10bn of awards in the previous five-year combined, despite being among the GCCs top three oil producers. In 2014, the country also awarded three contracts totalling $2.3bn on three gas-gathering centres and a $946m deal on an effluent water treatment and injection plant, both for Kuwait Oil Company (KOC).
The second-biggest EPC market for oil and gas in the GCC in 2014 was the UAE, which awarded about $9bn. Although a 22 per cent drop from a strong 2013, the UAE had another year of strong spending.
Major awards in Abu Dhabi included $2.7bn on the offshore Nasr full field development and $3.7bn-worth of contracts on the third phase of expansion of the onshore North East Bab fields. The latter included a $2.25bn award in December to Italys Tecnimont to expand production facilities at the Al-Dabbiya field.
Saudi Arabia, the regions largest crude producer and historically the strongest EPC market, awarded just $6.2bn the kingdoms lowest annual spending since 2004. Major awards included two contracts worth a combined $1.85bn on the Khurais Increment Programme for Saudi Aramco and a $1.2bn deal on Saudi Basic Industries Corporations (Sabics) methyl methacrylate complex in Jubail.
Oman awarded a long-term record of $3bn in EPC contracts in 2014, up from a strong year of $2.4bn in 2013. Major awards in the sultanate in 2014 included $1.2bn on the central processing facility for the Khazzan tight gas project for BP and $1bn of contracts for the Rabab Harweel Integrated Project for Petroleum Development Oman (PDO). Both the main deals were awarded to UK-based Petrofac.
Oman is set to have another strong year in 2014 with major contract awards expected on further Khazzan packages and on the greenfield Duqm oil refinery.