Construction costs in the Gulf’s oil and gas sector have fallen by more than 45 per cent since their peak in July 2008.

For engineering, procurement and construction (EPC) deals, oil and gas contractors are now charging just $40 a man hour, compared with $75 a man hour at the peak of the market in July 2008.

The Gulf’s national oil com-panies have also benefited from a 60 per cent drop in the cost of piping and equipment over the same period.

The fall in EPC, piping and equipment costs came as a result of the collapse in oil prices since the summer of last year, which made Gulf oil majors reluctant to invest in new projects, Arturo Grimaldi, vice-president of Middle East operations at French contractor Technip, said on the sidelines of the MEED Oil & Gas EPC 2009 conference on 19 October. “It is still a buyer’s market because most EPC contractors have reduced workloads,” said Grimaldi. “We are very far from workload saturation.”

Oil prices peaked at $147 a barrel in July 2008 before falling below $35 a barrel in February 2009 because of the global financial crisis.

National oil companies in Saudi Arabia and the UAE awarded contracts worth a total of $28.2bn in the first nine months of 2009, according to regional projects tracker MEED Projects.

Data from the projects tracker shows that, in the UAE alone, state-run energy companies will award a further $18bn of contracts before the end of the second quarter of 2010 as they take advantage of low project prices.

The national oil companies of Kuwait, Qatar and Saudi Arabia will award a further $38.9bn of projects by the end of 2012.