The region contains 60 per cent of the world’s oil and gas reserves and has become vital to global energy security over the past 50 years.

The Gulf states are spending heavily to maintain that dominance. According to regional projects tracker MEED Projects, the Gulf states plan to award more than $100bn of oil sector related contracts between 2010-15, roughly a third of the $150bn that Opec forecasts is needed to be invested in the industry to meet growing global demand.

The UAE and Saudi Arabia: oil industry leaders

Two countries are leading the pack in investment. Saudi Arabia and the UAE plan to spend $29bn and $31bn respectively on new oil production and refining projects over the next five years. They are followed by Kuwait and Qatar, which plan to spend $14bn and $13bn respectively.

The UAE presents the most opportunities for contractors in the development of new production capacity, as it plans to boost its oil output to about 3.5 million b/d by 2015 through increases to new and existing offshore and onshore oil fields.

Much of the onshore production boost will come from the $3bn project being developed by Abu Dhabi Company for Onshore Operations (Adco). Contracts on the scheme were awarded in the first quarter of 2010. The two state offshore operators Abu Dhabi Marine Operating Company (Adma-Opco) and Zakum Development Company (Zadco) are undertaking a series of projects to boost production. By 2015, Zadco will have added 250,000 b/d of production to its offshore fields, bringing its total output to 750,000 b/d, while Adma-Opco has been set the target of raising its production by 400,000 b/d to produce 1 million b/d by 2015.

The most notable of the projects being planned by the firms is a major production boost at the giant Upper Zakum field being undertaken by Zadco. The company is building four artificial islands to use as drilling platforms at a total cost of around $15bn, a concept Adma-Opco is also applying to the development of the Sath al-Raasboot field.

In Saudi Arabia, Aramco is more focused on upgrading downstream capabilities and it is building two $10bn-plus refineries in the country, at Yanbu and Jubail. It is also working on a multibillion-dollar programme to maintain production capacity in the kingdom at about 12 million b/d.

The company is also developing the giant offshore Manifa field, which could cost up to $15bn. The development of the 900,000 b/d field is expected to be completed in 2015.

Kuwait, meanwhile, plans to develop heavy oil reserves at Adbali, Ratqa, Raubhatain and Sabriyah fields in the north of the country. Australia’s WorleyParsons is designing production facilities for the project and state oil producer Kuwait Oil Company is tendering an engineering, procurement and construction (EPC) contract for the project.

The Middle East to meet gas market demands

With the huge reserves at its disposal, the Middle East is also well placed to be the world’s preeminent gas supplier. But the region is struggling to meet rising domestic and export demand.

Despite reserves of 76.18 trillion cubic metres or 40.6 per cent of total proven reserves, the Middle East’s share is underdeveloped. Production in 2009 totalled 407.2 billion cubic metres, or just only 13.6 per cent of global output.

According to MEED Projects, the Gulf states plan to award contracts worth more than $68bn of contracts over the next five years to raise production. The bulk of contracts, worth about $30bn or 40 per cent of all projects in region, are in the UAE. It is followed by Qatar with $20bn and Saudi Arabia with $11bn.

In the past decade, Qatar has executed an aggressive programme to increase its liquefied natural gas (LNG ) production capacity becoming the world’s largest LNG exporter. Work on the newest LNG trains at Ras Laffan is nearing completion and by the end of the year Qatar is expected to meet its production target of 77 million tonnes a year (t/y).

The LNG trains process gas from the giant North Field. Further developments will have to wait for the lifting of a moratorium on new projects from the field, now only expected to be lifted in 2015.

Doha is however moving ahead with the Barzan gas development with the US’ ExxonMobil. In April, state-energy firm Qatar Petroleum (QP) issued tenders for the construction of the offshore portion of the scheme.

The gas structure is expected to be developed in three phases. The first will involve the construction of two onshore gas processing trains by the end of 2013, with a combined capacity of 1.7 billion cubic feet a day (cf/d). The second phase will add a further 2 billion cf/d and the third phase will provide another 2.5 billion cf/d, bringing the total to 6.2 billion cf/d of gas.

Along with Barzan, Doha is aiming to reduce the practice of flaring through its jetty boil-off scheme at Ras Laffan. State-owned Qatargas awarded the estimated $1bn engineering, procurement and construction management contract to the US’ Fluor Corporation in April.

Outside Qatar, the region’s gas developments look less secure. After early optimism, the prospects of significant finds in Saudi Arabia’s vast Empty Quarter have diminished. Aramco plans to raise non-associated gas processing capacity to 93 billion cubic metres a year (cm/y) by 2015, from the current 64 billion cm/y, to meet rising demand. 

Elsewhere, one of the most promising prospects in the region is Abu Dhabi’s Shah gas project. But this scheme has faced a number of obstacles. In April, US oil major ConocoPhillips pulled out of the $10bn joint venture with Abu Dhabi National Oil Company (Adnoc).

Geologically tight and sulphur rich, the gas from Shah field was previously considered unsuitable for downstream industries, but the Gulf’s increasing gas demand has compelled Adnoc to reconsider.

The technical challenges of producing the gas will mean the firm will have to find a new partner quickly if it to reach its ambitious completion target of 2015.