For oil companies in the Middle East, the past 18 months has been a bumpy ride. When crude oil prices peaked at $147 a barrel in July 2008, national oil companies (NOCs) around the region postponed some of their largest projects.
Engineering and construction firms were hit by the twin nightmare of rising prices and scarce labour. While the problems were most serious for engineering, procurement and construction awards, oil companies seeking to fast-track feasibility and design studies on new projects were also hamstrung by the lack of available major engineering companies.
GCC countries have been bringing in different models in response to changing market conditions. In-house engineering deals have become more common in the region over the past few years, particularly in Kuwait and Oman, as a way for oil companies to commission studies without going through a formal tendering process for each new project.
Even the world’s largest oil company, Saudi Aramco, has embraced the ‘on-call’ model by asking five engineering contractors to share its day-to-day feasibility work.
Qatar has now lured international contrac-tors into in-house deals too. By bringing Technip, WorleyParsons and Petrofac on board, Qatar Petroleum has guaranteed it will have contractors available for all its schemes, and avoided the need to separately tender contracts for individual projects.
Qatar’s decision to hire established contractors to work across all of its facilities is a nod to the supply problems that have hit the state over the past five years.
Seeking outside help to smooth the engineering process is the right path for Qatar and other Gulf states as they learn a valuable lesson from an extraordinary period of project activity.