Kuwait buoys slump in GCC oil and gas spending

08 July 2015

Contract awards slow in key Middle East oil-exporting markets

  • GCC oil & gas contract awards fell 53 per cent in H1 2015 compared to H1 2014
  • $9.84bn of EPC contracts awarded this year compared with $21.08bn in 2014
  • Kuwait accounts for majority of EPC awards this year with a total of $5.4bn

Contract awards in the GCC oil and gas sector dropped by 53 per cent in the first half of 2015 as Kuwait buoyed weaker spending across the rest of the six-country bloc.

Companies in the GCC awarded $9.84bn of engineering, procurement and construction (EPC) contracts in the first six months of 2015 compared with $21.08bn in the same period of 2014, according to data from regional projects tracker MEED Projects.

The oil and gas projects market is on track to be the slowest since 2012 and is likely to end the year significantly below the $35.76bn recorded for the full year of 2014.

Kuwait represented the majority of the spending on the first half of 2015 with a total of $5.4bn from just two major EPC awards.

Kuwait awards

Workers mobilised for Kuwait oil gathering centre

A consortium of the UK’s Petrofac and Athens-based Consolidated Contractors Company (CCC) was awarded the main contract on the $4bn Ratqa Lower Fars Heavy Oil (LFHO) production facilities,support complex and tank farm.

The contract was awarded by Kuwait Oil Company (KOC).

Also in Kuwait, Spain’s Tecnicas Reunidas (TR) was awarded a $1.4bn EPC deal to build a fifth gas fractionation train at the Mina al-Ahmadi refinery for Kuwait National Petroleum Company (KNPC).

The two Kuwait projects represented over half the GCC oil and gas project awards in the first half, but still represented a drop from the $12.8bn awarded in Kuwait in the first half of 2014 when the Clean Fuels Project contracts were being signed.

Strong UAE

The UAE was the second largest spender in the first half of 2015 despite contract awards value dropping by over a third year on year to $2.6bn.

Spending in the UAE in the first half was dominated by the Integrated Gas Development (IGD) expansion, where three packages worth $1.6bn were awarded.

The main contractors winning work on the onshore/offshore gas scheme were Abu Dhabi-based National Petroleum Construction Company (NPCC), TR and a consortium of Italy’s Tecnimont and the local Archirodon.

The first half was also notable for a rare EPC award to a Chinese group, China Petroleum Engineering & Construction Corporation (CPECC), which won a $330m deal to develop the Mender field.

Saudi slows

Saudi Arabia continued its anemic first half oil and gas spending with contract awards slightly up at $1.3bn. The kingdom awarded the most contracts in the GCC oil and gas sector but spending was characterised by several smaller packages.

The largest was a $350m contract awarded to South Korea’s Hanwha Engineering & Construction to build a calcined petroleum coke plant in Al-Jubail for Gasan Investment and Industrial Development.

Spending in Oman was largely limited to two pipeline packages on its largest megaproject – the $16bn Khazzan tight gas field development.

Qatar Petroleum completes restructuring

Qatar stalls

Meanwhile, according to MEED Projects estimates, Qatar spent as little as $36m in the first half and significant contract awards in Bahrain were absent from the first six months.

Whether or not contract awards pick up in the second half of the year will largely depend on progress of a few large, delayed projects, including Kuwait’s New Refinery Project and the UAE’s Fujairah refinery.

Other major projects in the pipeline for 2015 awards include Saudi Arabia’s Fadhili gas plant and the Bab Integrated Facilities Expansion in Abu Dhabi, which both could see packages of $3bn awarded.


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