After a flurry of major oil and gas contract awards at the end of 2009, engineering, procurement and construction (EPC) firms looked forward to 2010 with the hope of continued high activity levels in the region’s energy sector.
But the year has proven a disappointment. In the nine months to September just $35bn of energy contracts were awarded and the total for the year is not expected to exceed $40bn by much. This compares with more than $70bn of contracts awarded in 2009.
The second of half of 2010 has been particularly quiet; several contracts that were expected to be awarded have not materialised.
Abu Dhabi was the main driver of project activity in 2009, as the emirate sought to capitalise on a sharp fall in contracting costs.
But with the tendering processes for its new upstream developments completed and downstream projects still in the early stages of planning, Abu Dhabi had little to offer to the market this year.
Saudi Arabia was expected to become the most active energy market for EPC contractors, yet Aramco has been slow to move forward with its schemes. As a result of the lull in activity contracting prices have remained under pressure, with aggressive bidding to win the limited contracts up for grabs.
As the year draws to a close there are some signs of movement in Saudi Arabia, with an award for onshore process packages for the kingdom’s $6bn Wasit gas scheme imminent. But most contractors will be writing off 2010 and looking to 2011 for a pickup in business.