Kuwait’s projects market has been revitalised in recent weeks despite thousands of Kuwaitis taking to the streets on 5 November to protest about new electoral laws. It is the largest demonstrations that the Gulf state has witnessed in recent years.
The optimism within Kuwait’s projects sector was noticeable at MEED’s Kuwait Energy and Infrastructure Projects Conference 2012, held from 4-6 November in Kuwait City, with clients discussing more than $120bn-worth of energy and infrastructure projects planned over the next decade.
“Kuwait’s projects market has always had potential, and I think 2012 and 2013 could be one of the best periods, with several major projects coming to the market. I am a believer,” said Jeff De Lange, deputy managing director at the local Gulf Consult, speaking at the event. Gulf Consult is working with UK-based Foster & Partners on the $3bn new terminal planned at Kuwait International airport.
The Public Works Ministry is set to tender the first package on the airport terminal scheme by the end of 2012, and along with the metro and Bubiyan port schemes, forms an important part of Kuwait’s plans to upgrade the country’s outdated infrastructure. The news of the airport tender follows on from the recent award of ther $2.6bn Subiya causeway, a long- awaited project that is regarded as crucial for stimulating growth of Kuwait’s real estate sector.
The Public Works Ministry is also planning to spend KD4bn ($14bn) on 88 new road projects by the end of 2013 in an effort to improve the country’s road links. In addition to new roads within Kuwait City, the ministry is also planning three major border roads to improve access throughout the country. This includes the estimated KD162m Nawaseeb road, which is a 42-km long road that will link Kuwait with Saudi Arabia. The Ministry of Electricity & Water (MEW) is planning to spend $27bn on developing 134 new power and water projects to meet the expected increase in demand by 2020.
The majority of the planned infrastructure schemes will be funded by the government. From 2006 to 2011, more than $50bn-worth of contracts awarded in Kuwait were by state entities, with only $5bn awarded by the private sector. The state is set to remain the country’s dominant construction and infrastructure client over the next decade, and an improved utilisation of the country’s vast energy reserves will provide economic means for the development programme.
Mazen al-Sardi, deputy managing director for technical services at state-upstream operator Kuwait Oil Company (KOC), told the MEED conference that it plans to invest $46n over the next five years to boost oil production and increase efficiency.
Kuwait Petroleum Corporation (KPC), the company which operates the country’s oil sector, is also set to invest in improving technology in the energy sector as the state seeks to boost its oil production by 1 million barrels per day (b/d), from 3 to 4 million b/d, by 2020.
“Over the next five years, there will be an average annual expenditure of $1bn to improve technology and expand oil production,” he said. “About 60 per cent of this will be for upstream expansions,” said Farouk al-Zanki, chief executive officer, KPC, at the MEED event.
The country’s downstream sector is also set for heavy capital investment to boost the country’s economic prospects. The Kuwait National Petroleum Company (KNPC), the downstream and refining division of KPC, is preparing to invest $37bn on major projects over the next six years. This will include pressing ahead with the long-planned clean fuel and new refinery projects, which will increase the state’s refining capacity to more than 1.4 million b/d from the current 936,000 b/d.
Those within Kuwait’s projects market hope that the renewed optimism and push for government projects will stimulate the growth of the private sector.
“We are enthused by what we have heard during the past couple of days about government projects, and hope that this can lead to more private projects. Private clients used to make up a big part of our business,” said Tarek Shuaib, partner at the local Pan Arab Consulting Engineers.