Spending on the Middle East and North Africa (Mena) oil and gas projects looks set to increase in the second quarter of 2013, compared with the first three months, as the UAE continues to lead the market with a string of offshore schemes getting off the ground.
At the halfway point of the second quarter, about $6.7bn-worth of engineering, procurement and construction (EPC) contracts have been awarded in the Mena region compared with a total of $8.4bn in the first quarter, according to Middle East projects tracker MEED Projects.
The bulk of contracts awarded in the second quarter to 15 May have been won in the UAE, with the Zakum Development Company (Zadco) awarding a huge $3.7bn contract on the development of the offshore Upper Zakum field.
The deal was won by a consortium of UK-UAE joint venture Petrofac Emirates and South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME). Petrofac has now won three major contracts in the UAE oil and gas sector this year.
The only other billion-dollar-plus contract in the Mena region so far in the second quarter was Qatar Petroleum (QP) awarding a deal to Taiwan’s CTCI and Japan-based Chiyoda Corporation, This was for the $1.2bn expansion of its Ras Laffan refinery.
If contracts are awarded as expected, this quarter could be the biggest-spending period since the final quarter of 2011, with several major projects moving towards the construction phase.
Since that peak of $14bn, contract awards for each subsequent quarter have hovered between $5bn and $10bn, with spending dominated by Saudi Arabia, the UAE, Iraq and Iran since the beginning of 2011.
Despite being one of the world’s largest oil exporters, spending on oil and gas projects in Kuwait over the past two years has lagged far behind its competitors.
Although Kuwait and the UAE have similar-sized oil sectors, Kuwait has only spent $2.9bn on projects since the start of 2011, compared with $13.9bn spent in the UAE.
The UAE is likely to award two more major contracts in the second quarter – both on the Umm al-Lulu offshore oil field development – which combined are worth in excess of $2bn.
The first package on Umm al-Lulu is set to be awarded to Abu Dhabi’s National Petroleum Construction Company (NPCC). The second package is still to be decided after a consortium of NPCC and Technip, and South Korea-based Samsung Engineering were asked to resubmit bids for mid-April.
Another major project coming to the award stage is in Morocco, where Societe Anonyme Marocaine de l’Industrie de Raffinage (Samir) is planning to build a liquefied natural gas (LNG) receiving terminal. Morocco is looking to diversify its energy supplies by decreasing its reliance on oil for use in power plants.