UAE upstream market set for quiet year

17 February 2015

Fewer large projects set to be awarded in Abu Dhabi after three-year spending spree

As contractors prepare bids on the estimated $2bn Bab Integrated Facilities expansion project in Abu Dhabi, they are also readying for a quiet year in the emirate’s upstream projects market.

In the past three years, the UAE has been the overall biggest spender on upstream expansions in the Middle East and North Africa (Mena) region as it aims to boost production capacity to 3.5 million barrels a day (b/d) by 2017.

However, the project pipeline will be much smaller in the coming years.

“Bab Integrated Facilities is the big one for us this year. After that, everyone will be looking to the Bab sour gas development,” a source from an international engineering, procurement and construction (EPC) firm tells MEED.

The decline in global oil prices in the second half of 2014 will not help the case for planned major upstream oil expansions, despite Abu Dhabi’s insistence that future projects will not be affected by market fluctuations. At the very least, it will cause oil producers to revise down project budgets.

The consensus among contractors in the GCC market – especially in the UAE and Oman – appears to be that gas schemes will continue regardless. Gas supplies are of key strategic importance to the UAE, with the government looking at several avenues to boost supplies to power stations and industry.

The estimated $11bn Bab sour gas development is easily the largest project on the horizon in Abu Dhabi, with many large EPC packages likely to be up for grabs.

However, the tender is unlikely to be awarded until 2016, leaving contractors to focus on smaller projects or other markets for the remainder of the year.

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