GCC oil and gas expansion estimated at $666 billion

The GCC’s oil and gas industry is planning to invest $666 billion to boost its capacities, as oil prices remained bullish in the year.
According to a research report that tracks oil and gas projects planned in the oil-rich region, the total value of the planned projects dropped by $6.6 billion in June, in a month-on-month comparison.

“The number of major petroleum projects planned over the next decade stood at 642, a decrease of 12 projects over the month,” says the Kuwait Financial Centre or Markaz ‘s oil and gas research report.

Similar projections were made by Booz & Company, a management consulting firm, which recently estimated “a wave of capital projects worth more than $1.1 trillion in projected spending in the coming decade,” approximately one-fourth of the industry’s total global investment through 2020.

“The massive investments going into the energy sector is a result of the bumper oil prices, which remained bullish at above $100 a barrel this year,” said Syed Abrar Ali Khan, the general manager of Abu Dhabi-based construction company, Trans Middle East LLC.
In terms of the number of planned petroleum sector projects Saudi Arabia is leading, whereas in terms of cumulative value Iran continues to lead, the Markaz reports.

Khan, who visited Qatar last month said, “The oil and gas projects have slowed down there a bit, as the country is focusing on building infrastructure for the Football World Cup.” On a month-on-month change basis, according to the report, the projects in UAE witnessed decrease of around $18.5 billion, attributed to the petrochemicals sector, whereas projects in Saudi Arabia witnessed an increase of around $9 billion.
Petrochemical firms in the GCC racked up their total production capacity to more than 115.994 million tonnes in 2011 compared to 102.075 million tonnes in 2010, an increase of 13.5 per cent, a report issued by the Gulf Petrochemicals and Chemicals Association said.

On May 12, Abu Dhabi National Petroleum Construction Company or NPCC chief executive Aqeel Al Madhi revealed Abu Dhabi will tender new projects worth $7 billion this year. Abu Dhabi seeks to boost output to 3.5 million barrels a day by 2018 from about 2.8 million barrels a day now.

Khan expects fewer mega projects are yet to be announced this year. “However, several smaller oil and gas projects are in the pipeline,” he said.

The contractors are waiting for the 270,000 barrel per day or bpd capacity Fujairah refinery project among the bigger ones.

In the recent weeks, Trans Middle East’s general manager said Abu Dhabi’s oil refiner Takreer concluded a $2.5 billion construction project, while a $450 million Habshan-Maqta-Taweelah pipeline project was also finalised to be awarded. The number of cancelled/on-hold projects in the upstream oil & gas segment increased by five projects whereas their total value increased by $0.8 billion over the month, according to Markaz report. Upstream oil & gas projects continue to be most affected in terms of cancellations or being placed on-hold.

From a segment perspective, according to the report, the value of total refining projects increased by $5.6 billion whereas the total petrochemicals projects decreased by $11.2 billion.

The value of regional upstream oil and gas projects witnessed minimal changes on a month-on-month basis. A review of the timing of the upcoming petroleum sector projects indicates that a large proportion of the projects continue to have a short-term horizon.

By Haseeb Haider, Jul 03 2012