New spenders set to shake up Middle East oil sector

1 February 2019 (Last Updated September 22nd, 2020 14:25)

A look at the active and planned project work in the oil and gas sector across the Middle East suggests a shift is underway in spending patterns.

New spenders set to shake up Middle East oil sector

A shift is underway in Middle Eastern oil and gas spending patterns.

Middle East oil and gas 2019

Four years on from the sharp drop in the oil price in late 2014, a look at the active and planned project work in the oil and gas sector suggests a shift is underway in regional spending patterns.

There is currently $211billion-worth of oil, gas and petrochemicals projects under execution in the Middle East, while a comparable $242billion-worth of projects are in various stages of pre-execution.

Under execution and pre-execution

Saudi Arabia, Kuwait and Iran

Saudi Aramco is, perhaps unsurprisingly, the largest single spender in the sector, with more than $31billion-worth of contracts under execution, according to Projects data from MEED, a data and analytics business specialising in the Middle East and North Africa.

The Saudi oil giant has more than 80 active oil and gas contracts under execution, including nine projects worth more than $1billion in value. Two of the largest active projects, in terms of the total value of packages under execution, are the $16billion Jizan refinery project and $6.5billion Fadhili gas plant.

The next three largest spenders are Kuwait’s largest oil and gas companies, which represent a total value of projects under execution commensurate with Saudi Aramco. The largest active projects in terms of the total value of packages under execution are the $24billion Clean Fuels Project, under Kuwait Integrated Petrochemical Industries Company, and the $20billion New Refinery Project, under Kuwait National Petroleum Company.

The fifth-largest spender on oil and gas projects is ostensibly Iran’s Pars Oil & Gas Company. Its work under execution is entirely made up of packages on the South Pars gas field development and given the reintroduction of US sanctions, it is possible that this project could face disruption.

UAE, Iraq, Algeria and Oman

Subsidiaries of Adnoc (the state-owned oil company of the United Arab Emirates) also have significant representation in the top 10, with a combined contract value of $16.7billion across both its onshore and offshore upstream business units.

The remaining three companies, Iraq’s State Company for Oil Project, Oman’s Duqm Refinery & Petrochemical Industries and Algeria’s Sonatrach, all represent large volumes of work, with more than $5billion-worth of projects under execution. Their projects include the refineries at Karbala and Maysan in Iraq, the refinery at Duqm, and a range of upstream exploration and exploitation projects, respectively.

Planned pipelines: A different set of spenders

Considering the planned pipeline of oil, gas and petrochemicals projects in the Middle East, however, MEED Projects data suggests that a different set of spenders will take the lead.

Saudi Aramco maintains a commanding presence, with $17.7billion-worth of projects in pre-execution and $11billion-worth of contracts that have moved beyond the study/feed stage to the bidding phase, including a $1.7billion contract for a gas-oil separation plant at the Berri field and a $1.5billion contract for onshore oil facilities at Tanajib in the Marjan field.

Iraq, UAE, Algeria and Kuwait

But leading the prospective pipeline of work is Iraq’s Ministry of Oil, with $19.5billion-worth of projects in pre-execution, $13.7billion of it in the bidding phase, including an $8billion contract for the Iraq strategic crude oil export pipeline from Najaf to Basra, and two multibillion-dollar contracts for new refineries at Al-Qayarrah and Wasit.

UAE spending stalwart Adnoc is then represented by Adnoc Refining, with $16.2billion of projects in pre-execution – in a reflection of the Abu Dhabi oil major’s shift from upstream to downstream investment. The $15billion new refinery project at Ruwais, which is under study, makes up almost the entire balance.

Algeria’s Sonatrach, meanwhile, plans to move ahead with projects worth $10.8billion, or more than double the value of its projects currently under execution. This includes $3.5billion-worth of projects in the bidding phase, led by the $2.5billion contract for the Hassi Messaoud refinery now under bid evaluation.

Kuwait Oil Company is also standing its ground with $12.3billion-worth of projects in pre-execution, $3.9billion of it in the bidding phase, led by the $2billion contract for the second phase development of the country’s Ratqa Lower Fars heavy oil resources.

Iran and Egypt

National Iranian Oil Company technically has $18.1billion-worth of projects in pre-execution on paper, alongside sizeable pipelines for Iran’s Pars Oil & Gas Company and Iranian Offshore Oil Company, but all of the projects remain in the study phase and in light of US sanctions may be at risk in the near-term.

However, the future spending pipeline also sees the more optimistic addition of $12.7billion-worth of offshore gas field exploration projects on behalf of Egypt’s Ministry of Petroleum, while the Oman Oil Company subsidiary Oxea is working on the study for an $8billion oxo petrochemical complex at Duqm.

Top oil & gas spenders by the value of projects under execution

MEED
This article is sourced from Power Technology sister publication www.meed.com, a leading source of high-value business intelligence and economic analysis about the Middle East and North Africa. To access more MEED content register for the 30-day Free Guest User Programme. https://www.meed.com/registration/