Bid & Tender


GCC Project Awards Growth hit $45bn in Q1 led by Saudi, Qatar

Defying regional and global geopolitical challenges, GCC project awards increased by 20.3% in the first quarter to hit $45 billion compared to $37.4 billion last year, with regional heavyweights Saudi Arabia and Qatar spearheading the growth, according to Kamco Invest, a non-banking financial powerhouse based in Kuwait.


The trend also defies oil production cutbacks which have all weighed on economic growth in the region as seen from IMF’s latest forecast that slashed GCC economic growth forecast for 2024 to 2.4% from its previous forecast of 3.7%, it said.


The consistent elevated trend in GCC contract awards underlines the entrenched resolve of GCC governments to see through their diversification projects, as well as state funding support, stated the industry expert in its GCC Projects Market Update April-2024 report.


Growth in GCC contract awards was evenly distributed during Q1-2024 as three out of the six countries in the GCC recorded y-o-y growth in their project’s awards, including two of the largest projects markets in the region, Saudi Arabia and Qatar, while the remaining three countries witnessed declines.


According to Kamco, Saudi Arabia alone accounted for more than half of the contracts awarded in the GCC region during Q1 with aggregate awards of $23.5 billion against $19.1 billion in Q1-2023 shrugging off underwhelming GDP growth projections by the IMF and continuing its strong non-oil growth rate run.


On Saudi Arabia, the report said after being aggressive on all fronts of project development, recent reports have shown a change in strategy for the kingdom wherein it is expected to have a more focused approach.


This includes a report which shows Saudi Arabia prioritizing projects instead of all-round development beginning with the completion of modules at the marina in The Line at Neom project. Also, on the funding front, there will also be external funding including debt issuance by various parties involved in the project.


This includes the recent roadshow by Neom for Chinese investors detailing plans for a futuristic ski resort and 170-km-long skyscrapers.


A Bloomberg report also showed curtailed plans for The Line project by 2030, although overall objectives of the project have been achieved so far. Monthly project awards data for Saudi giga projects showed a decline during March, according to MEED.


Total value of contract awards declined to $271 million in March-2024 from $509 million in February-2024 and $5.6 billion in January-2024. The total value of projects awarded since launch reached $57.0 billion, according to MEED.


According to Kamco, the kingdom represented over 52.2% of total GCC projects awarded during Q1-2024 that reached $23.5 billion. It achieved this feat despite recording a y-o-y dip in aggregate projects awarded in the construction, transport and chemical sectors.


The growth was mainly attributed to the kingdom’s gas sector which witnessed its total value of contract awards jump from $40 million in Q1-2023 to $6.2 billion in Q1-2024.


Similarly, the total value of projects awarded in Saudi Arabia’s water sector during Q1-2024 improved by 170.1% y-o-y to reach $6.3 billion supporting the overall growth in the kingdom's total contract awards during the quarter.


Comparatively, total contracts awarded in the UAE witnessed a marginal dip of 1% y-o-y to reach $11.5 billion during Q1 as compared to $11.6 billion for the same period last year.


The UAE projects market maintained its spot as the second biggest projects market in the GCC during the quarter despite the decrease in its share of total GCC projects awarded from 30.9% in Q1-2023 to 25.5% in Q1-2024.


Currently the UAE has the second highest expected economic growth rate among the GCC countries for 2024 at 3.5% with expectation to maintain its current course shrugging off the global economic uncertainty and the impact of ongoing conflicts in the wider Mena region.


The emirates' non-oil economic sector which has contributed around 70% of the growth during 2023 is expected to further improve in 2025, said the report.


On the other hand, aggregate value of contracts for Qatar jumped 68.5% y-o-y during Q1-2024 to reach $6.1 billion against $3.6 billion in Q1-2023.


According to Kamco, total value of contracts awarded in Qatar increased by 68.5% y-o-y to reach $6.1 billion during Q1-2024 as compared to $3.6 billion in Q1-2023, according to data gathered by MEED Projects.


The growth in contract awards was primarily due to the jump in value of projects awarded in Qatar’s Oil Sector during Q1-2024 which represented 80.5% of the total contracts awarded in the country during the year.


The total value of oil sector projects awarded jumped from no contracts awarded in Q1-2023 to $4.9 billion during Q1-2024 reflecting the $6 billion EPC contract to increase oil production from Al Shaheen offshore oil field by about 100 tb/d. The project is the third capacity expansion of the Al Shaheen oil field.


In terms of sectors, the first quarter witnessed a jump in the value of projects awarded in the Gas and Oil sectors. Total GCC gas sector contracts awarded during the quarter jumped more than 19 times to reach $7.4 billion as compared to $382 million during Q1-2023.


On the other hand, the total value of contracts awarded in the GCC oil sector increased nearly seven times to reach $9 billion during the similar period, making the sector the biggest contributor in terms of absolute growth in value of contracts awarded in the GCC region during the quarter.


Contract awards in Kuwait have been underwhelming during the first quarter of this year. According to MEED Projects, total projects awarded reached $327 million during Q1 as compared to $1.8 billion in Q1-2023.


Despite the lacklustre performance during the first three months of the year, contractors are currently preparing to bid for big-ticket projects, especially in the oil sector. According to MEED, seven companies have bought tender documents for the planned fuel depot project in Al Mutlaa region of Kuwat.


The project which is being awarded by the state-owned downstream operator Kuwait National Petroleum Company (KNPC) is valued at $850 million.


One of the notable contracts that were awarded during Q1 is the $100 million design contract to upgrade the Mina Al Ahmadi Refinery. The contract entails a project to overhaul an acid gas removal plant in the Mina Al Ahmadi Refinery and its scope includes consultancy work.


Currently, MEED Projects estimates the value of upcoming projects for Kuwait to be around $105.5 billion of which 58.1% are in the study stage while 11.2% are in the design stage.


In terms of sector proportion of upcoming projects, the power sector is expected to receive 27.2% or $28.7 billion topping the list as the largest sector in terms of upcoming contracts in the country followed by the transport sector with $27.6 billion worth of upcoming contracts in the pipeline.


According to MEED Projects, the GCC project market index for upcoming contracts as of April-2024 reached $1.4 trillion.


Saudi Arabia comprised the lion’s share of upcoming GCC projects (50.2% or $709 billion) followed by the UAE which has $316.1 billion and Oman with estimated upcoming projects at $172.1 billon.


In terms of sector representation, the construction sector comprised the largest sector, 33.5% or $462.4 billion, of upcoming projects in the GCC followed by the transport sector which comprised 20.5% or $283 billion of upcoming projects in the region.


Comparatively, the total value of GCC project market index for ongoing projects as of April-2024 stood at $1.3 trillion of which Saudi Arabia comprised 54.4% ($683.3 billion) followed by the UAE and Kuwait each representing 30.9% and 5.9% respectively.


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