The combined value of the 361 active oil and gas projects in the GCC has crossed $331.4 billion in November 2017, according to a leading project research and intelligence provider in the Middle East and North Africa (Mena) region.
The hydrocarbon sector represents 30 per cent of the GCC economy and 60 per cent of the total exports value, the company said in its latest Oil and Gas Construction Analytics report.
Construction projects of the GCC's oil and gas sector constitute two per cent of all active projects in the region and in dollar terms, while these account for 14 per cent of the total estimated value, that reflects the relatively high value of average energy projects, compared to other civil engineering and construction projects.
Although average oil price has recovered to $51.82 per barrel year-to-date in 2017, from the 13-year lowest average price per barrel of $42.55 in 2016, this is less than half of the $111.63 per barrel recorded in 2012 – the highest crude price ever, according to the Statistics Portal.
“World oil demand growth in 2017 is now expected to increase by 1.5 million barrels per day (bpd), representing an upward revision of around 30 tb/d from last previous report, mainly reflecting recent data showing an improvement in economic activities, according to the latest Monthly Oil Market Report (MOMR), issued in October by the Organisation of Petroleum Exporting Countries (Opec).
“Positive revisions were primarily a result of higher-than-expected oil demand from the OECD region and China. In 2018, world oil demand is anticipated to grow by 1.4 million bpd following an upward adjustment of 30 tb/d over the previous report, due to the improving economic outlook in the world economy, particularly China and Russia,” stated the report.
Based on the current global oil supply/demand balance, Opec said, its crude output in 2017 is estimated at 32.8 million bpd, around 0.6 million bpd higher than in 2016.
Similarly, the crude in 2018 is projected at 33.1 million bpd, about 0.3 million bpd higher than in 2017.
According to the BNC report, during the third quarter, a total of 17 projects with a combined estimated value of $22.05 billion were announced in the GCC's oil and gas sector, despite a low-oil price environment where oil price has been hovering around the psychological mark of $50 per barrel.
During that period, the number of oil and gas projects in the GCC increased by 6 per cent as compared to the second quarter of 2017 and the total estimated value of these projects increased by 5 per cent, it stated.
Oil futures surged further in September, with ICE Brent gaining more than 7 per cent and averaging above the $55/b level, supported greatly by increasing evidence that the oil market is heading toward rebalancing, geopolitical tensions in Iraq’s Kurdistan region and lower distillate stocks ahead of the winter season, the latest Opec report said, as all major industry stakeholders gather in the UAE capital for the Abu Dhabi International Petroleum Exhibition and Conference (Adipec).
Avin Gidwani, the chief executive of BNC Network, said: "The renewed optimism in the global economy and a slight increase in demand is reflected in the latest Oil and Gas Construction Analytics issued by BNC Network – with the announcement of 17 new oil and gas projects, worth $22.05 billion in the third quarter of 2017 – that pushed up the number of energy projects to 361 with a combined value of a whopping US$331.4 billion."
"This also reflects that the governments of the Gulf countries are determined to invest more in hydrocarbon projects to increase output and exports of oil and gas products to fuel the global economic growth that is set to accelerate further in the next few years," observed Gidwani.
“Despite economic diversification, the hydrocarbon sector still represents 30 per cent of the gross domestic product (GDP) and 60 per cent of the export value of the GCC countries,” he stated.
A total of 10 oil and gas projects with a combined estimated value of $5.6 billion moved to construction from other stages during the third quarter.
The largest oil and gas project to be awarded in the third quarter was Phase 1 of Duqm Refinery and Petrochemical Complex located in Oman worth $2.75 billion.
A total of 15 oil and gas projects with a combined estimated value of $9.9 billion were completed during the third quarter of 2017.
Notable projects completed in the third quarter of 2017 in the GCC's oil and gas sector include Block 61 which is part of Phase 1 of Khazzan Gas Field Development located in Qarn Alam, Oman worth $5 billion; Awali Oil Field Redevelopment located in Manama worth $1.5 billion and KOC Gas Booster Station located to the West of Kuwait City worth $939.4 million.
The major ones announced in the third quarter include Oman to India Multi-Purpose Pipeline located in Muscat worth $5.6 billion; New Duqm Refinery located in Oman worth $3 billion and Amiral Mixed Feed Cracker also worth $3 billion which is part of Jubail Refinery Complex located in Saudi Arabia.