Middle East’s Projects Outlook
Prospects for the Middle East and North Africa for 2023 has improved despite the slow pace of growth globally, amid the extraordinary economic uncertainties in 2022 with the ongoing Ukraine war, higher and more volatile commodity prices, rising inflationary pressures and a lingering pandemic.
Global growth is forecast to slow from 6 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023, according to the IMF's World Economic Outlook report.
However, the gulf region particularly the GCC, Iraq and Algeria, will continue to benefit from the international energy market developments and are being buffered by elevated energy prices. Also due to the ongoing war, the European countries now look at the region as a source of hydrocarbons to replace Russian energy imports. The Saudi projects market grew by 3.3 percent during the year, adding $43.1 billion to the GCC projects market.
The total planned and committed energy investments in oil and gas, petrochemicals and power sectors in Mena is expected to increase by 9 percent to exceed $875 billion over the next five years, says a report by the Arab Petroleum Investments Corporation (Apicorp). Saudi Arabia leads the region in energy investments with planned spending of $296 billion for the 2023 financial year.
The GCC nations aims to invest heavily to over $350 billion-plus in upstream and downstream schemes to increase production capacity and diversify into new generation of petrochemical projects to maximize value of the hydrocarbons chain. New policy focus is on conserving hydrocarbons reserves and on reducing greenhouse gas (GHG) emissions. Adoption of digital technologies and In-Country Value requirements are gaining prominence in oil and gas projects.
The region sees growing trends in the power and water sector too as it shifts towards clean energy projects. Alongwith $30 billion per year of capital spending on major power projects, about 98 GW of new renewables capacity is planned across the Middle East with 39 GW due to come on stream by 2025. A number of projects have been proposed for the development of hydrogen production and export.
In the last two years, more than 45 new hydrogen projects worth $100 billion-plus have been announced with a total hydrogen production capacity of more than 10 million tonnes a year. The NEOM Helios and the Egyptian Ain Sokhna complex are the two hydrogen projects that are under construction, while remaining are at early stages.
NEOM is the $500 billion megaproject owned by Saudi Arabia’s PIF. It is the flagship project of the Saudi Arabia 2030 Vision aimed at transforming the Kingdom into a tourism and entertainment hub.
All in all, the outlook for the projects market in the region is incredibly strong with abundant new opportunities in the energy industry.