Middle East’s Growing Projects Market
The Middle East economy is expected to grow in 2024 and maintain its growth levels between 2025 and 2028, according to the International Monetary Fund (IMF).
The economic recovery in the region was subdued throughout 2023, with slowing global economies, increased commodity prices and the tightening of global financial conditions.
The economic growth in the Gulf Cooperation Council (GCC) region is expected to rebound to 2.8% and 4.7% in 2024 and 2025, respectively, according to the World Bank’s?Gulf Economic Update (GEU).
The commitment of the GCC to diversifying their economies highlights their strategic approach to fostering resilience and sustainable development during a volatile global economic period.
The GCC market outlook is expected to remain strong with staggering $2.9 trillion worth of hydrocarbon and power projects underway, of which Saudi Arabia accounts for more than $1.5 trillion.
Top scheme to watch in Saudi Arabia includes $1.25 trillion gigaprojects. Other big projects include the development of the Jafurah onshore unconventional gas field and Aramco’s expanding Aramco’s $25bn third phase Master Gas System. Aramco has a significant pipeline of planned projects, including petrochemicals projects estimated to be worth up to $200bn.
Megaprojects underway in the UAE include Abu Dhabi’s $16bn Hail and Ghasha gas development, $7bn expansion project at Abu Dhabi’s Upper Zakum offshore oil field and the $4.5bn Ruwais LNG Terminal project. With more than $545bn worth of projects planned or underway, the UAE is the second largest projects market in the region after Saudi Arabia.
Qatar’s spending is focussed on oil, gas and utilities schemes. Key projects include QatarEnergy’s LNG capacity expansion to 127 million tons per year, $6bn Ras Laffan Petrochemicals Project and Kahramaa's $3bn Facility E IWPP.
The oil and gas producers in the region are investing heavily in blue hydrogen with global pipeline capacity set to reach 15.8 million tons per year. By diversifying into products such as blue hydrogen production, oil and gas companies can build low-carbon value chains at a time when demand for fossil fuels is expected to decline by the end of the decade.
The strong growth in electricity demand in the region and the rise in renewable energy combined with trends for new waste to energy and nuclear capacity are driving rapid power projects expansion.
The Middle East and North Africa (MENA) region projected to add 62 GW of renewable energy capacity over the next five years, according to the International Energy Agency. Saudi Arabia is expected to play a significant role in the region’s renewable energy expansion, alongside the UAE and Oman.
Saudi Arabia has $45bn worth of power generation projects in the pre-execution phase, in addition to the 17.6 GW of nuclear capacity with a total value of $40bn, requiring about 16 reactors. The kingdom is making progress on its green energy ambitions with the development of NEOM, a massive new urban area at the north of the Red Sea. Supported by $500bn from Saudi Arabia’s Public Investment Fund, Neom aims to be powered entirely by renewable energy. The project includes plans for a clean industrial hub called Oxagon, featuring the “world’s largest green hydrogen facility” at a cost of $8.4bn. Saudi Arabia aims to achieve a power mix of 50% renewable energy by 2030.
Oman, leveraging its expertise in oil and gas, aims to become a major green hydrogen producer by harnessing its ample solar and wind resources. Oman OQ’s strategic investments in green hydrogen projects – valued at around $40bn – powered by around 30 GW of renewable capacity will account for a sizable proportion of Oman’s targeted annual production of 1mn-1.25mn tonnes of green hydrogen by 2030. The country is targeting to produce 8mn tonnes per year of green hydrogen by 2050 with an estimated investment of $140bn.
Moving ahead, strong momentum will be seen in the region’s projects market with abundant new opportunities being offered in the energy sectors.
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