Middle East’s Projects Market

The Middle East’s projects market is expected to accelerate in the year ahead after facing a significant fall in overall expenditure in the first half of 2025.

The market slump was attributed to a slowdown in $1 trillion-plus Saudi gigaprojects spending and in large-scale oil and gas projects. After growing exponentially each year up to 2023 to almost $33bn, awards on the gigaprojects programme declined significantly in 2024-25.

H1 2025 saw a 38.9% decrease in project awards compared to the same period in 2024, reaching $86bn. Despite the decline, a new market report projects a bullish outlook for H2, with a significant number of contracts expected to be awarded in the coming months.

The Middle East's oil and gas sector is poised for significant growth in the second half of 2025, with a focus on expansion of both upstream and midstream infrastructure, particularly in natural gas production and exports. The region currently produces about 70 billion cubic feet per day (Bcfd) of gas and is expected to increase it by 30% by 2030.

A significant portion of this expansion will come from new projects that can produce gas at a cost-effective level of less than $5 per thousand cubic feet. Qatar is leading this expansion, adding 48 million tonnes per annum (Mtpa) through its North Field East and North Field South projects. The UAE will contribute an additional 10 Mtpa from the Ruwais LNG project.

Saudi Arabia is the region's largest upstream investor, with significant investments in oil and gas production. BP has planned massive $25bn investment in Iraqi oil fields.

The regional oil companies have set out plans for aggressive expansion, driven partly by strategies focused on diversifying their energy sectors. Saudi Aramco is planning sustained capital expenditure and remains intent on projects to expand the production of high-value petrochemicals.

The Middle East continues its growth journey from being global oil and gas suppliers to energy transition leaders by diversifying into other forms of energy. Decarbonization, renewables and clean energy are part of its long-term strategic vision now.

Nearly all countries in the region have strong renewable power potential and they are increasingly investing in these resources to ensure a stable, long-term power supply.

The share of renewables and nuclear in the Middle East’s power mix has doubled since 2015 to nearly 15%, with natural gas still providing two-thirds of total electricity. The region is expected to invest around $9bn in clean electricity generation this year. Several large-scale renewable energy projects are expected to move from planning to execution in the second half of 2025, including solar, wind, and battery storage facilities.

The Middle East is primed to lead the global green hydrogen market and possess the potential for its worldwide exportation to satisfy burgeoning global demand. Green hydrogen capacity is expected to grow rapidly at nearly 150% CAGR between 2025 and 2030 and by 2028, it is expected to overtake its blue counterpart.

In last two years in wider MENA region, more than 50 new hydrogen projects were announced with a total value of more than $150bn and a total hydrogen production capacity of more than 10 million tonnes a year. Saudi Arabia and the UAE have projects worth $10.5bn and $10.28bn respectively, Egypt has staked more than six times either of these efforts, currently investing $63.8bn. Oman is not far behind with projects worth $48.9bn.

Prospects remain bright in the region with a robust pipeline of projects presenting significant opportunities across the energy sector.

Editor