GCC oil and gas project value crosses AED 1.21 trillion
Gulf countries continue to invest in energy projects, as global demand for crude oil grows by 1.5 million barrels per day in 2017, according to OPEC.
The combined value of the 361 active oil and gas projects in the GCC has crossed AED 1.21 trillion in November 2017, according to latest Oil and Gas Construction Analytics report issued by BNC Network, one of the largest and most comprehensive project research and intelligence providers in the Middle East and North Africa (MENA) region.
Hydrocarbon sector represents 30 per cent of the GCC economy and 60 per cent of the total exports value.
The construction projects of the GCC's oil and gas sector constitutes 2 per cent of all active projects in the region and in dollar terms, while these projects account for 14 per cent of the total estimated value, that reflects 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.
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, OPEC crude in 2018 is projected at 33.1 million bpd, about 0.3 million bpd higher than in 2017.
In the third quarter of 2017, 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, the latest Oil and Gas Construction Analytics issued by BNC Network, shows.
In the third quarter of 2017, the number of oil and gas projects in the GCC increased by six per cent as compared to the second quarter of 2017 and the total estimated value of these projects increased by five per cent.
Oil futures surged further in September, with ICE Brent gaining more than seven 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 at the Abu AEDabi International Petroleum Exhibition and Conference (ADIPEC) that takes place at the Abu AEDabi National Exhibition Centre (ADNEC) from 13 to 16 November 2017.
“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 (AED80.92 billion) in the third quarter of 2017–that pushed up the number of energy projects to 361 with a combined value of a whopping $331.4 billion (AED1.21 trillion). 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. 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,” said Avin Gidwani, Chief Executive Officer of BNC Network.
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 of 2017. 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.
Major projects announced in the third quarter 2017 in the GCC's oil and gas sector 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.
“The latest BNC Network Oil and Gas Construction Analytics provide perhaps the best industry snapshot of how the overall energy industry is growing in the region. Although the UAE and other Gulf countries are investing in non-oil energy projects – such as renewable and nuclear power projects – the oil and gas industry is here to stay for a long haul till the alternative fuel consumption, such as battery and solar-powered vehicles, grows worldwide,” said Gidwani, adding that the growth in oil and gas construction projects will also create new jobs and support the region’s economic growth in the next few years.
BNC, the largest project intelligence provider in the MENA region, tracks 25,324 live construction projects with a value exceeding $7.7 trillion (AED28.3 trillion). It publishes more than 250 project updates that are distributed amongst 73,000 executives and professionals every day.