GCC sees 30 % of hydrocarbon projects on hold

Oct 18, 2009 02:00 AM

Nearly a third of all hydrocarbon projects in the Gulf region have been put on hold or cancelled, according to a new report. Despite this, the report by research house Proleads Global showed that the GCC countries remained the most active construction markets in the world for the oil, gas and petrochemical industries with projects budgeted at more than $ 690 bn.
Proleads investigated a total of 578 energy projects across the six GCC countries, and found that 30 % by value have been placed on hold or cancelled with a further 30 % currently in construction and 40 % in the pre-construction phase.

Emil Rademeyer, director of Proleads, said: "GCC countries have been taking a long, hard look at spending in the wake of the global recession, falling demand and the volatility of oil markets with projects rescheduled to take advantage of lower costs or cancelled."
"Overall, however, there remains a huge amount of activity in the GCC oil, gas and petrochemical sectors, earnings from which constitute about 85 % of the region's export revenues. Demand for hydrocarbons and refined product can also be expected to pick up as the global economy gradually pulls out of recession."

The Proleads Insight report covers projects in the oil and gas production and refining sectors with values greater than $ 10 mm each in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. The report predicted cash flow in the GCC hydrocarbon market to stabilise in 2010 at levels similar those found in late 2007.
"However, the cash flow picture could rapidly deteriorate if projects in the pipeline scheduled to begin construction do not start as planned," said Rademeyer.

The report finds, for example, that almost one third of petrochemical projects in Saudi Arabia are currently on hold. Overall, the GCC oil sector -- of which Saudi Arabia contributes most -- currently has 281 projects worth $ 304 bn, 89 % of which are in the construction or pre-construction phases.
The gas sector -- with Qatar leading the way-- has 155 projects worth $ 178 bn with 85 % in construction or pre-construction. Saudi Arabia is the largest contributor in the petrochemical sector with 142 projects worth $ 207 bn -- 72 % of which are in construction or pre-construction.

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