(MENAFN- The Peninsula) By Satish Kanady I The Peninsula
DOHA: With the Mena governments going aggressive to develop infrastructure to meet the needs of rapidly expanding populations and to meet their economic diversification commitments, an estimated $3.5trillion of projects have been planned across the region, with the GCC accounting for almost two third of this.
Construction, which covers private real estate and public buildings, represents the biggest segment of the Mena projects market. About $662bn worth of oil and gas projects are planned or underway in the Mena region. With $154.5bn of projects, Iran is the biggest oil and gas projects market, MEED's ‘Middle East and North Africa Projects Market Outlook 2019' revealed yesterday.
According to MEED, $405bn of oil, gas and petrochemicals projects are planned or under way in the GCC, representing nearly half of the value of the Mena market. An estimated $330bn of oil, gas and petrochemicals projects are planned or underway in the non-GCC Gulf states, with nearly 64 per cent in Iran. $124bn of oil, gas and petrochemicals projects are planned or underway in North Africa and the Levant with $79bn in Egypt.
Of all the projects planned in the Mena, about 68 per cent are in the GCC. An estimated $2.4tn of projects are planned but not yet awarded in the GCC. About $546bn of projects are planned but unawarded in North Africa. Iran, Iraq and Yemen together have about $515bn of projects planned. About $69bn of projects are planned across Jordan, Lebanon and Syria.
About $418bn of power and water project contracts have been awarded in the Mena region since the start of 2008. The average annual value of power and water project contract awards in the Mena region since 2008 is about $39bn a year. Award levels peaked in 2015 at $53.1bn before fiscal adjustments introduced after the 2014 fall in oil prices saw awards levels drop to $30.1bn in 2016, before rebounding to $37.8bn in 2017.
The Middle East and North Africa (Mena) region is home to some of the most exciting projects markets in the world. Since 2008, some $2.3tn of contracts have been awarded across the region, an average of about $216bn of awards a year, with the GCC accounting for almost two thirds of this, said Richard Thompson, Editorial Director, MEED.
The crash in oil prices from 2014 to 2016 has seen major changes to the market. The introduction in 2016 of fiscal adjustment policies led to a sharp slowdown in project spending, with the value of contract awards falling to about $180bn a year in 2016 and 2017, compared to $226bn a year from2008 to 2015.
Despite this, the region still offers some of the best project opportunities in the world. The need for infrastructure and economic diversification is greater than ever.
And, as home to some of the world's wealthiest countries, the financial muscle is available to meet these needs and the recovery in oil prices and economic growth in 2018 has seen the conditions for projects improving.
'But anyone seeking to do business in the region must be both flexible and patient. The biggest projects will take time to come to the market, and contract awards may never recover to pre-2016 levels. A new approach to project delivery is required, Richard said.
Governments want greater economic sustainability and are seeking innovation improve efficiency and reduce the need for capacity expansions.
Private developers are expected to take a larger share of the capital burden through public private partnerships (PPP), as well as through the privatisation of state utilities.
And future projects are expected to deliver more ‘in-country' value in terms of job and supply chain opportunities for local companies, he added.
MENAFN1809201800630000ID1097449072
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.