Business Sector

Saudi Contracting

Marmore Team

24 February 2016

The oil and gas sector accounted for USD 12.8 billion worth of projects as the facilities are being ramped up and modernized. The oil and gas sector accounted for a majority share of 21.7% out of the total value of projects awarded in 2014. Saudi Aramco accounted for all of the contracts in the oil and gas sector during 2014. Considering the size of the projects, Saudi Aramco elected to award contracts in phases without focusing on a single contractor to complete a project. Foreign contactors mainly European and Asian companies accounted for the majority of the awarded contracts in 2014. Eni Saipem, an Italian oil and gas industry contractor secured 4 contracts from Saudi Aramco worth USD 4bn during 2014. SEPCO (USD 3.3bn), Abdulrahman Al Shalwi (USD 0.6bn) and CAT group (USD 0.4bn) each secured 2 contracts from Saudi Aramco during 2014.

Jizan region accounted for 53% of the total value of project awarded in 2014 followed by Eastern Province (32%) and Madinah (15%). The majority of the contracts were awarded in Jizan as part of the Jizan Refinery and terminal project.

Saudi-Contracting_fig1.jpg

In 2014, power sector related contracts worth USD 8.9bn were awarded. Saudi Electricity Company (SEC) awarded the majority of the contracts as it focused on expanding the electricity grid to new areas as well as enhancing current electricity transmission operations for residential use.

According to Marmore’s KSA Contracting report, the Saudi real estate sector has ongoing projects worth USD 75.1billion. The Saudi government is focussing on developing the education infrastructure in the country. Moreover, the level of expenditure on the construction of healthcare facilities is likely to increase in 2015, as government has allocated budget of approximately USD 44 billion for the healthcare sector. The Saudi government’s focus on diversifying the economy will drive industrial construction.

Saudi-Contracting_fig2.jpg

Growth in the tourism sector and investments in the infrastructure will support the industry's expansion. The increase in the inflow of tourists and business travellers will lead to construction of hotel properties and retail centres.

The main challenges for the contracting industry include increasing competition, soaring costs, and limited availability of skilled and unskilled labour and constrains on working capital management. Despite these challenges, the contracting industry is projected to post a strong double digit growth and has enormous potential for further growth in the coming years due to the vast number of projects being planned and executed across various industry verticals. The near and long-term prospects for the industry are positive.

Stay Tuned To Marmore MENA Insights!

Never miss a patch or an update with Marmore's Newsletter. Subscribe now!

Related Article

2024 Kuwait Banking: Interest Rates and NIM Trend Analysis

The blog discusses how net interest margin of Kuwaits banks has moved across interest rate cycles, in light of awaited policy rate cuts.

Read More

Are ESG and Sustainable investing the same?

ESG and Sustainable Investing might seem to be related but both are distinct concepts. The GCC nations transition towards cleaner energy portrays a buoyant outlook for ESG and sustainable investing.

Read More

Business Impact of IFRS Sustainability Standards for GCC

The impact of the recently issued IFRS sustainability standards, once adopted, is likely to be high, as GCC companies scramble to allocate adequate resources for the adoption.

Read More

Tags

No Tags!

Share via

Downloads

Recent Insights

Card image

2024 Kuwait Banking: Interest Rates and NIM Trend Analysis

Read More
Card image

Are ESG and Sustainable investing the same?

Read More
Card image

Business Impact of IFRS Sustainability Standards for GCC

Read More