GCC contract awards jump 12% to $22.8bln

Bahrain - GCC project awards improved during the second quarter of the year despite global economic challenges caused by supply chain problems and higher oil prices primarily driven by the Russia-Ukraine conflict.

According to a report by Kuwait-based Kamco, total value of contracts awarded in the GCC increased by 11.7pc year-on-year (y-o-y) during Q2-2022 to $22.8 billion from $20.4bn in Q2-2021.

Saudi Arabia and Oman reported higher contract awards during the quarter that more than offset a dip in awards in Kuwait, Bahrain, Qatar, and the UAE.

The GCC’s largest economy recorded the biggest y-o-y increase in value of contracts awarded during Q2-2022 to $16.5bn in 2022 as compared to $9.3bn in Q2-2021.

Saudi Arabia represented 77.2pc of GCC contract awards in Q2-2022.

On the other hand, the value of contracts awarded in Bahrain during Q2-2022 witnessed a steep decline of 83.9pc to $228m as compared with $1.4bn during Q2-2021.

In terms of sector classification, the transportation sector witnessed the biggest increase in terms of absolute value during the quarter with an increase of $4.8bn in new contracts to a total of $7.7bn during Q2-2022.

Similarly, value of new contracts in the GCC Oil Sector increased almost three-fold to $4.5bn during Q2-2022 rising from $1.6bn during Q2-2021.

On the other hand, the gas, construction and power sectors witnessed y-o-y decline in awards.

Project awards in the construction sector contracted 36pc y-o-y to $4.3bn during the quarter.

Despite varying trends during Q2-2022, the projects pipeline in the GCC region continues to remain strong.

Data from MEED Project showed around $2.65 trillion worth of projects planned or underway in the GCC as of the end of June-2022 as compared to $2.59trn at the end of March 2022.

Data showed that around $77bn worth of construction and transport projects are at the tender stage and an additional $352bn at the design and study stage and these are mainly in the infrastructure schemes funded/initiated by the government including railways, highways, bridges, airports and sewerage systems.

Along with existing projects in the oil and gas sector, the pipeline also reflects new emerging trends in the project market.

This includes a number of real estate projects, especially in the UAE, as supply remained constrained, projects that are aimed at energy transition, rail projects that back in the headlines in the GCC and projects in the metals and mining industry as the global hunt for new deposits picks up pace.

Data showed that around 12pc of projects underway in the transportation sector are related to railways in the GCC and the share increases to 32pc of the sector in terms of future pipeline.