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The GCC projects market recovered from several quarters of declines during the first quarter of 2021, with the value of projects awarded more than doubling to $26.3 billion on the sequential quarter, Kamco Invest said in a report.
However, this is a shade lower than the $27.2 billion worth of projects awarded in Q1 2020.
The growth came mainly on the back of a quarter-on-quarter (q-o-q) increase in project awards in Qatar and Kuwait while the rest of the GCC countries reported declines.
Qatar awarded projects worth a total of $18 billion during the quarter- the biggest was the $13 billion award for the Qatargas - LNG processing trains project. Kuwait chipped in with $900 million awards.
This compares with $3.5 billion awards in Q1-2020 for Qatar and $2.2 billion for Kuwait.
On the other hand, Saudi Arabia and the UAE have seen the biggest absolute fall in project awards during Q1 2021 compared with year-ago period with declines at 6.5 billion and 6.1 billion, respectively.
Market still under pressure
The GCC project market has remained under severe pressure ever since crude oil prices started declining and the onset of COVID-19 was essentially only partly responsible for the slowdown that the sector is witnessing recently, Kamco said.
The region has seen a decline in new project awards over the years as even the existing and ongoing projects were thoroughly scrutinized for their viability in a low spending environment.
With rising debt levels and record high fiscal deficits as revenues declined, governments in the GCC cancelled numerous projects after the fall in oil prices.
This affected the aggregate project market in the region even before the pandemic started and as projects got completed contractors in the region were seeing declining workloads.
The value of projects planned and under execution in the GCC has remained around the $1.7 trillion mark since 2017. The UAE and Saudi Arabia markets have between them accounted for more than 84 percent of the total market over the last two years.
However, UAE has seen its share decline consistently over the years while Saudi Arabia has seen an increasing share especially post the announcement of the big-ticket projects.
The project market in Kuwait saw very gradual growth over the last several years. Total value of project planned and under execution stood at $86.1 billion at the end of 2015 that increased to $91.6 billion at the start of May-2021.
(Writing by Brinda Darasha; editing by Seban Scaria)
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© ZAWYA 2021
