SR600bn Worth of Projects Planned in the Kingdom
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Author: Arab News
Released 7 February 2006
JEDDAH, 25 January 2006 — The oil and gas sector in Saudi Arabia faces unprecedented growth in 2006. High energy prices and strong global oil demand are fuelling a significant upturn in construction activity, with almost SR600 billion ($160 billion) worth of large-scale projects planned in the Kingdom, according to MEED (Middle East Economic Digest) projects, the online business tracker.
According to market estimates more than 25 percent of the total, estimated at SR154.87 ($41.3 billion), will come from the oil and gas sector.
The Saudi Arabian Investment Authority (SAGIA) and Swicorp, a premier Swiss-based private equity and investment banking firm in the Middle East and North Africa (MENA), formed a consortium recently to invest in energy-related projects worth $5 billion.
Apart from oil and gas sector, Custodian of the Two Holy Mosques King Abdullah recently launched an SR100 billion ($26.6 billion) King Abdullah Economic City that will come up in Rabigh, north of Jeddah, in what has been described as the biggest project of its kind in the Gulf region.
Salim S. Al-Aydh, senior vice president, engineering and operations services at Saudi Aramco, commented: "The global petroleum industry is facing unprecedented challenges given its responsibility to supply a worldwide market. But with those challenges come opportunities of an equal magnitude."
According to Al-Aydh, demand for oil will expand in the next 25 years from roughly 85 million barrels a day to 120 million barrels a day, fueled by population growth in developing nations, increased prosperity in major economies and the greater affordability of energy. He added: "In particular, China’s crude oil imports increased by 35 percent in 2004, and are expected to increase by another 12 percent." This boom will not be sustainable unless Saudi Arabia keeps on implementing new technologies, both at the operational and logistical level, according to Ayman Razek, general manager of MEED projects.
He said: "The project sector is supported by companies like Saudi Aramco, who will be the engine behind Saudi’s economic growth in the years to come."
Razek added: "Major challenges for this market will be the rising operational costs that will need to be tackled with longer-term contracts and new bidding strategies that will safeguard both the contractor and the client."
Razek, said: "The pace of oil and gas activity in Saudi Arabia is increasing so rapidly that it is becoming difficult to keep track of the market developments — which is where MEED projects comes into play. Saudi Aramco has been a long standing customer of MEED and we are pleased that by subscribing to MEED projects we are able to help them in these challenging and exciting times."