The Kingdom of Saudi Arabia (KSA) continues to dominate the Middle East projects market with MEED Projects (MEED) identifying it as accounting for US$1.2 trillion of the US$3.3 trillion projects underway or planned in the six Gulf Cooperation Council countries plus Iraq and Iran. This leaves the UAE, dominated by Abu Dhabi’s energy market, in second place at US$800 billion and Iraq a distant third at US$400 billion. MEED’s previous expectation that Iraq would overtake KSA by 2020 is now in question due to the oil price turbulence in the last nine months and the ISIS security challenges in Iraq.

The scale of the KSA projects market translates across to the size of the opportunities for business focussed on supporting the massive EPC supply chain on greenfield projects and operations and management support in brownfield operations across upstream, midstream and downstream oil and gas facilities, petrochemicals plants and massive ports infrastructure on both the east and west coasts. KSA is also anticipated to become a major player in nuclear-powered electricity and ultimately in solar projects.

KSA continues to struggle with matching its gas supplies to sharply increasing industrial and domestic demand and this is driving the Saudi Government to look to exploit its sour gas resources through the Al Fadhili Project, like Abu Dhabi, and its unconventional resources especially in the north of the country. This is expected to be a key priority alongside the objectives of switching the country away from oil-fired electricity and replacing declining oil production with new and enhanced production from Khurais, Manifa and Safaniyah fields.

The rapidly growing and young population in KSA ensures that political stability is a primary consideration and this is reflected in one of the toughest in-country value frameworks in the region. Local investment, technology transfer and indigenous employment are all highly scrutinised in licensing applications via the Saudi Arabian General Investment Authority (SAGIA). However, the timescales needed to obtain SAGIA approvals have been subject to a positive sea change of late with fast-tracked decisions coming through in less than one week for relevant applications.

In August 2014, Saudi Aramco announced ambitious plans to spend US$40 billion a year over the next 10 years, and it remains to be seen the full extent to which this may be delayed or curtailed given the collapse of the oil price. However, even a reduced budget in the short term will offer significant opportunities as will the investment programmes of Saudi Basic Industries Corporation and the Saudi Electricity Company.

Looking west, the Red Sea remains a major future prospect for deepwater expertise and technology even if the short prospect has been curtailed by the sagging oil price. Jeddah may yet emerge as the new Aberdeen.