Leaders Oman: Summit review
Despite more than a year of lacklustre oil prices, the Sultanate’s construction sector appears buoyed by ongoing investment in infrastructure and the prospect of alternative funding channels
Low oil prices have been a thorn in the side of the Middle East construction sector for some time. Midway through 2014, the price of Brent Crude stood at more than $100 per barrel. Less than a year-and-a-half later, this figure has more than halved.
Whilst all GCC countries are feeling the pinch, some appear to be more exposed than others. The oil-dependent nature of Oman’s economy, coupled with high extraction costs, represents a concern for many in the Sultanate’s construction sector.
It was against this backdrop that Construction Week: Leaders in Construction Summit Oman 2015 took place in October. The annual event, now in its third year, saw more than a hundred high-profile members of the country’s construction sector gather in Muscat.
At last year’s conference, delegates were keen to discuss infrastructure-related opportunities. Other topics of debate included the fight to curb corruption, maintaining the country’s distinctive architectural style, and the bidding strategies that prove most effective in the Omani construction market.
Though the 2014 discussion points remain pertinent within the Sultanate’s construction sector, many of this year’s conversations were framed within the context of ongoing oil-price stagnation. A recent study from Alpen Capital warned that Oman could face a temporary slowdown in construction from 2017 if oil-price volatility continues. British construction firm Carillion has also voiced concerns over pursuing expansion in the Sultanate, CEO Richard Howson suggesting that “[Oman] has more exposure to the oil price” than other countries in the Middle East.
Challenging though this situation may seem, there are plenty of causes for optimism. The Sultanate’s construction sector looks set to benefit from the expansionary investment programme outlined in the 2015/16 budget, which at just over $36bn (OMR14bn), is nearly 5% higher than that of last year.
In October, Cluttons’ head of research, Faisal Durrani, told Construction Week that plans for economic diversification are benefitting the country’s construction industry, remarking that the government’s infrastructure investment programme is driving road and highway construction, oil infrastructure improvement, airport upgradation, and the establishment of new power plants.
Following its 15th meeting of the year, which took place in September, the Sultanate’s Tender Board awarded contracts worth $65.8m (OMR25.33m). Contracts awarded include a $14.1m (OMR5.43m) deal for the construction of the administration building for Sultan Qaboos University Hospital, and a $19.4m (OMR7.47m) contract to upgrade the efficiency of Sinaw-Mahout-A’Duqm Road. Moreover, Oman’s projected expenditure for the expansion of water infrastructure networks until the year 2040 is estimated at $6.5bn (OMR2.5bn).
Low oil prices may represent a concern within the construction industry, but Oman appears to have the right fundamentals in place to weather a potential storm.
The following articles detail how the Sultanate’s leading construction professionals are faring in the face of oil-related challenges, and the direction in which they expect the market to develop over the coming years: