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Are the Middle East’s contractors equipped to construct new energy projects?

The increasing demand for green energy projects in the Middle East means regional contractors must be attuned to the delivery requirements of these schemes

COMMENT, Projects, Contractor, Energy projects, Middle east

March has been an interesting month for the Middle East’s energy sector, and particularly the renewables segment – and these developments point to increased activity for the region’s contractors.

Take as an example Albanna Engineering, which was awarded an engineering, procurement, and construction (EPC) contract by a subsidiary of ENOC Group early in the month. Horizon Terminals awarded Albanna the EPC contract to develop a 16.2km jet fuel pipeline in Dubai, linking the group’s storage terminals in Jebel Ali to Al Maktoum International Airport in Dubai South.

UAE state news agency, WAM, reported on 5 March that construction for the pipeline was due to be completed in 24 months, with operational commencement scheduled for Q1 2020, in time for Expo 2020 Dubai.

More recently, London-headquartered oil and gas giant, Petrofac, announced the receipt of a $580m EPC contract in the Gulf. In a statement on 20 March, Petrofac revealed that the contract pertains to a “major project” with a GCC national oil company, but did not disclose any further information about the development or the client.

However, as the past week has shown, traditional energy schemes are not the region’s only avenue for growth. As the Middle East actively pursues long-term environmental and economic sustainability, new energy sources promise to bolster the prospects of local contractors.

Perhaps the greatest evidence of this is the UAE’s Barakah Nuclear Energy Plant (NEP), which reported progress last week. Construction on Unit 1 of the megaproject has been completed, with overall development progress recorded at 86%.

Barakah NEP’s latest milestone highlights the change in mindset that is occurring in the Middle East’s business community. As regional economies look to diversify away from traditional oil and gas power models, new energy sources are proving to be cost- and time-effective ways of ensuring local energy requirements are met with minimal impact on the environment. Be it solar, nuclear, or wind energy, regional contractors that exhibit excellence in these new sectors will grow steadily in the coming years.

After all, with $72bn (AED264bn) of planned investments, the UAE is expected to be the energy sector’s second-biggest spender in the Middle East and North Africa region in the next five years, according to data compiled by Arab Petroleum Investments Corporation. Only Saudi Arabia ranks higher, with its investment in energy-related projects expected to reach approximately $149bn (SAR558.75bn) in the next five years.

These investments will undoubtedly lead to projects that will pique the interest of most regional contractors – EPC specialists and others alike. Contracting leaders that are looking to grow in the region would benefit from orienting their resources to meet the needs of the Middle East’s future-focused energy sector.

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Construction Week - Issue 742
May 23, 2019