Saudi Arabia construction contract awards grow 113% to $13bn in Q1

Contract expansion in Q1 2019 comes as kingdom builds megaprojects across oil and gas, utilities, and transport sectors

Saudi Arabia's contract awards expanded in Q1.
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Saudi Arabia's contract awards expanded in Q1.

The US-Saudi Arabian Business Council (USSABC) revealed that the value of contract awards in Saudi Arabia grew to $13bn (SAR48.9bn) in Q1 2019, a staggering 113% increase from $6.1bn (SAR23bn) in the same period in 2018.

According to USSABC’s Contract Awards Index (CAI) report, the total value of contracts covers megaprojects in various sectors, with oil and gas; water; and transportation projects making up 67% of the total value, accounting for $8.7bn (SAR32.6bn).  

The value of awarded contracts in Q1 2019 alone represented approximately 48% of the total value of contracts awarded in 2018.

Makkah accounted for 17% of the total contracts in Q1 2019, recording $2.2bn (SAR8.2bn) during the period, particularly in the water and hospitality sectors.

These projects include the world’s largest desalination plant in Rabigh and the Four Seasons hotel in Jeddah.

Construction work is also under way on Riyadh’s second Ring Road, as well as the country’s much anticipated Riyadh Metro, all of which led to contracts worth $1.7bn (SAR6.4bn) in the capital city.

Saudi Arabia's water sector accounted for $3.2bn (SAR11.8bn) contracts in the first quarter of 2019, led predominantly by the Gulf nation’s Water and Electricity Company, and its Saline Water Conversion Corporation (SWCC).

The value of these contracts surged by 383% compared to Q1 2018 figures, reaching $3.7bbn (SAR14bn) in 2019.

In January 2019, SWCC awarded a $613.5m (SAR2.3bn) contract to a joint venture of Al Rashid Trading & Contracting and Spain's Acciona Group for the construction of a seawater reverse osmosis (SWRO) plant that has a capacity of 600,000m3 per day.

The project is part of Al Khobar SWRO desalination plant's Phase 2 in Al Khobar, and is due to complete in Q4 2021.

Activity was also high in the oil and gas sector in Q1 2019. The world’s largest oil producer, Saudi Aramco, awarded a $640.2m (SAR2.4bn) contract to a consortium of India’s Larsen and Turbo (L&T) and Subsea 7 to expand and construct new facilities at the oil giant’s Zuluf offshore oilfield during Q1 2019.

The project is expected to be completed in Q4 2021. 

In the transport sector, Saudi Arabia’s Ministry of Transport inked 88 road infrastructure contracts worth $1.4bn (SAR5.1bn) in February 2019.

Of these, 15 each were signed for work in Riyadh and Makkah – valued respectively at $161.1m (SAR604m) and $262.5m (SAR984m).

Saudi Aramco’s Marjan and Berri field development projects, and the Jeddah Public Transportation Program, are some of the upcoming schemes for which awards are due in 2019.

The Neom gigaproject, and megaprojects in KA Care, as well as Ma’aden’s Ras Al-Khair, are some of the medium- to long-term projects in Saudi Arabia's pipeline that are expected to bolster construction activities in the years to come. 

The positive performance comes as the kingdom’s government, backed by Crown Prince HRH Mohammed Bin Salman, and the Saudi private sector, work to improve the country’s economic position, which was briefly hit by a decline in oil revenues some years ago. 

“Consequently, the pace of awarded contracts thus far indicates that construction activities across all sectors will re-emerge as a strategic focal point in the kingdom,” USSABC said in its CAI report.

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