MENA Projects: Saudi Arabia Still the Driving Force; UAE Slowdown Continues

Excerpt from Citibank report:

In October this year, $16.9bn of projects were awarded across MENA. On a cumulative basis, just over $82bn of projects have been awarded across the region in the year to end October. This compares favourably with FY10 when almost $80bn of projects were awarded. Saudi Arabia is the main driving force accounting for a third of the 2011 total. Iraq accounts for 20%.The UAE has awarded almost $14bn in the year to end October, almost $20bn below FY10.

-Projects Planned & Underway Supported by Saudi Arabia - For the GCC, projects planned & underway remains stable at $1.8trn. This is supported by the region’s largest market, Saudi Arabia, which has grown 3% since our last (September) report to almost $650bn. In contrast, the UAE, has contracted 3% & now sits close to $600bn. The Gulf as a whole (including Iran & Iraq) stands at $2.5trn ,supported by the region’s 3rd largest market, Iraq (up 2% since our last report to ~$355bn).

-Cancelled & Delayed Projects All Fall Again; Except Saudi - In our previous (September) report, we reported a marginal decline in delayed & cancelled projects to ~$1,695bn. However, this is now back on the rise (to ~$1,745bn). Of all the main MENA markets, only Saudi Arabia shows a decline in such projects; its total is down 2% to close to $355bn. The UAE hascontinued to rise & has now reached almost $960bn (having added $20bn to cancelled projects).

-Project Pipelines Fall; Except Saudi - We see a similar picture for project pipelines. For the main MENA markets the total stands at over $580bn. This shows a 10% decline since our last report. Only Saudi Arabia shows an increase in its pipeline; up $7bn & approaching $210bn. The UAE & Qatar are each down $16-17bn. We would argue that the latter market has peaked.

-Gas Processing Makes Progress - Gas Processing remains a key area of investment. Around $10bn of projects have been added to pipelines across the main MENA markets. By comparison, Construction & Infrastructure continue to retract.

Infrastructure delays are up almost $25bn to over $75bn. Construction cancellations are up $17bn to almost $270bn.

-Saudi Arabian-Exposed Companies Remain Best-Placed - Given the ongoing relative strength of this market as well as investment in more technical level projects, we continue to believe Korean contractors remain best-placed across the region. However, we would also highlight Saipem & OCI as being similarly positioned.