meed-logo

line1 line2 line3
SIGN IN / REGISTER

Middle East defence spending accelerates

7 May 2023

 

Global military spending reached a record high of $2.24tn in 2022, up 3.7 per cent year-on-year, according to newly compiled data from the Stockholm International Peace Research Institute (SIPRI), as the Ukraine war and tensions in East Asia prompted governments to ramp up their investment in equipment.

It marks the eighth consecutive year of growth in global defence expenditure. The sharpest rise was in Europe, where there was a 13 per cent increase in spending, but the Middle East and North Africa (Mena) region was not far behind, with an 11.2 per cent rise on the previous year.

“The continuous rise in global military expenditure in recent years is a sign that we are living in an increasingly insecure world,” said Nan Tian, a senior researcher with SIPRI’s military expenditure and arms production programme.

“States are bolstering military strength in response to a deteriorating security environment, which they do not foresee improving in the near future.”

Rising regional outlay

The rise in the Mena region’s total to $168bn was mostly due to an increase in spending by Saudi Arabia and Qatar and, to a lesser extent, Lebanon and Iran.

As has long been the case, Saudi Arabia dominated the picture, with a defence outlay of $75bn in 2022 – up 16 per cent on the year before and its first increase since 2018.

Military spending data for the Middle East is often opaque. Other large spenders, according to SIPRI’s database, include Israel ($23.4bn), Qatar ($15.4bn), Algeria ($9.1bn), Kuwait ($8.2bn), Iran ($6.8bn) and Oman ($5.8bn).

However, the institute has no estimates for a number of other countries, most notably the UAE. Its most recent figure for the UAE is for 2014, at which point the defence budget was an estimated $22.8bn, the region’s second-biggest after Saudi Arabia that year.

There are also no current estimates for defence spending by the countries suffering the greatest instability, including Libya, Sudan, Syria and Yemen.

Others have drawn up figures for the UAE, though. The London-based International Institute for Strategic Studies (IISS) estimated the UAE’s defence spend was $20.4bn last year in its recently published Military Balance 2023 report. That marked a 6 per cent rise on the previous year’s estimate.

While the UAE may not have the largest budget in the region, IISS says its armed forces are “arguably the best trained and most capable of all GCC states”.

Unclear Iranian picture

The outlay by Iran is also a matter of some debate, given the questions over the value of the rial and the country’s high inflation rate of around 40 per cent.

SIPRI says that, in local currency terms, Iran’s defence spending grew by 38 per cent to IR1,988tn in 2022. That is equivalent to some $46.9bn at the government’s official exchange rate, but far less at the open market rate used by SIPRI.

Inflationary pressures have become a common concern for countries around the world, even if few are having to cope with price rises as rapid as in Iran. Many Western countries are also dealing with an energy supply crisis due to the war in Ukraine, which has led to prices spiking upwards and sanctions being imposed on Moscow.

The Middle East’s oil exporters have benefitted from elevated oil prices, making it easier to afford the rise in defence spending.

However, the most notable direct consequence of the conflict in Ukraine for the Middle East has been the surge in military cooperation that has followed between Russia and Iran. Moscow’s failure to quickly take control of Ukraine has led to a drawn-out conflict and, as its weapons inventory has become depleted, it has imported drones from Iran to fill in some of the gaps.

That cooperation may yet extend in the other direction, with Iranian media reporting in March a potential deal for Tehran to receive Russian Sukhoi Su-35 fighter jets. Iran will also have gained useful information about the performance of its Shahed 131, Shahed 136 and Mohajer-6 drones in the war.

Lingering Gulf concerns

Such developments will likely concern other Gulf governments, even if regional tensions have eased somewhat due to the rapprochement between Saudi Arabia and Iran, announced via a China-brokered agreement in March.

That fits into a broader regional trend for de-escalation and diplomatic advances. Recent talks between Saudi officials and Yemen’s Houthi rebels in Sanaa could yet pave the way to resolving that conflict – further discussions between the two sides are due to take place in May, possibly in Muscat.

The levels of violence in Libya and Syria have also been on a downward trajectory over the past year, but both remain susceptible to further outbreaks of fighting, as does Iraq.

Elsewhere, though, relations between Algeria and Morocco remain problematic, and the prospects of any peace deal between the Israelis and Palestinians look as distant as ever with the hardline government of Israel’s Prime Minister Benjamin Netanyahu in office.

Any reduction in regional tensions will be a welcome development given the high burden of defence spending on local economies. As IISS points out, many Mena countries’ defence budgets are very large relative to the size of their economies.

As has long been the case, Oman spends more as a proportion of its GDP than any other country in the region, with its 2022 outlay equivalent to 5.9 per cent of GDP, according to IISS calculations.

It is followed by Kuwait at 5 per cent and Saudi Arabia at 4.5 per cent.

The average for the region is 3.8 per cent of GDP, more than double the global average of 1.7 per cent. The overall trend for rising budgets means that the economic burden is unlikely to fall away any time soon.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10816511/main.gif
Dominic Dudley

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • WEBINAR: End-of-Year Mena Market Review

    13 November 2026

    Webinar: The big questions shaping the Gulf market. You decide what gets debated.
    Tuesday 24 November 2026  | 11:00 AM GST  |  Register now

    What makes this session particularly interesting is that the audience gets to decide the agenda. Registrants can vote for the topics they’d like Ed and Colin to debate, with the most popular questions forming the final shortlist for the live session.

    Topics in the ballot:

    • Is the Gulf trying to build too much, too quickly?
    • Saudi Arabia or the UAE: where would you place your next big bet?
    • Are gigaprojects the best use of public money?
    • Who is really responsible when projects go wrong?
    • Should the lowest-price tender become a thing of the past?
    • Can private capital take over from the government in financing infrastructure and diversification?
    • Is the Gulf’s AI and data centre boom a smart bet or the next overbuilding risk?
    • Should the Gulf double down on hydrocarbons to fund diversification?
    • Is localisation strengthening the economy or making delivery harder?
    • Are Gulf countries building complementary economies or competing for the same customers?

    The session will also feature live audience polling and Q&A, giving attendees an opportunity to share their views.

    Hosted by: 

    Edward James, head of content and analysis at MEED

    A well-known and respected thought leader in Mena affairs, Edward James has been with MEED for more than 19 years, working as a researcher, consultant and content director. Today, he heads up all content and research produced by the MEED group. His specific areas of expertise are construction, hydrocarbons, power and water, and the petrochemicals market. He is considered one of the world’s foremost experts on the Mena projects market. He is a regular guest commentator on Middle East issues for news channels such as the BBC, CNN and ABC News and is a regular speaker at events in the region. 

    Colin Foreman, editor of MEED 

    Colin Foreman is editor and a specialist construction journalist for news and analysis on MEED.com and the MEED Business Review magazine. He has been reporting on the region since 2003, specialising in the construction sector and its impact on the broader economy. He has reported exclusively on a wide range of projects across the region including Dubai Metro, the Burj Khalifa, Jeddah Airport, Doha Metro, Hamad International airport and Yas Island. Before joining MEED, Colin reported on the construction sector in Hong Kong.

    Click here to register

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21380319/main.gif
    MEED Editorial
  • Syntys breaks ground on 20MW Qatar data centre

    13 November 2026

    Register for MEED’s 14-day trial access 

    Qatari data centre developer Syntys has broken ground on a 20MW facility to support hyperscale, cloud, artificial intelligence (AI) and advanced computing deployments.

    The groundbreaking ceremony took place on 12 November. It was attended by Qatar’s Communications & Information Technology Minister, Mohammed bin Ali bin Mohammed Al-Mannai, along with representatives from Ooredoo Group, Microsoft, Google, Kahramaa, the National Cyber Security Agency, Qatar Free Zones Authority and local banks.

    Syntys said the facility is being developed on an existing company campus, where power, fibre connectivity and an operational team are already in place. The company has yet to disclose the project value or planned completion date.

    The facility is designed to meet Tier 3 requirements and accommodate a range of rack densities, including higher-density configurations for graphics processing unit (GPU)-based AI and high-performance computing workloads.

    It will operate as a carrier-neutral facility, allowing customers to select connectivity providers and establish network resilience in line with their own technical and operational requirements.

    The project forms part of Syntys’ strategy to expand its Qatar platform through acquisitions and new development. Earlier this year, the company acquired QData QFZ, adding two operational, Tier 3-compliant, carrier-neutral facilities to its portfolio.

    Syntys now owns and operates four campuses in Qatar, allowing customers to establish primary and disaster-recovery environments at separate in-country locations.

    The company also designs and operates the facilities supporting Ooredoo’s sovereign AI cloud, which uses Nvidia Hopper GPUs.

    The development comes as Qatar implements its Digital Agenda 2030, which identifies digital infrastructure as one of six strategic pillars and targets about QR40bn ($11bn) in economic impact by 2030.

    The data centre is expected to support the growth of in-country digital services and enable sensitive workloads to remain within Qatar’s national borders.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21378257/main1028.png
    Yasir Iqbal
  • Jereh wins $392m Bu Hasa oil field facilities project

    13 November 2026

    Register for MEED’s 14-day trial access 

    The onshore oil and gas business of Abu Dhabi National Oil Company (Adnoc Onshore) has awarded China’s Jereh Group a contract valued at AED1.44bn ($392.1m) for the engineering, procurement and construction (EPC) of wellhead surface facilities and flowlines at the Bu Hasa cluster of oil fields in Abu Dhabi.

    The cluster includes the Bu Hasa, Bida Al-Qemzan and Huwaila fields. The objective of the project is to build wellhead surface facilities and lay gathering flowlines that will connect new wells to the existing production network.

    The scope of work on the project also covers the design, fabrication and installation of:

    • production well module skids
    • gas lift skids, which inject gas into wells to help lift the oil
    • skid-mounted wellhead control panels
    • solar power units

    The framework agreement awarded by Adnoc Onshore on a call-off basis has a duration of 36 months, with an extendable option of 24 months, Jereh said in a filing with China’s Shenzhen Stock Exchange, where it is listed.

    Adnoc Onshore is Adnoc Group’s largest production subsidiary, accounting for about 2 million barrels a day (b/d) of crude and about 7 billion cubic feet a day of associated gas from four primary onshore asset clusters: Bab, Bu Hasa, North East Bab and South East.

    Maintaining and enhancing oil output levels at the Bu Hasa asset is critical to Adnoc Onshore’s contribution to parent company Adnoc Group’s target of expanding crude oil production capacity to 5 million b/d by 2027, an initiative known as Accelerated Integrated Programme 5. The state energy company’s total production capacity currently stands at approximately 4.85 million b/d.

    Prior to this contract, Adnoc Onshore selected Jereh Oil & Gas Engineering Company in 2024 for a project to digitally connect 2,443 wells at the Bab, Bu Hasa and South East cluster of onshore oil fields in Abu Dhabi for remote operations. The contract, formally awarded in 2025, was valued at $920m.

    Abu Dhabi contracts

    The contract for the Bu Hasa wellhead facilities and flowlines is among a trio of projects totalling approximately $2.7bn that has been awarded by Adnoc Group in recent weeks, Jereh announced in its stock market filing.

    The largest of the three contracts, valued at $1.7bn, is for the Ruwais Diyab unconventional gas development in Abu Dhabi. Awarded to Jereh on a design, build and operate model, the contract has a duration of 29 months for construction works and 60 months of operations, with up to two five-year extensions available.

    Adnoc achieved final investment decision on the Ruwais Diyab unconventional gas development project on 2 November, during the Abu Dhabi International Petroleum Exhibition and Conference 2026.

    The project will deliver 345 million standard cubic feet a day (scf/d) of raw gas from 2029 over a 25-year period, with the potential to reach up to 1 billion scf/d in the future.

    The scope of work on the Ruwais Diyab project covers:

    • wellsite facilities
    • a central processing facility
    • gas gathering pipelines and product export pipelines
    • utilities

    The plant will treat the raw gas and recover the liquids produced with it. It will also treat produced water, which is the water that comes up from the wells with the gas, and recover sulphur. Finished products will be delivered to designated receiving facilities.

    When the operation period ends, Jereh will either hand the facilities over to Adnoc or decommission them and restore the site, as the contract and the owner require.

    The third contract covers Adnoc Onshore’s Bab and North East Bab 1 tie-in project, where the main scope of work involves tying in new oil producer wells and removing and modifying surface facilities at existing producer wells.

    The project’s scope also covers supporting works for water supply wells, water injection wells, disposal wells and water-alternating-gas injection wells. Several existing wells will also be upgraded with digital systems.

    Jereh said the value of its contract is $599m, with a duration of 60 months. Similar to the Bu Hasa project, this contract also uses a framework model wherein Adnoc Onshore will issue work orders in batches according to its execution plans.

    MEED previously reported that Adnoc Onshore had divided the scope of work on the Bab and North East Bab 1 tie-in project into 18 EPC packages. Along with Jereh, Adnoc Onshore has picked Abu Dhabi-based Robt Stone Middle East for a portion of work on the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21355151/main3320.jpg
    Indrajit Sen
  • PDO awards contract for Al-Ghubar oil field project

    12 November 2026

     

    Register for MEED’s 14-day trial access 

    Petroleum Development Oman (PDO) has awarded the main contract for a project to build a facility to handle additional oil production from the Al-Ghubar field in the sultanate.

    The Al-Ghubar field is located in the Ghaba Salt Basin at Qarn Alam, within majority state-owned PDO’s Block 6 concession area.

    The Al-Ghubar gas-oil gravity drainage (GOGD) facility will be designed as a sour (hydrogen sulphide) facility and is expected to handle a maximum oil production rate of 1,800 standard cubic metres a day (cm/d), a total water flow rate of up to 10,421 standard cm/d and gas lift of up to 256,934 standard cm/d. Production from the planned Al-Ghubar GOGD facility will be exported to PDO’s main oil line.

    China-based Jereh Group has won the contract for the Al-Ghubar GOGD facility project, sources told MEED.

    A project kick-off meeting between PDO and Jereh has also recently taken place, the sources said.

    MEED previously reported that Jereh had emerged as the lowest bidder for the project.

    The following contractors, among others, are understood to have been bidding for the Al-Ghubar GOGD facility project:

    • Engineering for the Petroleum & Process Industries (Egypt) / Petrojet (Egypt)
    • GS Engineering & Construction (South Korea)
    • Jereh (China)
    • Larsen & Toubro Energy Hydrocarbon (India)

    PDO floated the tender for the Al-Ghubar GOGD facility project in March, setting an initial bid submission deadline of 4 May, MEED previously reported.

    PDO later extended the deadlines for the submission of technical and commercial bids to 26 July and 7 August, respectively. Contractors submitted technical proposals by the revised deadline, according to sources.

    After receiving the technical bids for the project in July, PDO granted contractors until 16 August to submit commercial bids. It eventually extended the deadline to 1 September, with contractors submitting commercial proposals by that date, as MEED reported.

    The scope of work on the Al-Ghubar GOGD project covers the engineering, procurement and construction (EPC) of the following:

    • On-plot scope, consisting of:
      • Production separator  
      • Test separator  
      • Concentric wash tank
      • Wet oil pump
      • Water bath heater
      • Surge tank
      • Gas injection/gas lift compressor (centrifugal)
      • Utilities (instrument air compressors, chemical injection skids, drain system, vent system) 
      • Suction scrubber
      • Air coolers
      • Discharge scrubbers
      • Condensate flash drum
      • Atmospheric pressure knock-out drum 
      • Flare system
      • Gas heater
      • Water disposal pump
      • Oil shipping pump
      • 132kV substation and plant substation (housing 6.6kV and 415-Volt switchboard)
      • Control room
         
    • Off-plot scope consisting of:
      • Off-plot pipeline network (bulk header, test header, gathering infrastructure/ gathering line header, instrument air header, water disposal header)
      • Two remote manifold stations 
      • Tie-in connection to main oil line
      • Tie-in to gas network pipeline

    PDO previously intended to tender the Al-Ghubar GOGD project under its framework structure with selected EPC contractors, but ultimately tendered it separately.

    PDO is the operator of Oman’s Block 6 hydrocarbons concession, the sultanate’s largest and most prolific concession. Situated onshore and covering an area of 75,119 square kilometres, Block 6 contains 202 oil fields and 43 gas fields. PDO produces approximately 680,000 barrels a day of oil and condensates from the fields.

    The Omani government holds a 60% stake in PDO through Energy Development Oman. The other shareholders are UK-based Shell (34%), France’s TotalEnergies (4%) and Thailand’s state-owned PTTEP (2%).

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21345337/main2647.jpg
    Indrajit Sen
  • Laing O’Rourke joins the international exit list

    12 November 2026

    Commentary
    Colin Foreman
    Editor

    Register for MEED’s 14-day trial access 

    Laing O’Rourke’s decision to seek a buyer for its Middle East business marks the end of an era for UAE construction.

    In the early 2000s, the contractor was among the leading names in the market. Its work at Dubai International airport, the Atlantis hotel on the Palm Jumeirah and the ski slope at Mall of the Emirates made it arguably the UAE’s most prominent contractor during the pre-global financial crisis construction boom.

    Its activities were not limited to Dubai. A partnering agreement with Aldar for Al-Raha Beach then made it the most active contractor in Abu Dhabi almost overnight.

    The global financial crisis changed its fortunes. The Aldar Laing O’Rourke joint venture ended. Unsettled by payment problems and wider stress in the industry, the company took a more cautious approach to clients and projects in the region. One executive at the time told MEED: “You might see lots of tower cranes, but none of them are doing work that we would want to do.”

    The contractor’s appetite partially returned in the late 2010s, when it won Al-Wasl Plaza at the Expo 2020 site in Dubai. It also became a leading player in the growing data centre market, delivering facilities for repeat clients, including Khazna and Equinix.

    Data centres have since been its focus. These are significant projects, but they lack the public profile of the airport, Atlantis and Al-Wasl Plaza. As its profile faded, the company sold its UAE joinery arm to Dubai-based Arco Turnkey Solutions in 2025.

    Laing O’Rourke now looks set to follow other international contractors that have, for various reasons, left the region, including Murray & Roberts, Balfour Beatty, Multiplex, Carillion and Bam. With a record £17.2bn order book anchored by UK and Australian infrastructure, the group’s priorities clearly lie elsewhere.

    Whoever buys the business will inherit strong data centre credentials. For much of the market, however, Laing O’Rourke will be remembered for the landmark projects that defined the UAE’s boom years.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/21344577/main.jpg
    Colin Foreman