Another bumper year for Mena projects

25 December 2024

 

The Middle East’s projects market in 2024 has been fuelled by the same heady cocktail of favourable oil prices, continued investment into oil and gas projects, government infrastructure spending, the energy transition, real estate investment and economic diversification that propelled the total value of awards in 2023 to record levels.

By the end of October 2024, there were $262bn of contract awards across the Middle East and North Africa (Mena) region, according to regional projects tracker MEED Projects. By the end of the year, the 2024 total may top the $290bn recorded in 2023. 

While economic diversification is a priority for governments across the region, oil and gas remains a key sector for project awards. The three largest contract awards in 2024 were from the sector.

The top-ranked contract by value was a $20bn deal awarded to Iranian companies Petropars, Oil Industries Engineering & Construction, Khatam Al-Anbiya Construction Headquarters and Mapna Group for the South Pars gas field pressure-boosting project in Iran by Pars Oil & Gas Company.

Next was the $8bn deal won by China’s Hualu Engineering Technology Company for delivering the Al-Faw refinery in Iraq for Southern Refineries Company.

The third-largest award was a $5.5bn contract won by a joint venture of France’s Technip Energies, Japan’s JGC Corporation and the UAE’s NMDC Group for the Ruwais low-carbon liquefied natural gas terminal project by Abu Dhabi National Oil Company (Adnoc).

These contract awards mean that the oil and gas sector accounted for 32% of the $262bn total that was recorded in the Mena region by the end of October 2024.

Breaking down the sector into oil and gas separately reveals a telling trend. Oil accounts for 12% of awards, while gas accounts for 20%. These numbers reflect the growing importance of gas as a transition fuel that is cleaner and more environmentally friendly than oil, but still provides the dependable energy that many renewable alternatives still do not offer. 

Strong performances

Construction is the second-largest sector after oil and gas, accounting for 23% of awards. Its significance has dropped in 2024 compared to 2023, when it accounted for 32% of contract awards. 

In terms of value, there were $68bn of contract awards in 2024 until the end of October. If the same pace is maintained during November and December, the 2024 total is expected to be about $81bn, which falls short of the 2023 total of $97bn. 

While the total value of contract awards may have dropped, there was the largest construction contract award on record in 2024 – a $4.7bn deal secured by Italian contractor WeBuild for the construction of three dams for the Trojena mountain resort at Saudi Arabia’s Neom gigaproject. 

The power sector accounted for 18% of the total awards during the period, the largest of which was the $5.3bn contract won by Saudi Arabia’s Alfanar Projects and China Electric Power Equipment & Technology Company for the 7,000MW Saudi Central, Western and Southern Regions high-voltage direct current overhead transmission lines project being developed by Saudi Electricity Company.

When analysed by country, Saudi Arabia and the UAE dominate the market, and together they account for over 60% of contract awards across the region in 2024 up to the end of October. 

As the region’s largest economy, it is unsurprising that Saudi Arabia accounts for the largest share, with 38.6%, followed by the UAE, which had 22%. The next most significant country was Iran, which came in a distant third with 8% of contract awards. 

The outsized contribution of Saudi Arabia and the UAE reflects the relative economic stability found in the GCC compared to other countries in the region that are grappling with the impact of conflict and other associated financial pressures. 

Looking beyond the contract awards numbers, the biggest project announcement in 2024 came in April, when Abu Dhabi investment vehicle ADQ released details of plans to invest $35bn in Egypt. The plans involve ADQ acquiring the development rights for Ras El-Hekma, a planned new city on Egypt’s northern Mediterranean coast, for $24bn. 

The development has been billed as having the potential to attract over $150bn in investment.

In October, ADQ appointed its subsidiary Modon Holding as the master developer for Ras El-Hekma. Modon will act as the master developer for the entire development, which covers more than 170 square kilometres (sq km). 

Modon will develop the first phase, which covers 50 sq km, and the remaining 120 sq km will delivered with private developers.

Key partners for delivering the project have already been found. For construction, Modon has signed a framework agreement with Egyptian firm Orascom Construction to serve as the primary contractor for the project’s first phase. 

Modon also signed a deal with Abu Dhabi National Energy Company (Taqa) for developing, financing and operating greenfield utility infrastructure projects, water desalination projects, electricity transmission and distribution projects and wastewater projects at the Ras El-Hekma development.

While economic diversification is a priority for governments across the region, oil and gas remains a key sector for project awards

Future prospects

Looking ahead, the performance of the projects market in 2025 will depend  on the favourable macroeconomic conditions remaining in the GCC, which if the other four members of the six-nation bloc are added, accounted for nearly 72% of the Mena region’s total contract awards during the first 10 months of 2024. 

The key metric to watch in 2025 will be the oil price. In mid-November, the price of Brent Crude was $72 a barrel, which is below what many in the region, including Saudi Arabia, require if they are to maintain their project spending plans. 

The outlook for oil prices is uncertain and after oil producers’ group Opec cut its global demand growth forecasts for both 2024 and 2025 for the fourth time, highlighting economic weakness in China, India and other regions, there are concerns prices will dip in 2025. 

The election of Donald Trump as US president adds to those concerns. He has promised to “drill, baby, drill”, and a sharp uptick in output from the US could cause oil prices to soften further.

Trump is also a protectionist and has said ‘tariff’ is his favourite word. Most of his new tariffs are expected to be aimed at China, which could mean that Chinese companies look to other markets that remain open to them, including the Middle East.

The appeal is clear to see. Chinese contractors already command a dominant position in the region – particularly in North Africa and Iraq – and Chinese companies will find great appeal in affluent markets such as Saudi Arabia and the UAE, which can offer large-scale project opportunities.

The other metric that will drive the projects market in 2025 is real estate. In the UAE, much of the ongoing development work is supported by the buoyant property market, particularly in Dubai, which has grown strongly throughout 2024. 

According to a report by data and analytics company Reidin, property sales in the UAE reached AED46.52bn ($12.7bn) in October 2024, marking a 55% year-on-year increase. Demand also remains robust, with 19,500 transactions recorded in October, reflecting a 72% rise compared to the same period in 2023. 

Looking ahead to 2025, Reidin says that the outlook remains optimistic as sustained demand, rising property values and steady inventory turnover are all expected to continue driving growth. 

While the forecast supports a positive outlook for construction in the UAE, those who have seen Dubai’s property market collapse before will be keenly watching the data in 2025.

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Colin Foreman
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    China State Construction Engineering Corporation recently signed a contract for Kuwait’s North Kabd wastewater treatment plant, the country’s largest wastewater infrastructure project to date.

    The award, following more than a decade of planning, propelled Kuwait’s water sector contract awards to more than $4bn as of early August, according to regional project tracker MEED Projects.

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    North Kabd is the largest of several major water projects awarded this year, alongside contracts covering desalination and the expansion and rehabilitation of water distribution infrastructure.

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    These include a $316m contract awarded to local firm United Gulf Construction (UGC) by the Ministry of Electricity, Water & Renewable Energy (MEWRE) for the rehabilitation and expansion of the Doha water distribution complex.

    The five-year project includes a new pump station and will add about 130 million imperial gallons of storage capacity, while increasing pumping capacity to 220 million imperial gallons a day (MIGD).

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    In April, Kuwait’s Central Agency for Public Tenders approved MEWRE’s recommendation to award a $371m contract for phase two of the Doha seawater reverse osmosis (SWRO) desalination plant.

    A joint venture of Kuwait-based Heavy Engineering Industries & Shipbuilding Company (Heisco) and India’s VA Tech Wabag will carry out the project, which will have a capacity of about 272,000 cm/d.

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    Meanwhile, Kuwait’s Ministry of Public Works (MPW) has been progressing several tenders for major water infrastructure projects covering rainwater drainage and treated water systems in the country’s southern and northern regions.

    In July, local Combined Group Contracting submitted the lowest bid for a contract to develop a major treated water system in the southern region. The contractor submitted a price of about $515m for the scheme, according to a company disclosure.

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    In what is already a standout year for Kuwait’s water sector, further awards could push activity significantly higher. More than $1bn of water projects are currently under bid evaluation, indicating further evidence of a sustained recovery in the months ahead.

    Power sector activity

    Kuwait’s power sector recorded just $271m of contract awards by early August, according to MEED Projects, putting activity well below recent annual levels.

    This compares with a record full-year total of $5.5bn in 2025 and $2.7bn in both 2024 and 2023.

    Several large-scale generation projects have been slow to advance, with deadline extensions a notable feature in recent months. The outlook is stronger, however, with these projects now progressing through procurement and significant awards expected in the months ahead.

    Kuwait is advancing the 1,800MW Al-Khairan phase one independent water and power project (IWPP), for which two developer consortiums led by Abu Dhabi National Energy Company (Taqa) and Saudi Arabia’s Acwa submitted bids in June.

    The project will also include a desalination plant with a capacity of 125 MIGD. A second phase of the Al-Khairan IWPP, estimated at $750m, is understood to include a further 1,800MW of generation capacity through a combined-cycle gas-fired power plant. The project remains in the early development stages, with tendering not expected until at least 2027.

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    The Kuwait Authority for Partnership Projects (Kapp) is also progressing the Al-Dibdibah power and Al-Shagaya renewable energy programme in partnership with Kuwait’s MEWRE.

    The contract to develop the 1,100MW phase three, zone one solar photovoltaic (PV) project is expected to be confirmed soon, with a consortium led by Abu Dhabi Future Energy Company (Masdar) previously reported to be the frontrunner.

    A separate 500MW solar PV project is also being procured under phase three, zone two of the same programme, with bids submitted on 26 July. If the contract is awarded by the end of the year, the two Shagaya contracts would add about $2bn to the value of power sector awards.  

    Another notable development was the 25-year energy conversion and water purchase agreement signed in February for the Al-Zour North IWPP phases two and three. The signing marked a key step towards financial close on the estimated $4bn project. Once completed, the facility will add 2,700MW of power and 120 MIGD of desalinated water to Kuwait’s supply network

    The Shagaya, Khairan and Zour North projects form a key part of Kuwait’s generation portfolio. The country is aiming to reach 22,100MW of installed renewable energy capacity by 2030, under a 20-year strategy announced in March 2025 that extends to 2050.

    Kuwait is also continuing to invest in existing generation plants. MEWRE is evaluating bids for the $1.7bn upgrade of the Subiya power and water plant, including the conversion of units from open-cycle to combined-cycle operation and the modernisation of existing facilities.

    Battery energy storage systems

    In the near to medium term, more than $10bn-worth of power projects are under bid evaluation. This includes several battery energy storage system projects with a planned total storage capacity of 1.5GW.

    In June, Kuwait approved sites in Al-Mutlaa and Jaber Al-Ahmad cities for the development of the projects. The projects will be implemented in phases, with the first phase providing 500MW of storage capacity. The first facilities are expected to be operational by summer 2027 and will supply stored energy to the electricity grid during periods of peak demand.

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    She added: “On exports, of course, we try our best to satisfy requirements and work closely with customers. But in terms of gas supply to the UAE, we are at 100%.”

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    Responding to a question about the deployment of robotics and artificial intelligence (AI) to carry out damage assessment and repair work at the Habshan gas processing facility, Al-Nuaimi said: “One of the technical challenges in restoring the facilities quickly was that we had to inspect a significant part of our assets – some 600 kilometres of piping of different sizes across the facilities.

    “If we had done this in the conventional way, we would have spent around 100 additional days putting up scaffolding and sending people to conduct manual and visual inspections.”

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    She added: “We also used robotics in responding to fires and accessing certain parts of the assets.

    “When we talk about AI, it is not a headline. It is real work and real value that we see every day in our business,” Al-Nuaimi further remarked.

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