meed-logo

line1 line2 line3
SIGN IN / REGISTER

Aramco spending lifts Saudi upstream market

16 September 2024

Saudi Aramco’s profits in the second quarter and first half of 2024 may have slid on a year-on-year basis, but that has not impacted the company’s capital expenditure (capex). Project spending, on the contrary, has spiked sharply.

Capex rose to $12.13bn in the second quarter from $10.46bn in the same period last year. Second-quarter capex also increased from the first quarter, during which Aramco spent $10.83bn. In the first half of the year, the company’s spending increased to $22.96bn, compared to $19.20bn in the first half of 2023, Aramco said.

Aramco has demonstrated robust capex so far this year on major projects that are critical to its strategic upstream goals of maintaining oil production potential at 12 million barrels a day (b/d) and raising gas production by 60% by 2030, with 2021 as its baseline.

Robust offshore spending

In late January, the Saudi Energy Ministry directed Aramco to abandon its campaign to expand its oil production spare capacity from 12 million b/d to 13 million b/d by 2027. As a direct consequence of that government decision, Aramco cancelled the tendering process for at least 15 tenders involving engineering, procurement, construction and installation (EPCI) of structures at key offshore oil and gas fields.

Since that decision, however, Aramco has gone the other way. The Saudi energy giant has already spent an estimated $4bn-$4.5bn year-to-date on offshore EPCI contracts, known in the Aramco ecosystem as Contracts Release and Purchase Orders (CRPOs).

Italian contractor Saipem has been the biggest beneficiary of this robust offshore spending by Aramco, winning all of the CRPOs awarded so far this year.

In early May, Aramco awarded Saipem the contract for CRPO 143, which involves replacing an oil line between the Berri and Manifa oil fields in the kingdom’s Gulf waters.

Aramco then awarded Saipem the contract for CRPO 138, which involves laying a trunkline at the Abu Safah offshore field. The contract is estimated to be worth $500m.

The Milan-listed contractor then scooped three major CRPOs in August, starting with CRPOs 132 and 139, whose combined value is estimated to be about $1bn. The scope of work for the two contracts involves the EPCI of structures to upgrade the Marjan, Zuluf and Safaniya offshore field developments, respectively.

Just days after awarding CRPOs 132 and 139 to Saipem, Aramco awarded the Italian contractor CRPO 127, worth an estimated $2bn-$2.5bn. It involves EPCI works for several structures at the Marjan field development.

Offshore jobs under bidding

Meanwhile, offshore service providers in Aramco’s Long-Term Agreement (LTA) pool of contractors are preparing bids for eight more CRPOs.

Aramco had issued a fresh batch of four tenders – CRPOs 149, 150, 152 and 153 – which cover the EPCI works on Saudi Arabia’s Abu Safah, Arabiyah, Hasbah and Marjan offshore oil field developments.

Prior to those four tenders, Aramco issued four other tenders in May to its LTA contractors as part of a project to further expand the Zuluf offshore field development. The main objective of the project is to install several structures at the Zuluf field to maintain and raise its long-term oil and gas production potential. The combined value of CRPOs 145, 146, 147 and 148 is estimated to be about $4bn. LTA contractors were initially due to submit bids for the four tenders by 22 August, but Aramco eventually extended the deadline until 17 October.

Prioritising gas production

Saudi Aramco has registered swift progress this year with the successive expansion phases of its programme to produce and process gas from the Jafurah unconventional development in Saudi Arabia.

Aramco officially awarded contracts on 30 June for the Jafurah second expansion phase, which aims to raise its processing potential to up to 2 billion cubic feet a day (cf/d) of raw gas produced from the Jafurah field.

Aramco awarded 16 contracts worth about $12.4bn for EPC works and drilling services for the second expansion phase.

Within weeks of those awards, a consortium of Spanish contractor Tecnicas Reunidas and China’s Sinopec Group announced that Aramco had selected it for EPC works on the third expansion phase, worth $2.24bn. The EPC scope of work mainly entails building three gas compression plants, each capable of processing 200 million cf/d.

Also in July, Aramco issued the main EPC tender for the fourth expansion phase. Contractors are preparing bids for the project, whose scope of work is similar to that of the third expansion phase and is, hence, understood to be of similar value.

Aramco said last year that it expected its total capex in 2024 to be in the range of $48bn to $58bn. As the first eight months of the year have demonstrated, far from witnessing a slump in capex, 2024 may well turn out to be a record year for Aramco’s project spending.

Looking beyond 2024, Amin Nasser, Aramco’s president and CEO, told MEED in May that he expects his company to ramp up capex in the next two years as it strives to achieve its strategic 2030 goals. This capex guidance indicates that Aramco’s spending boom on oil production and gas production capacity expansion projects could extend into 2026.

https://image.digitalinsightresearch.in/uploads/NewsArticle/12543165/main.gif
Indrajit Sen

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

Click here to register
Exclusive from Meed
Related Articles
  • Contractor appointed for Oman power plants

    13 May 2026

     

    A consortium of China-headquartered Shandong Electric Power Construction No. 3 Company (Sepco 3) and South Korea’s Doosan Enerbility has been appointed as the main contractor on the Misfah and Duqm combined-cycle gas turbine power plants in Oman.

    The contracts cover the construction of two independent power producer (IPP) projects, with work scheduled to begin in the third quarter of 2026.

    State offtaker Nama Power & Water Procurement (Nama PWP) had previously signed power-purchase agreements (PPAs) for the development and operation of the plants.

    The developer’s contract was awarded to a consortium comprising Korea Western Power (Kowepo), Qatar’s Nebras Power, the UAE’s Etihad Water & Electricity (EtihadWE) and Oman’s Bhawan Infrastructure Services.

    The Misfah IPP will be led by Nebras Power and located in Wilayat Bousher in Muscat Governorate, with a planned capacity of 1,600MW.

    The Duqm IPP will be led by Kowepo and located in Wilayat Duqm in Al-Wusta Governorate, with a capacity of 800MW.

    According to Nama PWP, the total investment for the two projects is estimated at approximately RO1bn ($2.6bn).

    MEED reported last October that Nama PWP had received three bids for the development and operation of the gas-fired IPPs.

    The other bids included a consortium comprising China’s Shenzhen Energy Group and Oman National Engineering & Investment Company, and a lone bid from Saudi Arabia’s Acwa Power.

    Synergy Consulting is the financial adviser and lead adviser to Nama PWP for these projects.

    In November, Oman’s OQ Gas Networks received final investment approval to proceed with gas supply connections for the facilities.

    The Misfah IPP will receive 8.5 million cubic metres a day (cm/d) of natural gas. The Duqm IPP will be supplied with 4.5 million cm/d of natural gas.

    In March 2025, the same Sepco 3 and Doosan Enerbility consortium signed an engineering, procurement and construction contract with Saudi Electricity Company for the expansion of the Riyadh Power Plant 12 (PP12).

    Located about 150 kilometres northwest of Riyadh, the 1,863MW power plant is expected to be completed in 2028.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16816237/main.jpg
    Mark Dowdall
  • Financial challenge tests Iraq’s resolve

    13 May 2026

     

    On 21 April, as a fragile ceasefire held between the US and Iran, the Trump administration halted a $500m shipment in cash headed for Iraq, as it sought to clamp down on Iranian-backed Shia militias in the country. 

    That cash, derived from Iraqi oil exports and routed via the US Federal Reserve to the Central Bank of Iraq (CBI), is a vital cog in Iraq’s financial arteries, enabling it to cover foreign exchange demand.

    This was not the first time that Iraq’s financial system has felt the US’s warm breath on its neck.

    Back in February 2025, the US Treasury Department blacklisted five Iraqi banks from participating in dollar transactions, citing concerns about their role in illicit financial flows that benefited Iran’s Islamic Revolutionary Guards Corps.

    Iraq has also itself often circumscribed dollar use within its own financial system.

    In July 2023, the CBI banned 14 banks from conducting dollar transactions in a crackdown on dollar smuggling. In February 2024, it banned a further eight banks from dollar transactions as part of a crackdown on fraud and money laundering.

    Dollar pressure

    The recent halt in US dollar cash shipments has nevertheless added pressure to Iraq’s parallel currency market gap, says Lucila Bonilla, lead emerging market economist at Oxford Economics.  

    “The gap between the parallel exchange rate has widened noticeably against the official peg, to around 20%,” she says.

    “Dollar demand has risen as citizens and traders seek to hedge uncertainty – dollar deposits are up, and there are reports of a notable shift in the composition of cash holdings toward dollars.”

    Ratings agencies see the US move on Iraqi dollar use as a challenge, but one that might not prove too onerous.

    “Iraq can overcome a short-term war as it has $100bn of reserves and its debt profile is bearable,” says Gilbert Hobeika, a director at Fitch Ratings.

    “But a longer-term conflict will hurt Iraq as the economy is reliant on oil revenues and government involvement, while facing at the same time risk from the US stopping delivery of US dollars.”

    How persistent the pressure proves will depend largely on the duration of the Hormuz shock and how the relationship with the US evolves.

    “Forming a new government that is palatable to the US could ease the pressure, though Iraq’s protracted government formation process adds uncertainty to that timeline,” says Bonilla.

    The US-Iran war is putting even more pressure on banks.

    “There are uncertainties with regard to depositors,” says Hobeika. “The public sector banks have weak management and governance structures. Financial reporting is weak, and that puts pressure on asset quality and capitalisation.”

    If the conflict lasts a long time, the government will start withdrawing funds to pay salaries and contractors.

    “That will affect deposits at the public sector banks in the near term,” says Hobeika.

    State-heavy system

    Iraq’s banking system is dominated by a handful of state-owned banks with a market share of 75%-80%, and then 60-plus private banks competing for the remaining 20%-25% of the pie. 

    “Private banks have struggled to compete in a market with limited opportunities, small deposit bases and a narrow range of products, often focusing on very basic activities,” says Lea Hanna, an analyst at Moody’s.

    “In 2019, we had a wave of Islamic banks getting bans on dealing with US dollars – reducing what had been a primary source of business.”

    A few private banks have benefitted since then, namely those with majority ownership by foreign banks such as National Bank of Iraq, a subsidiary of Capital Bank of Jordan, and Bank of Baghdad, a subsidiary of Jordan Kuwait Bank.

    “Supported by their affiliates, these banks are relatively well run compared to domestic peers and have ample capital buffers,” says Hanna.

    “They have captured a large market share of US dollar transfers thanks to their strong US correspondent banking relationships that allow them easier access to US dollars. They have seen a surge in their profitability and an increase in their deposit base.”

    Financial reform

    The CBI has attempted to introduce reforms to the banking system, as part of a wider effort to enable it to channel funding to the private sector.

    In early 2025, it increased the minimum issued and paid-up capital requirement to ID400bn ($305m), along with a requirement to establish correspondent banking relationships for foreign-currency trading. The plan was to increase these in ID50bn increments every six months, to hasten sector consolidation.

    However, of Fitch’s rated banks, just two – state-owned Trade Bank of Iraq and Mansour Bank, a subsidiary of Qatar National Bank – met the full capital requirement.

    “While a lot of banks managed to increase their capital, a number of them didn’t and have been struggling to improve their systems and compliance with anti-terrorism and anti-money laundering regulations,” says Hobeika.

    “These systems take a long time to improve, and it costs the banks too. For that reason, they have agreed with the central bank to postpone implementation to 2027/28.”

    The expectation is that the number of private Iraqi banks will shrink from 60 to about half that number by 2028.

    “Iraq’s banking sector is undergoing a significant overhaul, with the Central Bank pushing through higher capital requirements, improved anti-money-laundering compliance, and a shift towards commercial banks managing their own international correspondent relationships. These moves are welcomed,” says Bonilla.

    But the harder work remains, argues Bonilla: state-owned banks still carry high levels of non-performing loans, weak governance and a history of politically directed lending, while private sector credit remains among the lowest in the region.

    “The stakes are high as the IMF estimates that a comprehensive reform of the financial sector, alongside broader governance and regulatory changes, could double Iraq’s non-oil growth potential over the medium term, adding around 4 percentage points to GDP,” says Bonilla.

    “For now, the reforms address the plumbing. The structural transformation of a banking system to serve the private sector is still largely ahead.”

    Clouded outlook

    So far, Iraq’s financial system seems to have averted a worst-case scenario of large-scale deposit withdrawals related to the Iran conflict.

    Any deposit withdrawals seem to be more related to the introduction of a digital custom system ASYCUDA (Automated System for Customs Data) aimed at helping the government collect revenues, which saw a lot of traders trying to bypass the custom charges.

    “This drove some exporters or traders to source US dollars outside the banking system, in the parallel market, to avoid stricter requirements and up-front payment of customs duties. That has now eased,” says Hanna.

    Looking ahead, Fitch anticipates that most government financing is likely to come from the CBI through indirect purchases of government securities.

    The central bank’s total claims on the central government represented about 52% of the domestic debt stock and 25% of the total debt stock at end-2024, notes the agency.

    It envisages that a smaller portion will come from the government’s cash deposits, anticipated to fall to an average 12% by 2027.

    Fitch says the CBI’s balance sheet limits refinancing risks, while the FX reserves are large enough to absorb the expansion of that balance sheet without putting pressure on the exchange-rate peg with the US dollar.

    Surging foreign direct investment comes as a source of comfort, with annual inflows rising from around $2bn in 2022 to $5bn-$7bn from 2023 onwards. 

    Reform of the financial system will remain at the top of the new government’s in-tray.

    The regional environment is unconducive to this mammoth task, and it can only hope that an end to the conflict would support ongoing Iraqi efforts to build a financial system comparable to that of some of its Gulf neighbours.

    MEED’s June 2026 report on Iraq also includes:

    > OVERVIEW: Iraq enters era of resilience, reform and rising risks
    > OIL & GAS: Iraqi oil and gas sector in crisis
    > POWER & WATER: Focus shifts to delivery of Iraq utilities expansion
    > CONSTRUCTION: Momentum builds in Iraq’s post-war construction sector

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16799540/main.gif
    James Gavin
  • JinkoSolar signs 2GW deal for Abu Dhabi solar project

    13 May 2026

    China’s JinkoSolar has signed an agreement with Abu Dhabi Future Energy Company (Masdar) to supply 2GW of photovoltaic (PV) modules for the round-the-clock renewable energy project in Abu Dhabi.

    The agreement covers the supply of JinkoSolar’s Tiger Neo series modules for the project, which is being developed by Masdar in collaboration with Emirates Water & Electricity Company (Ewec).

    The landmark $6bn project combines a 5.2GW solar PV plant with a 19 gigawatt-hour battery energy storage system (bess).

    It entered construction in October 2025 with India’s Larsen & Toubro and Power China working as contractors. It is known as the world’s first gigascale round-the-clock renewable energy project.

    Masdar had earlier selected JinkoSolar and JA Solar as preferred suppliers for solar PV modules, and CATL (Contemporary Amperex Technology) as preferred supplier for the bess segment.

    The project is designed to provide baseload renewable power and address intermittency challenges associated with solar generation. The developers said the scheme will serve as a model for similar projects internationally.

    JinkoSolar said the Tiger Neo modules supplied for the project are based on N-type TOPCon technology and have been adapted to meet the technical requirements of the development.

    Senior executives from both companies attended the signing ceremony in Abu Dhabi, including Mohamed Jameel Al-Ramahi, CEO of Masdar, and Charlie Cao, CEO of JinkoSolar.

    Jinko has won several major contracts in recent years, including a contract to supply solar PV modules with a capacity of 3GW for Saudi Arabia’s Haden and Al-Khushaybi solar projects.

    It also recently announced the signing of a 2GW solar PV module supply agreement with China Energy Engineering Corporation (CEEC) for Saudi Arabia’s Phase Six Khurais PV project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16813268/main1816.jpg
    Mark Dowdall
  • Dubai opens prequalification for Jebel Ali STP expansion

    13 May 2026

     

    Dubai Municipality has issued a request for qualifications for the Jebel Ali sewerage treatment plant (STP) expansion – phase 3 project.

    The DS150/3 project will be delivered under a public-private partnership (PPP) model on a design, build, finance, own, operate and transfer basis.

    The project involves the development of a new water resource recovery facility with an ultimate treatment capacity of up to 1 million cubic metres a day (cm/d).

    It is being procured through Dubai Municipality’s Sewerage and Recycled Water Projects Department and will be delivered through a two-stage operational approach over a 30-year concession period.

    The bid submission deadline is 18 June.

    UK-headquartered Deloitte is acting as financial adviser, Aecom as technical adviser and CMS as legal adviser.

    Dubai Municipality said the project will also include additional land uses and community-focused amenities as part of broader sustainability and urban integration objectives.

    Phase one and two expansion

    In April, the deadline was extended for contractors to submit bids for an engineering, procurement and construction (EPC) contract covering the expansion of the Jebel Ali STP phases one and two.

    Located on a 670-hectare site in Jebel Ali, the original wastewater facility has a treatment capacity of about 675,000 cm/d following the completion of phase two in 2019, combining approximately 300,000 cm/d from phase one and 375,000 cm/d from phase two.

    The upgraded facility will be capable of treating an additional sewage flow of 100,000 cm/d, with the expansion estimated to cost $300m.

    The new bid submission deadline is 11 June.

    UK-headquartered KPMG and UAE-based Tribe Infrastructure are serving as financial advisers on the project.

    > Be recognised among the best in the industry at the MEED Projects Awards 2026 …

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16812872/main.jpg
    Mark Dowdall
  • Iraq LNG project delayed until next year

    13 May 2026

    Register for MEED’s 14-day trial access 

    Iraq’s first liquefied natural gas (LNG) import terminal, which has an estimated project value of $450m, is now expected to become operational in 2027 due to delays caused by the regional war and disruption to shipping through the Strait of Hormuz.

    Work on jetty reinforcement and fixed terminal infrastructure at the Port of Khor Al-Zubair has been delayed, according to a statement from US-based Excelerate Energy, which is contracted to develop the facility.

    In its statement, the company said: “We are revising our full-year guidance to reflect the delayed startup of our Iraq terminal due to the ongoing conflict in the Middle East.”

    It added: “The Iraq project fundamentals remain unchanged. Looking ahead, we continue to have confidence in our sequenced earnings growth through 2028.”

    In October 2025, Excelerate signed a definitive commercial agreement with a subsidiary of Iraq’s Ministry of Electricity for the development of the country’s first LNG import terminal.

    The integrated project includes a five-year agreement for regasification services and LNG supply, with extension options, and a minimum contracted offtake of 250 million standard cubic feet a day (cf/d).

    Excelerate said: “Jetty reinforcement and construction of the fixed terminal infrastructure have been delayed temporarily due to the conflict in the Middle East and the terminal is no longer expected to commence operations in the third quarter of 2026 as previously disclosed.

    “Project startup is now expected in 2027. The long-term fundamentals supporting the project remain unchanged, driven by chronic power shortages and limited domestic gas processing capacity in Iraq.

    “Current conditions further reinforce the country’s need for reliable and scalable LNG import infrastructure and construction will resume as conditions allow.”

    Earlier this year, Iraq’s Ministry of Electricity said that the terminal was on track to come online on 1 June, ahead of expected gas shortages during the summer months.

    Then, in late April, the ministry said the project had been delayed by several months and was expected to come online in August at the earliest.

    Although Iraq is Opec’s second-largest oil producer after Saudi Arabia, it is a net natural gas importer because its lack of infrastructure investment has meant that, until 2023, it flared roughly half of the estimated 3.12 billion cf/d of gas produced in association with crude oil.

    Iraq’s reliance on flaring associated gas instead of gathering and processing it has prevented the country from fully realising its potential as a gas producer and forced the Iraqi government to rely on costly gas and electricity imports from Iran.

    READ THE MAY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Global energy sector forced to recalibrate; Conflict hits debt issuance and listings activity; UAE’s non-oil sector faces unclear recovery period amid disruption.

    Distributed to senior decision-makers in the region and around the world, the May 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/16803348/main.jpg
    Wil Crisp