meed-logo

line1 line2 line3
SIGN IN / REGISTER

Energy security facilitates upstream spending

1 March 2023

MEED's upstream oil & gas report also includes: Hydrocarbons exploration rebounds

 

Middle East and North Africa (Mena) oil and gas producers have stepped up to the challenge of meeting the world’s energy needs, especially since the outbreak of the Russia- Ukraine war in February 2022. Although state-owned and private energy producers alike are motivated by the profitability that high commodity prices bring, supply from the region is critical in addressing global energy security.

Regional hydrocarbons producers spent almost $19bn on upstream projects in 2022 as they sought to swiftly bring additional energy supplies online to offset the impact of the lack of Russian volumes on the global market, and particularly on Europe.

With the larger issue of an effective energy transition taking longer than projected, coupled with the prevailing supply shortage, Mena players have put in place major capital expenditure (capex) plans to boost their long-term oil and gas production potential.

The overall value of Mena oil and gas production projects in various pre-execution stages is more than $125bn, according to regional projects tracker MEED Projects.

Robust upstream spending

Qatar dominated spending on upstream projects for the second year in a row in 2022, accounting for more than a third of the $18.9bn of engineering, procurement and construction (EPC) contract awards in the Mena region.

With the goal of consolidating its position as the world’s largest supplier of gas, QatarEnergy is making progress with its North Field liquefied natural gas (LNG) expansion programme, estimated to be worth about $30bn. This will raise Qatar’s LNG production to 126 million tonnes a year (t/y) in two phases by 2027.

The two-stage North Field Production Sustainability (NFPS) programme will run in parallel, to help maintain gas production from the large offshore reserve in order to match the feedstock requirements of the LNG expansion scheme.

QatarEnergy’s biggest award in 2022 was a $4.5bn EPC contract won by Italian contractor Saipem. It covers the building and installation of two gas compression facilities as part of the second development phase of the NFPS project. 

The two gas compression complexes covered in the package will weigh 62,000 tonnes and 63,000 tonnes and will be the largest fixed steel jacket compression platforms ever built.

Saudi Aramco allocated a capex budget of $40bn-$50bn for 2022, an increase on the $31.9bn it spent in 2021. The firm came second to QatarEnergy, spending about $5.8bn on upstream EPC contracts in 2022. 

Aramco awarded contracts for 11 offshore engineering, procurement, construction and installation (EPCI) tenders during the year to contractors in its Long-Term Agreement (LTA) pool of offshore service providers.

Through these offshore structure refurbishment and modification works, Aramco intends to maintain and enhance the oil and gas production capacity of its Abu Safah, Manifa, Marjan, Qatif and Safaniya fields.

In the first quarter of 2022, Aramco also selected Japanese contractor JGC Corporation for the two main onshore packages of the Zuluf upstream project. Package one is estimated to be the bigger of the two onshore packages, with an approximate contract value of $2bn-$2.5bn. It covers EPC work to build hydrocarbons processing facilities. Package two, covering utilities and water injection facilities, is estimated to be worth about $1bn.

Healthy projects pipeline

With regional energy producers stepping up efforts to achieve their oil and gas output goals more quickly, the level of spending on upstream EPC project contracts this year is expected to increase to almost three times that of 2022.

Iran is still under the weight of economic sanctions and has failed to reach an agreement with Western governments regarding its nuclear programme. Despite this, the country appears to still be striving to increase its oil and gas production levels.

State-owned Pars Oil & Gas Company (POGC) is understood to be moving ahead with a programme to develop the offshore North Pars gas field, estimated to hold reserves of up to 55 trillion cubic feet. 

POGC has undertaken a $16bn EPC project, with offshore and onshore components, to start gas production from North Pars. With Tehran suffering from a lack of foreign investment in its energy sector, however, the actual size of the project could shrink significantly and there could be delays to its development timeline.

QatarEnergy, meanwhile, has progressed to the next phase of its North Field LNG expansion programme, known as North Field South (NFS). Contractors submitted commercial bids in February for the estimated $6bn package covering EPCI work on two main LNG trains.

Investing in growth

Abu Dhabi National Oil Company (Adnoc) has adopted a five-year business plan with a capex budget of $150bn for 2023-27. The firm has also said it now aims to meet its oil production capacity target of 5 million barrels a day (b/d) by 2027 instead of 2030.

Having brought its oil and gas production capacity targets forward, Adnoc is accelerating work on key projects. The firm plans to raise gas output by 3 billion cubic feet a day (cf/d) in the next few years, and the Hail and Ghasha offshore sour gas production project will be central to achieving this goal.

In January, Adnoc signed pre-construction service agreements with two consortiums of contractors for the offshore and onshore EPC work on the gas production project, which is estimated to be worth more than $10bn.

France-headquartered Technip Energies, South Korean contractor Samsung Engineering and Italy’s Tecnimont have formed a consortium for the Hail and Ghasha onshore package. 

Italian contractor Saipem, Abu Dhabi’s National Petroleum Construction Company and state-owned China Petroleum Engineering & Construction Company will work together on the offshore package.

Under the agreements, which are valued at $80m and $60m for the onshore and offshore packages, respectively, the contractors will perform initial detailed engineering and procurement services for critical long-lead items. 

The consortiums will also prepare proposals for the main EPC work on the project, which Adnoc will evaluate on an open-book cost estimate basis.

Production from the Ghasha concession, where the Hail and Ghasha fields are located, is expected to start in 2025, ramping up to more than 1.5 billion cf/d before the end of the decade.

Meanwhile, Saudi Aramco is striving to increase its maximum oil output spare capacity to 13 million b/d by 2027 from about 12 million b/d currently, and raise gas production by 50 per cent by the end of this decade.

To realise these targets, Aramco is expected to significantly raise capex on upstream EPC contracts this year. The company is preparing to award more than $3bn-worth of offshore EPCI deals to its LTA contractors before the end of the first quarter of 2023.

Later this year, Aramco is anticipated to award several more multibillion-dollar offshore EPCI jobs. This will include 10 packages of a project to incrementally increase oil production from the Safaniya offshore oil and gas field in Saudi Arabia – the world’s largest offshore oil field.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10636457/main.gif
Indrajit Sen

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

Click here to register
Exclusive from Meed
Related Articles
  • Firms submit Qiddiya high-speed rail EPC prequalifications

    22 April 2026

     

    Register for MEED’s 14-day trial access 

    Saudi Arabia’s Royal Commission for Riyadh City, in collaboration with Qiddiya Investment Company (QIC) and the National Centre for Privatisation & PPP, received bids on 16 April from firms for the engineering, procurement, construction and financing (EPCF) package of the Qiddiya high-speed rail project in Riyadh.

    Firms interested in bidding for the project on a public-private partnership (PPP) basis have been given until 30 April to submit their prequalification statements, as MEED reported earlier this month.

    The prequalification notice was issued on 19 January, and a project briefing session was held on 23 February at Qiddiya Entertainment City.

    The Qiddiya high-speed rail project, also known as Q-Express, will connect King Salman International airport and the King Abdullah Financial District (KAFD) with Qiddiya City. The line will operate at speeds of up to 250 kilometres an hour, reaching Qiddiya in 30 minutes.

    The line is expected to be developed in two phases. The first phase will connect Qiddiya with KAFD and King Khalid International airport.

    The second phase will start from a development known as the North Pole and travel to the New Murabba development, King Salman Park, central Riyadh and Industrial City in the south of the city.

    In November last year, MEED reported that more than 145 local and international companies had expressed interest in developing the project, including 68 contracting companies, 23 design and project management consultants, 16 investment firms, 12 rail operators, 10 rolling stock providers and 16 other services firms.

    In November 2023, MEED reported that French consultant Egis had been appointed as the technical adviser for the project. UK-based consultancy Ernst & Young is acting as the transaction adviser, and Ashurst is the legal adviser.

    Qiddiya is one of Saudi Arabia’s five official gigaprojects and covers a total area of 376 square kilometres (sq km), with 223 sq km of developed land. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16514433/main.gif
    Yasir Iqbal
  • Qatar invites bids for major power grid expansion

    22 April 2026

    Qatar General Electricity & Water Corporation (Kahramaa) has invited bids for a major power transmission expansion project covering substations and extra-high-voltage cables.

    The bid submission deadline is 14 May.

    The engineering, procurement and construction (EPC) contract covers new substations at multiple voltage levels. It also includes the supply and installation of 400kV extra-high-voltage power cables.

    The project is divided into the following packages:

    • Substation packages S1 and S2 cover new 132/11kV substations  
    • Package S3 covers new 66/11kV substations
    • Package S4 includes a new 400/220/132kV substation, along with upgrades and modifications to existing 400kV and 220kV substations
    • Package S5 covers new 132/11kV substations and upgrades to existing 132kV and 66kV substations
    • Cable packages C1 and C2 cover 400kV cables

    The bid bond is set at QR7m ($1.9m) for the full tender, while bids for individual packages require a QR1m ($0.27m) bond per package. 

    Kahramaa stated that foreign companies not registered in Qatar may participate, subject to meeting specified conditions, including registration and certification requirements.

    It added that it may increase or decrease the scope during the contract period in line with Qatar’s Tenders & Auctions Law.

    Kahramaa procurement plan

    Kahramaa’s 2026 procurement plan includes 198 tenders with a total estimated value of QR21.4bn ($5.9bn).

    Electricity transmission projects account for QR8.9bn ($2.4bn) and include the construction of new 400/132kV substations in Al-Wukair and Al-Mashaf, as well as the expansion of 400kV substations at Ras Laffan.

    These also cover the installation of 132kV underground cables between Al-Sailiya and Al-Rayyan over a 24-kilometre route, as well as upgrades to the 400kV and 220kV networks.

    Additionally, there are 64 planned electricity distribution projects managed by the Electricity Distribution Department that cover the medium-voltage and low-voltage networks throughout Doha and the regional municipalities. 

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16513966/main.jpg
    Mark Dowdall
  • Trump confirms UAE currency swap talks

    22 April 2026

    Register for MEED’s 14-day trial access 

    US President Donald Trump has confirmed that Washington is considering a currency swap agreement with the UAE.

    During an interview with US broadcaster CNBC, Trump acknowledged that the arrangement is being considered. “It is [under consideration], but it’s been a good country. It’s been a good ally of ours,” Trump stated, noting that the request stems from a liquidity challenge rather than a solvency issue.

    Addressing the scale of the conflict’s impact on the federation, he added, “UAE got hit with 1,400 missiles. Now, fortunately, they had the Patriots, and they had a great defence … but they did get hit hard. They were hit the hardest of the group, actually.”

    The president also emphasised the strength of the bilateral economic relationship and his personal regard for the country’s leadership. “They’re really led by incredible people,” Trump told CNBC. “A year ago, I went there and I got them to invest $1tn in the United States. So, yeah, if I could help them, I would.”

    An early report by the Wall Street Journal said that high-level talks were initiated by UAE Central Bank governor Khaled Mohamed Balama, who recently met with Treasury secretary Scott Bessent and Federal Reserve officials in Washington.

    The UAE’s move is viewed as a precautionary effort to protect the dirham’s peg to the dollar and maintain its position as a global financial hub. The conflict has already inflicted significant damage on Emirati oil-and-gas infrastructure and disrupted tanker traffic through the Strait of Hormuz, which has historically been the primary source of the nation’s dollar revenues.

    While swap lines are traditionally managed by the Federal Reserve and reserved for major economies with deep ties to US markets, the Trump administration may look to the Treasury Department for a solution. Trump referenced a recent $20bn swap for Argentina facilitated by Secretary Bessent through the Exchange Stabilisation Fund as a potential model for the UAE.

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

    Economic shock threatens long-term outlook; Riyadh adjusts to fiscal and geopolitical risk; GCC contractor ranking reflects gigaprojects slowdown.

    Distributed to senior decision-makers in the region and around the world, the April 2026 edition of MEED Business Review includes:

    > GCC CONTRACTOR RANKING: Construction guard undergoes a shift
    To see previous issues of MEED Business Review, please click here

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16512000/main.jpg
    Colin Foreman
  • Egyptian and Chinese firms sign green hydrogen deal

    22 April 2026

    A group of Egyptian companies and China’s UEG have signed a preliminary agreement to explore developing a Mediterranean green hydrogen hub in the port city of Alexandria.

    The memorandum of understanding was signed by:

    • Abu Qir Fertilisers & Chemicals Company (Egypt)
    • AlexFert (Egypt)
    • Orascom Construction (Egypt)
    • UEG Green Hydrogen Development Holding (China)

    In a joint statement, the companies said: “The collaboration marks a significant step toward advancing Egypt’s position as a regional leader in green hydrogen and sustainable energy solutions.

    “The proposed project aims to develop a large-scale green hydrogen production facility powered by renewable energy, with integration into existing ammonia production infrastructure.”

    Under the terms of the deal, UEG and Orascom Construction will lead feasibility studies for 500MW of renewable energy generation and 480 tonnes a day (t/d) of green hydrogen production.

    Abu Qir and AlexFert will evaluate the integration of green hydrogen into ammonia production processes and support access to local resources and infrastructure.

    The renewable energy will be a mix of wind and solar, according to the statement.

    Hany Dahy, the chairman of Abu Qir Fertilisers & Chemicals Company, said: “This partnership reflects Abu Qir’s commitment to leading the transition toward low-carbon ammonia production, leveraging our existing assets while integrating green hydrogen solutions.”

    Joe Williams, the chief executive of the Green Hydrogen Organisation, said: “The announcement of this project comes at a crucial time, as geopolitical tensions in the Middle East highlight the importance of diversifying energy and fuel supply chains.

    “Developing integrated green ammonia and fertiliser production in Alexandria supports local industrial value, and strengthens long-term energy and food security.

    “As green ammonia production scales in Egypt, it can also be used as a clean shipping fuel given Egypt’s strategic maritime location.”

    The preliminary agreement establishes a framework for cooperation while the parties conduct technical, commercial and regulatory assessments.

    Subject to the outcomes, the partners intend to negotiate definitive agreements for the project’s development, according to their statement.

    Abu Qir Fertilisers established North Abu Qir for Agricultural Nutrients in May 2023 to develop a major Egyptian fertiliser project designed to produce 2,400 t/d of ammonium nitrate.

    Located next to Abu Qir Fertilisers in Alexandria, on a site formerly occupied by the Rakta paper manufacturing facility, the project is a joint venture with a capital investment of £E10bn ($190m), of which Abu Qir Fertilisers holds a 45% stake.

    The state-owned companies Egyptian General Petroleum Corporation and Egyptian Petrochemicals Holding Company hold stakes of 45% and 10%, respectively.

    The project focuses on the production of ammonia and nitric acid.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16498782/main.jpg
    Wil Crisp
  • Chinese company approves $68.5m biotech project in Egypt

    22 April 2026

    China’s Tongling Jieya Biotechnology is planning to develop a factory that will produce disposable sanitary products in Egypt, according to a stock market filing.

    As part of the plan to develop and operate the facility, the company is establishing a subsidiary in the North African country.

    The total investment in the project is estimated to be approximately RMB467,101,200 ($68.5m).

    In its statement, Tongling Jieya Biotechnology said that it would “implement the investment in stages based on market demand and business progress, adjusting the investment amount and method as needed, and fulfilling the corresponding review procedures and information disclosure obligations”.

    The facility is expected to produce up to 10 billion wet wipes a year, as well as 2 billion baby diapers and 100,000 tonnes of nonwoven fabrics.

    This is expected to generate about $270m in annual revenue and employ around 1,000 people when the facility is operating at full capacity.

    The plan to establish the subsidiary and develop the factory was approved at a company board meeting on 8 April 2026.

    In its statement, the company said: “The management was authorised to handle the signing of agreements and documents related to this investment and construction, and to apply for administrative permits or filings with the relevant authorities such as the Ministry of Commerce and the State Administration of Foreign Exchange.”

    The construction and implementation of the project still requires approval from Egyptian government departments.

    Under current plans, the factory will be developed in the China-Egypt TEDA Suez Economic and Trade Cooperation Zone, located within the wider Suez Canal Economic Zone (SC Zone).

    The land for the project has already been purchased, covering an area of 160,000 square metres.

    The scope of the project will include developing:

    • 14 production lines
    • Quality control facilities
    • Auxiliary equipment

    The statement from Tongling Jieya Biotechnology estimates a two-year construction period for the project.

    The contract for the land on which the project will be built was signed with TEDA Special Economic Zone Development Company on 23 December 2025, with a value of $8,465,400.

    Tongling Jieya Biotechnology said the planned facility in Egypt is important for the company’s “globalisation strategy”.

    It said: “Egypt is located at the crossroads of Asia, Africa and Europe, with a superior geographical location, and has signed a number of free trade agreements with major European and American markets, which is conducive to the company’s further expansion and coverage of global markets outside the United States.”

    Established in 2008, the China-Egypt TEDA Suez Economic and Trade Cooperation Zone has become one of the SCZone’s most prominent industrial hubs.

    By July last year, it had attracted 185 companies and over $3bn in cumulative investment.

    The land deal for this project was one of three agreements announced in December last year relating to the zone, with a total value of more than a billion dollars.

    At the time, SC Zone chairman Walid Gamal El-Din said that the largest was a project led by the Chinese chemical fibre specialist Xin Feng Ming.

    This will involve the construction of an integrated polyester fiber and polymer complex with investments exceeding $800m.

    The facility is expected to be built over about 400,000 square meters and developed in three phases, with a combined annual production capacity of 1.08 million tonnes.

    It is expected to create around 3,000 jobs.

    A second project with Chaoyang Langma will establish a $190m tyre manufacturing complex producing heavy-duty truck and passenger car tyres.

    The facility will span 200,000 square meters and employ about 1,400 workers.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/16498781/main.jpg
    Wil Crisp