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
  • Egypt seeks consultant for major inland waterway study

    18 November 2025

    Egypt’s Transport Ministry has issued an expressions of interest (EOI) request, through the River Transport Authority, to appoint a consultancy firm for a study on a proposed inland waterway linking Lake Victoria to the Mediterranean.

    The consultant will carry out basin-wide data collection and prepare a strategic environmental and social assessment for the project.

    The assignment includes hydrological, topographic, bathymetric and geotechnical surveys across the Nile Basin.

    The consultancy is expected to run for about 15 months, starting in February or March 2026.

    Firms must submit EOIs by 6 December.

    The study forms part of the Vic-Med project, a multi-country plan to establish a continuous inland waterway from Lake Victoria to the Mediterranean Sea.

    The masterplan project aims to reduce transport costs for landlocked countries and provide a lower-carbon alternative to road freight along the Nile corridor

    The work is part of phase two, part one of the feasibility study, funded through a $2m grant from the New Partnership for Africa's Development – Infrastructure Project Preparation Facility (NEPAD–IPPF), the African Development Bank’s (AfDB) fund for early-stage project development.

    The first phase, completed in July 2019 with $650,000 in AfDB funding, developed the project’s legal and institutional framework and launched two regional inland water transport programmes.

    The second phase, valued at $11.7m, covers updated feasibility studies and expanded technical assessments supporting detailed engineering design and cost-benefit analysis in the next stage. 

    This phase also covers the establishment of a regional operating unit for the project in Cairo.

    READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

    Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15108707/main.jpg
    Mark Dowdall
  • Kuwait to make decision on four oil pipeline packages

    18 November 2025

     

    Kuwait is evaluating bids on four packages for a major pipeline project after prices were submitted earlier this month, according to industry sources.

    The four separate packages cover pipeline work in the north, south, east and west regions of the country, sources said.

    Although the total of all bids submitted by Kuwait-based Alghanim International General Trading & Contracting is the lowest at KD419m ($1.4bn), the company submitted the lowest individual bid on only one package, located in northern Kuwait.

    Its bid for the north Kuwait package was KD149.8m ($488.3m).

    Mechanical Engineering & Construction Company submitted the lowest bids for pipeline work on two packages located in the south and east of the country. 

    Both of these bids were valued at KD97,868,394 ($319m).

    Al-Dar Engineering & Construction Company is the low bidder on the fourth package, for pipe work in western Kuwait, submitting a bid of KD64,825,398 ($211.3m).

    Together, all four contracts are expected to be worth about $1.4bn when awarded.

    The scope of all four packages focuses on developing new flowlines and connecting pipelines for oil-producing wells and water wells.

    In some cases, companies are also required to replace old flowlines.

    The contracts are based on work orders, so when KOC needs to connect wells it will issue a request for work execution, industry sources said. 

    Kuwait is trying to boost project activity in its upstream sector.

    The country’s national oil company, Kuwait Petroleum Corporation, is aiming to increase oil production capacity to 4 million barrels a day (b/d) by 2035.

    In August, Kuwait announced that it was producing 3.2 million b/d.

    Earlier this month, KOC said it was planning to spend KD1.2bn ($3.92bn) on its exploration drilling programme through 2030.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15106496/main.png
    Wil Crisp
  • Indian firm wins Oman chemicals project EPC contract

    17 November 2025

    Register for MEED’s 14-day trial access 

    Indian contractor Nuberg EPC has won a contract to perform engineering, procurement and construction (EPC) works on a project to build chlor alkali and calcium chloride plants in Oman for privately-owned Al-Ghaith Chemical Industries.

    The project involves expanding Al-Ghaith’s existing chlor alkali plant in Sur Industrial City, by adding 120 tonnes a day (t/d) of capacity, taking the unit’s total output capacity to 190 t/d. The project also involves building a calcium chloride plant that will have a production capacity of 80 t/d.

    Nuberg EPC said the contract is being executed on a lump sum turnkey basis, with its scope covering design, front-end engineering and design (feed), detailed engineering, procurement, fabrication, construction, commissioning and handover.

    Project execution is already under way, with completion targeted within 19 months, Nuberg EPC said.

    The project marks the second phase of Al-Ghaith’s integrated chemicals complex in Sur and represents a first-of-its-kind large-scale chlor alkali expansion in Oman.

    Nuberg EPC also performed EPC works on the original chlor alkali plant, which has a capacity of 70 t/d.

    In addition to the Oman project, Al-Ghaith has, in the previous decade, also brought on board Nuberg EPC for its chlor alkali and calcium chloride plants in Abu Dhabi. Those contracts covered the commissioning of a 60 t/d chlor alkali plant that was later expanded to 120 t/d, and the execution of a 125 t/d calcium chloride plant and a 50 t/d carbon dioxide plant.

    Nuberg EPC has also executed the expansion of a 45 t/d chlor alkali plant and a greenfield 80 t/d calcium chloride plant for Oman Chlorine in Sohar, increasing the total chlor alkali output capacity to 75 t/d.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15104096/main5048.jpg
    Indrajit Sen
  • Egypt starts production from strategic gas field

    17 November 2025

    Egypt has started gas production from the West Burullus field in the Mediterranean Sea, after connecting the first wells to the national gas grid, according to a statement from the country’s Petroleum & Mineral Resources Ministry.

    Productivity testing showed an output rate approaching 45 million cubic feet a day (cf/d).

    Kareem Badawi, Egypt’s Petroleum & Mineral Resources Minister, said he intends to accelerate development of the field and confirmed that work is under way to connect two additional wells, with the aim of increasing production to 75 million cf/d in the coming months.

    He added that the ministry aims to cut the county’s gas import bill by boosting domestic production.

    The operator of the concession is Cheiron, an Egyptian independent exploration and production company.

    Egypt’s oil ministry said in its statement that the West Burullus field development project represents a model for future integrated projects and investment plans.

    It said that a range of domestic and foreign companies are involved in bringing the field into production.

    In February, a banking consortium led by Banque du Caire, alongside Arab International Bank, Al-Baraka Bank Egypt and Saib Bank, arranged $75m in syndicated medium-term financing for Cheiron Egypt Delta, a subsidiary of the Cheiron Group.

    This financing will help cover part of the investment costs for the gas field development project.

    At the time, Cheiron said that the financing will provide up to 45.5% of the total $165m investment required for the project.

    READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

    Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15102295/main3406.jpg
    Wil Crisp
  • Major Iraq refinery project stalls

    17 November 2025

     

    Construction has yet to start on Iraq’s Al-Faw Investment Refinery project due to a range of problems, according to industry sources.

    In May last year, a statement released by the Iraqi Prime Minister’s Office said that Iraq’s state-owned Southern Refineries Company and China National Chemical Engineering Company (CNCEC) had signed a contract to develop the project.

    Iraq’s Oil Ministry previously said the project would be worth $7bn-$8bn.

    One source said: “This project is failing to make progress despite the efforts of senior political figures in the country.”

    A meeting was chaired by Iraqi Prime Minister Mohammed Shia Al-Sudani in August this year to discuss and try to resolve the problems that are stopping the commencement of construction, according to industry sources.

    It is believed that financing remains a key obstacle for the project.

    The Al-Faw project is part of the Iraqi government’s plan to increase Iraq’s refining capacities, attract foreign investment and increase the production of petroleum products domestically.

    The refinery will have a capacity of 300,000 barrels a day and will produce oil derivatives for both domestic and international markets.

    The project will be carried out in two stages.

    The first phase will involve refining operations, while the second will involve constructing a petrochemicals complex with a capacity of 3 million tonnes a year.

    The project also includes the construction of a 2,000MW power plant and the establishment of the Al-Faw Academy for Refinery Technology, to train 5,000 Iraqi workers that will eventually work at the facility.

    Hualu, a subsidiary of CNCEC, signed a preliminary principles agreement for the project in December 2021.

    At the time, Iraq’s Oil Ministry said that the project would have a value of $7bn-$8bn.

    Due to material price inflation since December 2021, some insiders believe that the project value may now be significantly higher.

    READ THE NOVEMBER 2025 MEED BUSINESS REVIEW – click here to view PDF

    Mena players up the ante in global LNG production race; Investment takes UAE non-oil economy from strength to strength; Project finance activity draws international lenders back to market

    Distributed to senior decision-makers in the region and around the world, the November 2025 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/15102287/main.jpg
    Wil Crisp