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Gigaproject contract awards reach $56bn

18 March 2024

Saudi Arabia’s five official gigaprojects have awarded $56bn of construction contracts since they were launched, according to MEED’s Saudi Gigaprojects Tracker compiled using data from regional projects tracker MEED Projects. 

The $56bn total for the five official gigaprojects awards represents 19 per cent of the $300bn of contract awards made across all clients and sectors in Saudi Arabia since the initial gigaproject contracts were awarded in May 2017.

What is a gigaproject?
In January 2023, Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al Saud confirmed five official gigaprojects in the kingdom: the Diriyah, Neom, Qiddiya, Red Sea and Roshn projects.

Contract activity in the kingdom has increased since 2021 as key elements move out of the design phase and into construction. In September 2021, $9bn of contracts had been awarded on gigaprojects. The total more than doubled to $26bn in 2022 and has nearly doubled again in September this year.

January 2024 was the best-performing month for gigaprojects contract awards, with $5.56bn of deals reported. This monthly total was largely due to the $4.7bn contract secured by Italian contractor WeBuild for the construction of the dams at the Trojena mountain resort at Neom.

The deal, which MEED exclusively reported on 15 January, includes the construction of three dams that will form a freshwater lake for the Trojena ski resort.

If Webuild’s dam construction deal is discounted, the gigaprojects performance this year is less impressive, with $1.4bn of awards during the first two months of the year.

There are concerns that dampened levels of contract awards could be a sign of things to come. At the launch of the 2024 budget in December last year, Finance Minister Mohammed Al Jadaan told reporters that the delivery of some of the projects included in the Saudi Vision 2030 plan may be delayed to avoid pressure on the Saudi economy.

The outlook for the oil and gas sector was also dealt a blow in January when a government directive instructed Saudi Aramco to halt its plans to increase the kingdom’s oil production capacity.

In a statement on 30 January, Aramco said it had received a directive from the energy ministry to maintain its maximum sustainable capacity at 12 million barrels a day (b/d). The state energy giant had previously been set a target of achieving an oil output spare capacity of 13 million b/d by 2027.

MEED has subsequently reported that Aramco has shelved more than a dozen offshore oil field upgrade tenders issued to its Long-Term Agreement (LTA) pool of offshore contractors last year.

MEED's April 2024 special report on Saudi Arabia includes:

> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospects

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Colin Foreman

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