Meed | Regional downstream sector prepares for consolidation

Regional downstream sector prepares for consolidation

30 December 2024

The Middle East and North Africa (Mena) region’s midstream and downstream oil, gas and petrochemicals sectors together had one of their best years on record in 2024, with state-owned companies and private players collectively spending close to $38bn on projects.

Saudi Arabia emerged as the biggest regional spender on midstream and downstream projects. To address incremental volumes of gas entering the grid as Saudi Aramco increases its conventional and unconventional gas production, the state enterprise has spent more than $17bn on gas processing and transportation projects this year.

In April 2024, Aramco awarded $7.7bn in engineering, procurement and construction (EPC) contracts for a project to expand the Fadhili gas plant in the Eastern Province of Saudi Arabia. The project is expected to increase the plant’s processing capacity from 2.5 billion cubic feet a day (cf/d) to up to 4 billion cf/d.

On 30 June, Aramco awarded 15 lump-sum turnkey contracts for the third expansion phase of the Master Gas System (MGS-3), worth $8.8bn. Then, in August, the company awarded contracts for the remaining two packages of the MGS-3 project, which were worth $1bn.

Saudi Aramco divided EPC works on the MGS-3 project into 17 packages. The first two packages involve upgrading existing gas compression systems and installing new gas compressors. The 15 other packages relate to laying gas transport pipelines at various locations in the kingdom.

The Master Gas System expansion will increase the size of the network and raise its total capacity by an additional 3.15 billion cf/d by 2028 with the installation of about 4,000 kilometres
of pipelines and 17 new gas compression trains.

Abu Dhabi capex

The UAE has been the second-largest spender on midstream, downstream and chemicals projects in 2024, led by investments from Abu Dhabi National Oil Company (Adnoc) and Taziz – its 60:40 joint venture with industrial holding entity ADQ.

Adnoc’s biggest capital expenditure (capex) was in the form of a $5.5bn EPC contract that it awarded to a consortium of France’s Technip Energies, Japan-based JGC Corporation and Abu Dhabi-owned NMDC Energy to develop a greenfield liquefied natural gas (LNG) terminal complex in Ruwais.

The upcoming Ruwais LNG export terminal will have the capacity to produce about 9.6 million tonnes a year (t/y) of LNG from two processing trains, each of which has a capacity of 4.8 million t/y. When the project is commissioned, Adnoc’s LNG production capacity will more than double to about 15 million t/y.

Adnoc Group subsidiary Adnoc Gas has also advanced a project to expand its sales gas pipeline network across the UAE, which is known as Estidama. The Abu Dhabi-listed company has awarded two EPC packages of the project this year, which together were worth more than $500m.

Adnoc Gas is expected to award the contract for another Estidama package before the end of 2024 that covers the construction of a pipeline that will provide feedstock from its Habshan gas processing plant to the upcoming Ruwais LNG complex.

Taziz, meanwhile, awarded three EPC contracts totalling $2bn for infrastructure works at the industrial chemicals zone that it is developing in Ruwais Industrial City.

Spending to plateau

Having reached a peak in spending, and with EPC contracts awarded for strategic midstream, downstream and chemicals projects in 2024, the Mena region is set to enter a period of more pragmatic project spending in 2025. However, this does not imply that a slump in project capex is likely, and the region could once again equal the level of contract awards made in 2024.

One of the largest projects that may be awarded in 2025 is the main contract for the North Field West LNG project – the third phase of QatarEnergy’s LNG expansion programme.

The North Field West project will have an LNG production capacity of 16 million t/y, which is expected to be achieved through two 8 million t/y LNG processing trains, based on the two earlier phases of QatarEnergy’s LNG expansion programme.

The new project will draw feedstock for LNG production from the western zone of Qatar’s North Field offshore
gas reserve.

Taziz is also on course to make progress with the second expansion phase of its derivatives complex, which will more than double the number of chemicals produced at the industrial hub. The expansion’s centrepiece will be a large-scale steam cracker that will supply feedstocks to the several new chemical plants earmarked for third-party investments.

In Saudi Arabia, there has been speculation that Aramco may be revisiting its investment strategy and execution approach for its strategic liquids-to-chemicals programme.

The aim of the programme is to derive greater economic value from every barrel of crude produced in the kingdom by converting 4 million barrels a day (b/d) of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

Aramco has divided its liquids-to-chemicals programme into four main projects. It took a major step forward
in September 2023 by selecting US firm KBR, France’s Technip Energies, UK-based Wood Group and Australia- headquartered Worley to provide project management consultancy services for the four different segments of the scheme.

Progress on a programme as big as the liquids-to-chemicals scheme is expected to be measured and laboured.

While day-to-day the advancement might appear sluggish, Amin Nasser, Aramco’s president and CEO, said earlier in 2024 that the Saudi energy giant is on track to achieve its crude oil-to-chemicals conversion goal by 2030.

“We are on track to achieve our target of 4 million b/d liquids-to-chemicals [conversion capacity] by 2030,” he said.

Meanwhile, Kuwait is in a similar situation with its planned Al-Zour integrated complex upgrade programme (Zicup), which has suffered significant delays in recent years. However, state-owned Kuwait Integrated Petroleum Industries Company (Kipic), the project’s operator, recently appointed a team to look into the logistics of developing a benzine pipeline as part of the estimated $10bn Zicup scheme.

Although this may be a small step, it does indicate that Kuwait remains determined to achieve its ambition of developing a large-scale petrochemicals facility, which, when integrated with its $16bn Al-Zour refinery, could become one of the biggest integrated refining and petrochemicals complexes in the Mena region.

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Indrajit Sen

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Saudi Arabia’s Royal Commission for Al-Ula (RCU) is conducting market sounding for the first phase of the Mughayra wastewater treatment plant (WWTP) expansion before formally starting its tendering process, according to industry sources.

The project is valued at SR400m ($107m) and is intended to increase the Mughayra plant’s wastewater treatment capacity to 62,000 cubic metres a day.

RCU is gauging interest from potential contractors and has not yet issued a prequalification questionnaire, a source said.

The scheme forms part of Saudi Arabia’s broader investment drive to develop its cultural and tourism offering across Al-Ula.

The commission launched its Journey Through Time Masterplan in April 2021, with implementation scheduled in three phases through 2035. The masterplan covers infrastructure development, water management and irrigation, alongside the regeneration of a 9-kilometre cultural oasis.

French engineering firm Artelia previously noted in its 2025 annual corporate report that it is involved in the design phase of the Mughayra WWTP.

RCU is also developing strategic potable-water storage infrastructure in Al-Ula, including a design-and-build project covering a 50,000-cubic-metre reservoir at Hub 06 and a 15,000-cubic-metre reservoir at Hub 08.

Local contractor Bin Omairah previously confirmed that it is serving as the engineering, procurement and construction contractor for the storage facilities.

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Saudi Arabia raises electricity tariffs
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Saudi Energy, formerly Saudi Electricity Company, has announced revised electricity tariffs, which will take effect on 1 January 2027.

The revised tariff schedule, published on the company’s official website, covers residential, commercial, industrial, agricultural, charitable and government customers.

The largest percentage increase in consumption rates is 16.7%, for residential customers using up to 6,000 kilowatt-hours (kWh) a month. Residential customers will pay 21 halalas/kWh for monthly consumption of up to 6,000kWh, up from 18 halalas. For consumption above 6,000kWh, the rate will rise from 30 to 33 halalas/kWh, a 10% increase.

The industrial tariff will increase by 15%, from 20 to 23 halalas/kWh. Commercial customers, private healthcare facilities and private educational facilities will pay 25 halalas/kWh, up from 22 halalas, for consumption up to 6,000kWh a month, and 35 halalas/kWh above that level, up from 32 halalas.

Tariffs for charities and government customers will also increase. In addition to consumption-based charges, customers will pay a fixed monthly fee based on the capacity of their electricity meter. This replaces the previous separate charge for meter reading, maintenance and billing, with VAT applied to the revised tariffs.

Electricity investment

The new tariffs coincide with changes to water consumption tariffs announced by the National Water Company, also effective from 1 January 2027.

King Salman Bin Abdulaziz Al-Saud directed support measures following a proposal presented by Crown Prince and Prime Minister Mohammed Bin Salman Bin Abdulaziz Al-Saud.

This includes raising the minimum wage required for Saudi nationals to count as full employees towards private sector localisation quotas under the Nitaqat programme.

The tariff changes come as Saudi Arabia plans substantial investment in its electricity infrastructure. In September 2025, Saudi Energy announced plans to invest SR220bn ($58.7bn) in power infrastructure projects between 2025 and 2030.

A June 2025 report by Fitch Ratings forecast negative free cash flow of about SR16bn a year over the period and rising leverage, reflecting the financial demands of the programme.

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Dubai Municipality confirms AED3bn Tasreef drainage awards
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Dubai Municipality has confirmed it has awarded four contracts worth AED3bn ($817m) to expand the emirate’s stormwater drainage network by about 100 square kilometres under phase three of the Tasreef programme.

The projects will cover Jumeirah, Umm Suqeim, Al-Quoz, Al-Barsha, Al-Wasl and Al-Marmoom. The works include constructing and extending main stormwater drainage lines with diameters of up to three metres.

The four packages are part of Dubai’s AED30bn Tasreef programme, which aims to increase the emirate’s stormwater drainage capacity by 700% and reduce costs associated with pumping stations, network operations and maintenance by 20%.

The contracts have been awarded to China State Construction Engineering Corporation (CSCEC) and three local firms: Arifco Group, Nael Construction & Contracting (NCC) and Detech Contracting. Dubai Municipality did not state which projects the awards relate to.

According to sources, the contract awards include packages TF-15-C1, TF-15-C2 and TF-13-C1.

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The second package, TF-15-C2, covers the corridor between Sheikh Zayed Road and Al-Khail Road. It includes about 14km of main drainage lines serving Al-Quoz Industrial Areas 1, 3 and 4, and Al-Barsha 1. In July, MEED reported that CSCEC had won the engineering, procurement and construction contract for this project.

The third package, TF-13-C1, covers Al-Marmoom, where 23km of drainage infrastructure will be developed. According to a source, Arifco has been awarded this contract.

The final package covers Jumeirah and Umm Suqeim, where about 42km of main drainage lines will serve Umm Suqeim 1, 2 and 3; Umm Al-Sheif; Jumeirah 3; Al-Safa 1 and 2; and Al-Manara.

In May, MEED reported that NCC had been awarded a contract to build a sewage and stormwater drainage system, DS-204. However, it is unconfirmed whether this relates to the same project.

Earlier, in February, the municipality confirmed it had awarded contracts for five new projects under phase two of the programme to expand and strengthen Dubai’s stormwater drainage network.

These included two contracts awarded to Detech and one to CSCEC for stormwater drainage infrastructure. In addition, two consultancy contracts were awarded for the study and design of drainage systems in selected areas across the emirate.

Cumulatively valued at AED2.5bn, the new projects will serve 30 vital areas, spanning approximately 430 million square metres and supporting an estimated population of three million residents by 2040.

Previously, in April 2025, an earlier package of awards was announced under phase one of the Tasreef programme. The overall masterplan aims to expand Dubai’s rainwater drainage capacity by 700% by 2033.

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Phase two comprises 360 homes across four buildings, with main construction scheduled for completion in late 2028.

Phase four includes 257 homes across four buildings, with completion targeted for the second quarter of 2029.

The award follows an earlier contract valued at about AED800m ($218m) awarded to local contractor Metac General Contracting Company for phases one and three, covering 537 homes across seven buildings.

Together, the two contracts total more than AED1.75bn ($476m) and account for all 1,154 planned homes across the 15 buildings of Bay Grove Residences.

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The tender was issued on 1 October, with a bid submission deadline of 6 January 2027.

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The pavilion will be built on a plot of at least 12,293 square metres and will include a one-level basement, ground- and first-floor public areas, three interconnected courtyards, exhibition spaces on three levels, and an auditorium.

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The facility is designed to accommodate at least 20,000 visitors a day during peak periods, with an anticipated average daily footfall of about 15,000 visitors. The project has a target of Leed Gold certification.

The successful contractor will complete the design, including specialist contractor design portions, and will coordinate the works with the lead design consultant. The scope also includes substructure and early works, including earthworks, excavation, soil improvement, raft foundations, basement reinforced-concrete walls, waterproofing and backfilling.

The main works tender is based on Royal Institute of British Architects' Stage 3 design at 60%, with the 100% Stage 3 design to be issued by addendum.

The main contractor will take over early construction, foundation works and the lead designer’s role. Visitor experience works will be confirmed at a later stage.

The contract also covers the building envelope; internal fit-out; mechanical, electrical and plumbing systems; information and communications technology; fire and life safety systems; security; specialist lighting; landscaping; utilities; and digital and immersive visitor-experience installations.

ERC has also tendered the design-and-build main contract for the Adaptation and Innovation Pavilion in the exhibition’s Technology District, as MEED reported last week.

Expo 2030 Riyadh will run from October 2030 to March 2031 with the theme Foresight for Tomorrow, with host authorities projecting approximately 42 million visits.

The masterplan covers 6 square kilometres, making it one of the largest sites ever designated for a World Expo event.

Situated north of the Saudi capital, the site is located near the future King Salman International airport and will provide direct access to Riyadh landmarks.

The Public Investment Fund, Saudi Arabia’s sovereign wealth vehicle, launched ERC – a wholly owned subsidiary – in June 2025 to build and operate facilities for Expo 2030.

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