Riyadh prioritises stability over headline growth
28 September 2023
MEED's October 2023 special report on Saudi Arabia also includes:
> POLITICS: Saudi Arabia looks both east and west
> GIGAPROJECTS: Gigaproject activity enters full swing
> TRANSPORT: Infrastructure projects support Riyadh’s logistics ambitions
> UPSTREAM: Aramco focuses on upstream capacity building
> DOWNSTREAM: Saudi chemical and downstream projects in motion
> POWER: Riyadh rides power projects surge
> WATER: Saudi water projects momentum holds steady
> BANKS: Saudi banks track more modest growth path
> SPORT: Saudi Arabia’s football vision goes global
> JEDDAH TOWER: Jeddah developer restarts world’s tallest tower
As 2023 heads towards its final quarter, Saudi Arabia has elected to continue to pursue further voluntary Opec+ oil production cuts, supporting oil prices at the expense of its own immediate GDP growth.
On 5 September, Riyadh confirmed its intention to roll over its additional 1 million barrels a day (b/d) of production cuts until the end of the fourth quarter. Analysts had largely expected Saudi Arabia to extend the cuts with a view to further tightening oil markets, and the price of Brent crude broke the $90-a-barrel mark and reached its highest point in 10 months shortly after the cut extension was announced.
Despite the rise in prices, Saudi Arabia’s ongoing oil production restraint will ensure no improvement is likely to be made on its modest mid-year real GDP growth forecasts.
In July, the Washington-based IMF lowered its projection for Saudi Arabia’s economic growth to 1.9 per cent, down from an earlier forecast of 3.1 per cent in April – and compared to an 8.7 per cent growth figure for 2022, which saw oil reach highs of up to $124 a barrel and the kingdom’s first fiscal surplus in nearly a decade.
The country also entered a technical recession in the second quarter after its economy contracted for its second successive quarter in a row – shrinking by 0.1 per cent after a contraction of 1.4 per cent in the first quarter, according to estimates from the General Authority for Statistics (Gastat). This resulted in a slowing of year-on-year growth to 3.8 per cent in the first quarter and 1.1 per cent in the second.
There is now a risk that the Saudi economy could see an overall contraction for 2023. The further three months of production cuts will translate into a 9 per cent overall fall in production in 2023, the largest drop in 15 years, according to Khalij Economics.
Non-oil growth
Despite the disappointing headline GDP growth figures and projections, however, Saudi Arabia is maintaining a robust non-oil growth rate.
The non-oil economy is estimated to have grown 5.5 per cent year-on-year in the second quarter of 2023, according to Gastat, while oil sector growth declined by 4.2 per cent. Private sector growth for the quarter has been estimated to be even higher, at about 6.1 per cent.
At the same time, the Riyad Bank Saudi Arabia purchasing managers’ index (PMI) settled to an 11-month low of 56.6 in August 2023, down from 57.7 in July, reflecting a moderation of non-oil activity. It was the second stepdown in two months for the index from a multi-year high for new business in June.
The headline PMI figures remain deeply positive, however, with the index well above the 50 mark that delineates growth from contraction.
The index also saw the rate of job creation pick up further in August amid sustained new business growth. This reflects a continuation of a job creation trend in the country that has seen unemployment fall from 9 per cent during the Covid-19 pandemic to 4.8 per cent at the end of 2022. Meanwhile, youth unemployment has been halved over the past two years to 16.8 per cent in 2022.
On the flipside, input cost inflation accelerated to its fastest rate in over a year due to a sharper uptick in purchase prices, though selling prices partially compensated for this by also rising. Business confidence nevertheless slid to the lowest level since June 2020 over concerns of rising market competition.
Project performance
The kingdom’s non-oil sector should continue to be well supported by Saudi Arabia’s infrastructure and project spending plans. These schemes remain affordable thanks to the kingdom’s broad financial reserves and buffers.
As of mid-September, Saudi Arabia’s project spending for 2023 had already all but matched that of 2022, with contract awards in the kingdom approaching the $57bn mark – last year’s figure – but with three and a half months still left to run.
This is the third straight year with project awards of around $55bn or more. This is a 75 per cent increase in spending compared to the period from 2016 to 2020, which witnessed an average of only slightly more than $30bn in awards each year.
There is a further $50bn-worth of project work in bid evaluation and expected to be awarded this year. Even accommodating the possibility of delays for much of this work, the award of even a modest portion of this would make 2023 by far the strongest year on record for project awards in Saudi Arabia.
This heightened level of projects activity is as much due to above-average spending on oil and gas infrastructure, amid a spree of investment by Saudi Aramco in the optimisation of its core assets, as it is to the kingdom’s gigaproject programme.
Oil and gas project awards alone have exceeded $21bn in 2023 to date and could readily be on track to beat the previous award high of $24.7bn seen in 2019.
It is the construction and transport sector that has the furthest to go to outdo itself in the last quarter of 2023.
Awards in the sector to date have hit $24.6bn, whereas awards in 2022 reached $34.7bn – so there is a $10.1bn gap to bridge to beat last year’s performance. This is not unrealistic given the $14.2bn-worth of projects in the sector under bid evaluation, and especially given the backing of the Public Investment Fund for the kingdom’s gigaprojects and other Vision 2030 schemes.
Overall, the ongoing upsurge in projects activity should continue to prove supportive of the non-oil economy, regardless of either the vicissitudes of the oil price or Saudi Arabia’s moderation of its own oil production.
Register for MEED's guest program now to access this article.
Exclusive from Meed
-
Eni completes $1bn Libya gas project20 October 2026
-
Diriyah Company tenders East Wadi bridge20 October 2026
-
Kuwait selects firms for power works at housing projects20 October 2026
-
Taqa moves forward with Mirfa-Liwa scheme20 October 2026
-
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Eni completes $1bn Libya gas project
20 October 2026
Register for MEED’s 14-day trial access
Libya’s Mellitah Oil & Gas Company, a joint venture of Libya’s National Oil Corporation (NOC) and Italian oil and gas company Eni, has achieved mechanical completion on its Bouri gas utilisation project (GUP).
In a statement, Eni said that start-up procedures are currently under way, enabling the recovery of associated gas produced from the Bouri field, which is located in Libya’s western offshore area.
The main contract for the project, worth $1bn, was awarded to Italy’s Saipem in August 2023.
The project involved the construction and installation of the new Bouri gas recovery module and related tie-in infrastructure that enables the recovery and treatment of gas that was previously flared.
In its statement, Eni said that the project “represents one of the most significant emissions reduction initiatives in Libya’s energy sector”.
It also said that it would contribute to improving the environmental performance of the country’s production system by reducing greenhouse gas emissions by approximately 1.5 million tonnes of carbon dioxide a year.
The recovered gas will be supplied to the domestic market, adding about 700 million cubic metres a year and helping meet demand from the power generation sector.
The project will also support additional gas volumes available for export to Europe through the GreenStream pipeline.
Eni said: “The start-up of the Bouri GUP confirms the joint commitment of Eni and NOC to the development of Libya’s energy sector through initiatives that combine production growth, operational efficiency and environmental stewardship.
“The project is part of a broader strategy aimed at enhancing the value of the country’s gas resources while reducing the emissions intensity of upstream activities.”
Other key projects currently under way in Libya include the A&E Structures Project, which is focused on bringing new offshore gas resources onstream for both the domestic market and exports, as well as initiatives aimed at upgrading and optimising gas production and transportation infrastructures.
Eni has been present in Libya since 1959, and the company’s equity production in the country in 2025 amounted to approximately 162,000 barrels of oil equivalent a day.
The Bouri offshore field is part of Libya’s Block NC-41, located 120 kilometres north of the Libyan coast in the Mediterranean Sea.
It was first discovered in 1976 at a depth of 8,700 feet. It is estimated to contain 4.5 billion barrels in proven recoverable crude oil reserves and 3.5 trillion cubic feet of associated natural gas, with an annual production potential of 6 billion cubic metres.
The first development phase, costing nearly $2bn, was completed in 1990.
This was immediately followed by a second development phase, which entailed drilling 55 new wells and constructing three additional platforms. Production began from the oil platforms DP4 and DP3 in August 1998.
https://image.digitalinsightresearch.in/uploads/NewsArticle/20770288/main3529.jpg -
Diriyah Company tenders East Wadi bridge
20 October 2026
Saudi Arabia’s Diriyah Company has invited contractors to bid on the construction of the DG II East Wadi Bridge, a key crossing within Riyadh’s Diriyah master development.
The bridge will provide an arterial road connection linking the Diriyah Gate Phase 2 (DG II) Infrastructure Package 1 and Package 2 zones.
The project scope involves the construction of a 100-metre clear-span, 44-metre-wide, single-span post-tensioned concrete bridge structure with integrated abutments and four architectural towers.
The contract also encompasses approach slabs, access roads, pavements, associated earthworks, architectural finishes and cladding, mechanical, electrical and plumbing installations, utility interfaces, bridge parapets, vehicle restraint systems, waterproofing, testing and commissioning, and associated temporary works.
The client will supply the detailed engineering design, and the selected contractor will develop the construction methodology.
Diriyah Company issued the prequalification tender on 14 September, with submissions due by 10 December.
https://image.digitalinsightresearch.in/uploads/NewsArticle/20769223/main.png -
Kuwait selects firms for power works at housing projects
20 October 2026
Kuwait’s Public Authority for Housing Welfare (PAHW) has appointed contractors for works covering the supply and installation of 132kV underground cables at South Sabah Al-Ahmad Residential City.
The contracts relate to engineering, procurement and construction (EPC) packages for works for 28 main 132/11kV substations across four phases.
According to sources, Egypt’s Elsewedy Cables has won contracts for phases 1 and 3, while China’s TBEA Shandong Luneng Taishan Cable Company has won contracts for phases 2 and 4 of the development.
In April, MEED reported that PAHW had received at least five bids for each of the first two packages, with Elsewedy and TBEA offering $44m and $40.5m, respectively.
The first contract (phase 1) covers seven substations in zones N9, N7 and N5. The second contract (phase 2) covers seven substations in zones N10 and N5.
PAHW issued two further 132kV underground cable tenders for the South Sabah Al-Ahmad residential development at the end of May, as reported by MEED.
This included a contract (phase 3) covering the supply, extension and maintenance of 132kV underground cables linked to seven substations serving the N5, N6, N8 and N10 districts. Egytech Cables, a subsidiary of Elsewedy, submitted an offer of $39.95m, the lowest of four bids.
The other contract (phase 4) covers the supply, extension and maintenance of 132kV underground cables feeding eight main transformer substations serving the N1, N6 and N11 districts.
MEED reported in July that TBEA had submitted an offer of $44.06m for the contract.
South Saad Al-Abdullah
Separately, PAHW has appointed contractors for power transmission works at the South Saad Al-Abdullah residential development.
The local firm Sayed Hamid Behbehani & Sons has won a contract to supply, install and maintain 10 main 132/11kV transformer substations for the development’s third phase.
Another local firm, Al-Ahleia Switchgear, has won a contract to supply, install and maintain 10 main 132/11kV transformer substations for the project’s fourth phase.
As reported in August, the contractors submitted bids of $104.2m and $103.3m, respectively.
https://image.digitalinsightresearch.in/uploads/NewsArticle/20761431/main.jpg -
Taqa moves forward with Mirfa-Liwa scheme
20 October 2026
Taqa Transmission and Taqa Distribution are advancing a major water transmission and distribution scheme serving Mirfa, Madinat Zayed and Liwa in Abu Dhabi, sources told MEED.
The project, originally estimated to cost $775m, has been in procurement for several years. According to sources, a request for proposals has been issued, with bids due on 5 January 2027.
The initial submission deadline was 11 November, before it was extended.
The project was previously tendered in December 2024, with contractors submitting bids for transmission and distribution packages in January 2025. As of August, the bids were still under evaluation. It is unclear whether the latest tender represents a revised procurement process for the same scheme.
The project comprises a water transmission system from Mirfa, alongside distribution networks serving farms and settlements in the western region.
According to details seen by MEED, the latest scope includes a pumping station at Mirfa with a capacity of 128 million imperial gallons a day, about 125 kilometres of transmission pipelines to Muzairah, with branches to Madinat Zayed and Liwa Summit, and storage tanks at the three locations.
The distribution network is divided into four geographic clusters covering Liwa East, Liwa West, Madinat Zayed and Seih Al-Kheir. The works include associated pipelines, pumping stations and storage facilities.
The earlier procurement was structured as an engineering, procurement and construction scheme, divided between transmission and distribution works.
As MEED understands, the latest tender is being pursued under a design, build and operate model, which extends the contractor’s responsibilities to operating the infrastructure after construction.
https://image.digitalinsightresearch.in/uploads/NewsArticle/20758109/main2934.jpg -
Contractors prepare prices for Adnoc Onshore field facilities project
20 October 2026
Contractors are preparing commercial bids for Adnoc Onshore’s project to build on-plot and off-plot facilities at the Rumaitha and Shanayel fields in Abu Dhabi’s North East Bab oil field cluster.
The project will enhance and sustain crude output at Rumaitha and Shanayel at 45,000 barrels a day (b/d), supporting Adnoc’s Accelerated Integrated Programme 5 (AiP5) drive to lift capacity to 5 million b/d by 2027.
Adnoc Onshore issued the main tender for engineering, procurement and construction (EPC) works on 19 June. Contractors submitted technical bids by 5 August, sources told MEED.
The on-plot works include adding a crude processing train, produced water treatment and reinjection systems, surface water pumps, and multi-stage gas compression and dehydration units. Works also include utilities, safety and control systems, modifications to existing Phase 1 units and 220kV power infrastructure.
The off-plot scope includes installing and tying in new gas-lifted producer and water-injection wells, as well as building and expanding wellhead clusters. Contractors will also lay crude-gathering, water-injection and gas-export pipelines connecting to the Adnoc Gas network and extend 33kV overhead power lines across the fields.
The tender follows Adnoc Onshore’s shift in strategy for the wider North East Bab development – comprising the Al-Nouf, Rumaitha and Shanayel fields – after scrapping an earlier engineering, procurement and construction management (EPCm) approach. MEED reported in December that the operator had cancelled an off-plot EPCm contract awarded to China Petroleum Engineering & Construction Corporation (CPECC) in October 2024. Adnoc later cancelled a separate on-plot EPCm tender that it received bids for in the second quarter of 2025.
In addition to the North East cluster, Adnoc Onshore continues to make progress on EPC works for another similar project to build off-plot facilities at the South East cluster of oil fields in Abu Dhabi, which is also integral to Adnoc Group’s AiP5 campaign.
The South East cluster comprises the Asab, Mender, Qusahwira, Sahil and Shah fields and accounts for approximately a third of Adnoc Onshore’s oil production capacity.
MEED previously reported that Adnoc Onshore awarded CPECC the EPC works for the South East off-plot facilities project, with the contract value estimated at around $1.2bn.
CPECC is also performing EPC works on the South East on-plot facilities project in a consortium with Greece-headquartered Archirodon. Adnoc Onshore awarded an estimated $1.5bn contract for that project to the consortium in December 2024, with EPC works scheduled for completion in 2027.
ALSO READ: Adnoc Onshore seeks bids for Bu Hasa field EOR project
https://image.digitalinsightresearch.in/uploads/NewsArticle/20757699/main.jpeg