By Andy Sambidge
Proleads report shows extent of global slowdown on region's hydrocarbon industry.
Nearly a third of all hydrocarbon projects in the Gulf region have been put on hold or cancelled, according to a new report published on Sunday.
Despite this, the report by research house Proleads Global showed that the GCC countries remained the most active construction markets in the world for the oil, gas and petrochemical industries with projects budgeted at more than $690bn.
Proleads investigated a total of 578 energy projects across the six GCC countries, and found that 30 percent by value have been placed on hold or cancelled with a further 30 percent currently in construction and 40 percent in the pre-construction phase.
Emil Rademeyer, director of Proleads, said: "GCC countries have been taking a long, hard look at spending in the wake of the global recession, falling demand and the volatility of oil markets with projects rescheduled to take advantage of lower costs or cancelled.
"Overall, however, there remains a huge amount of activity in the GCC oil, gas and petrochemical sectors, earnings from which constitute about 85 percent of the region's export revenues. Demand for hydrocarbons and refined product can also be expected to pick up as the global economy gradually pulls out of recession."
The Proleads Insight report covers projects in the oil and gas production and refining sectors with values greater than $10m each in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE.
The report predicted cashflow in the GCC hydrocarbon market to stabilise in 2010 at levels similar those found in late 2007.
"However, the cashflow picture could rapidly deteriorate if projects in the pipeline scheduled to begin construction do not start as planned," said Rademeyer.
The report finds, for example, that almost one third of petrochemical projects in Saudi Arabia are currently on hold.
Overall, the GCC oil sector - of which Saudi Arabia contributes most - currently has 281 projects worth $304bn, 89 percent of which are in the construction or pre-construction phases.
The gas sector - with Qatar leading the way - has 155 projects worth $178 billion with 85 percent in construction or pre-construction.
Saudi Arabia is the largest contributor in the petrochemical sector with 142 projects worth $207 billion - 72 percent of which are in construction or pre-construction.