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2010 proved to be quiet for Middle East oil contractors


2011 will hopefully bring greater activity to oil engineering firms across the Middle East who will be looking for a pickup in oil and gas contract awards after 2010 proved to be a very quiet year.

Many engineering, procurement and construction (EPC) firms had hoped that 2010 would continue to carry on from 2009 which had seen a great number of contract awards, but this did not materialise.

One of the key reasons why 2009 saw such a high number of projects awarded was the role played by Abu Dhabi who was one of the main drivers of new project activity in the region, as the emirate sought to capitalise on a sharp fall in contracting costs.

2010 proved to be a disappointment for many EPC firms with the nine months to September 2010 only bringing in US$35 billion of energy contracts and the total for the whole year not now expected to exceed US$40 billion, as the second half of 2010 which was supposed to bring in a new contracts ended up not living up to expectations, according to MEED.

There are a number of reasons for the slowdown in activity in 2010. Abu Dhabi did not tender many projects as the emirate had completed most of its tendering for its new upstream developments and its downstream projects remain in the early stages of planning.

Saudi Arabia was also expected to become quite active in the oil and gas market for EPC contracts in 2010 but Saudi Aramco remained slow in pushing ahead with a number of its upcoming schemes.

This fall in activity has seen contracting prices remain low due to the high competition for the small number of contracts due to be offered during 2010. The tail end of 2010 did see some movement and many EPC's hope this will be a sign of better things to come in 2011.