The Hindu Business Line : Energy prices, global oil demand fuel upturn in Saudi construction activity

HIGH energy prices and strong global oil demand are fuelling a significant upturn in construction activity in Saudi Arabia, with almost $160-billion-worth of large-scale projects planned in the kingdom according to MEED projects, the online business tracker.

More than 25 per cent of the total, estimated at $41.3 billion, will come from the oil and gas sector, according to market estimates, the MEED report on Tuesday published by the official Emirates News Agency WAM said.

Mr Salim S. Al-Aydh, senior vice-president, engineering and operations services at Saudi Aramco, commented: "The global petroleum industry is facing unprecedented challenges given its responsibility to supply a worldwide market. But with those challenges come opportunities of an equal magnitude."

According to Al-Aydh, demand for oil will expand in the next 25 years from roughly 85 million barrels a day to 120 million barrels a day, fuelled by population growth in developing nations, increased prosperity in major economies and the greater affordability of energy.

He continued: "In particular, China's crude oil imports increased by 35 per cent in 2004, and are expected to increase by another 12 per cent."

This boom will not be sustainable unless Saudi Arabia keeps on implementing new technologies, both at the operational and logistical level, according to Mr Ayman Razek, general manager of MEED projects.

He said the project sector is supported by companies like Saudi Aramco, who will be the engine behind Saudi's economic growth in the years to come." Mr Razek added: "Major challenges for this market will be the rising operational costs that will need to be tackled with longer-term contracts and new bidding strategies that will safeguard both the contractor and the client."

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