Key Gulf Sectors

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Key Gulf Sectors

While the Gulf is clearly the world-leader in oil and gas, regional governments’ diversification policies are leading to an expansion across a range of other sectors, so creating business opportunities for international companies.

Below is a high-level view of some of the trends across the sectors:

Oil & Gas

  • Expanding natural gas production is the priority for the region’s oil and gas industry, as demand from power and industry rises
  • In Saudi Arabia and the UAE in 2011, state-run energy companies will award more than US$12bn-worth of contracts, upstream and downstream, according to MEED Projects
  • Qatar is forecast to award almost US$5bn-worth of contracts in 2011, according to MEED Projects.

Projects

  • Government spending dominates the projects market, especially as governments accelerate social projects, such as housing, education, water and health
  • Significant private capital from within the region is also likely to fund infrastructure development
  • Saudi Arabia promises to be the biggest spender, as it has committed to spending US$400bn by the end of 2014
  • This takes the total number of projects planned in Saudi Arabia to US$623bn, making it the GCC’s largest projects market, according to MEED Projects Tracker
  • The most active project sectors are construction and infrastructure, followed by oil and gas, and then power and water.

Energy-intensive manufacturing

  • Gulf has a competitive advantage in energy-intensive industries such as petrochemicals, cement and metallurgical industries (aluminium, steel and copper)
  • Petrochemicals are successful in terms of growth and export competitiveness – there was an increase in capacity of almost 5 million tonnes in 2009, with a further 6 million due in 2012
  • Aluminium production is a significant industry, with 886 plants employing 63,000 people.  Most Gulf states are now expanding aluminium capacity to serve growing Asian markets.

Financial services

  • Clear trend of Middle Eastern investors choosing to keep more capital within the region since the financial crisis
  • In the aftermath of the financial crisis, growth has slowed for Gulf banks. The combined assets of the 20 largest banks increased by 6.6% in 2010, ahead of 2009’s 5.8% rise, but considerably less than 2008’s 17%, according to MEED
  • Traditionally, corporate assets have made up the largest part of bank assets in GCC countries
  • Retail banking is picking up fast as a large and growing young population enters the workforce. Mortgages and other retail products, such as home and life insurance, will increasingly be areas of focus
  • Insurance has been a growing market, as a growing middle class embraces financial services products
  • Trade finance increasing as Gulf countries become more integrated into world trade.

ICT

  • The Information and Communication Technology sector has been expanding rapidly in recent years
  • Governments across the Middle East and North Africa see it as key to improving efficiency within government organisations, while stimulating growth and productivity
  • Local governments have plans to roll out fibre optic networks to promote the deployment of technology services
  • Plans are in place to lay an additional 60,000 kilometres  of fibre optic networks across the region by the end of 2012, as part of US$2.5bn worth of investment aimed at developing world-class telecommunications networks
  • Region’s international connectivity is continually being upgraded as new undersea cables are laid.

Tourism and aviation

  • Gulf has emerged as a tourism and aviation hub in recent years
  • Tourism arrivals and infrastructure growing (including hotels and airlines)
  • Niche tourism is developing (healthcare, sports, heritage)
  • Budget tourism is expanding
  • Asian tourists, especially Indians, likely to start visiting region
  • All Gulf countries planning to expand their airports
  • By 2016 the combined capacity of international airports at Dubai, Abu Dhabi and Qatar will be greater than that of Heathrow, Paris Charles de Gaulle and Frankfurt.