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GCC hydrocarbon projects at $690 billion
Despite the suspension or cancellation of 30 percent of the Gulf’s hydrocarbon projects, the Gulf Cooperation Council’s (GCC) oil, gas and petrochemicals construction market remains the most active in the world, with $690 billion of budgeted projects. Among 578 hydrocarbon projects in the GCC, 30 percent by value have been placed on hold or cancelled, with another 30 percent under construction and a further 40 percent in the pipeline. Earnings from the GCC oil, gas and petrochemicals sectors remain the largest among other sectors, constituting about 85 percent of the region’s export revenues. In addition, the demand for hydrocarbons and refined products is expected to pick up as the global economy pulls out of recession. Proleads Insight, a hydrocarbon consultancy firm, is projecting that by 2010, the cash flows in the GCC hydrocarbon markets will stabilize. But this is bound to deteriorate quickly if projects scheduled to start are not executed as planned by the start of next year.
GCC railway projects will reach $60 billion by 2010
As GCC countries witness substantial growth and develop rapidly, member countries have agreed to build railroad networks with a total estimated cost of more than $60 billion. These railroads will help boost cross border trade, cut freight costs and result in faster movement of cargo and passengers. Construction of a rail network that will link the six members of the GCC is expected to start in 2010, while expenses will be shared by the states. Moreover, the Union Railway Company in the UAE has an estimated $8.2 billion railway project that will connect all major cities in the Emirates with a track length of 1,400km. In Saudi Arabia, the Saudi Railway Organisation already provides freight services on three main lines totalling 1,018km, while there are plans to extend the network to the Red Sea port of Jeddah and eventually to the borders of Jordan, Yemen and Egypt.
Yemen seeks $2 billion bailout
The Arab world’s poorest country, Yemen, is seeking a $2 billion bailout from the region’s richest state, Saudi Arabia, to avert a cash crisis. The Yemeni government desperately needs money to pay for food and fuel imports after revenues from oil exports plummeted 75 percent in the first half of 2009. This drop in oil revenue comes after a decline of 26 percent in the country’s oil production and a large decrease in oil prices compared with the same period last year. In 2008, oil revenues paid for 75 percent of government expenditures and oil accounted for 96 percent of Yemen’s exports. In the first quarter of 2009, and in the wake of falling oil prices, the government’s oil revenues fell to $255 million, down 74 percent from $998 million in the same period the previous year. In May, the Central Bank of Yemen said it held $7.3 billion in foreign currency reserves, which would only be enough to cover the bill for food and fuel imports for the first nine months of 2009. By contrast, in 2004, Yemen’s foreign reserves of $5.7 billion were enough to pay for nearly 16 months of imports.
