The total value of GCC contracts awarded in Q2 surged by 11.7 per cent to hit $22.8 billion over $20.4 billion the same period last year mainly driven by regional heavyweight Saudi Arabia - which accounted for 77 per cent of the deals worth $16.5 billion - and Oman which reported higher contract awards for the quarter that more than offset a dip in awards in Kuwait, Bahrain, Qatar and UAE, said a report.

GCC project awards improved during Q2 despite global economic challenges that was caused by supply chain problems and higher oil prices primarily due to the ongoing Russia-Ukraine conflict, according to the report by Kuwait-based Kamco Invest.

Higher crude oil price was the biggest contributor to inflation numbers across countries, including in the US where it contributed to around 200 bps to the 9.1 per cent inflation during June-2022, stated the report.

According to Kamco, the GCC’s largest projects market, Saudi Arabia, recorded the biggest y-o-y increase in value of contracts awarded during Q2 that surged to hit $16.5 billion from $9.3 billion last year.

The major contracts awarded include those linked to the kingdom's ambitious $500 billion future city Neom, which boosted the kingdom's tally for the quarter, it stated.

According to MEED, three out of the 10 biggest contracts awarded in the kingdom during Q2 were from the Neom project. Comparatively, the UAE recorded a 46.4 per cent fall in y-o-y projects awarded in Q2 which fell to $3.1 billion.

Kamco pointed out that the neighbouring Oman saw the value of new project awards jump almost three times to hit $1.1 billion rising from $390 million last year.

One notable project awarded in Oman during Q2-2022 is the $195 million contract to construct plaza, commercial and residential buildings as parts of the $1.6 billion Yiti Sustainable City project.

On the other hand, the value of the total projects awarded in Kuwait fell 67.9 per cent to $521 million down from $1.6 billion last year, while those awarded in Bahrain during Q2-2022 witnessed a steep decline of 83.9 per cent to reach $228 million when compared to $1.4 billion during Q2-2021.

In terms of sector classification, transportation topped the list with biggest increase in terms of absolute value adding  $4.8 billion to new contracts thus taking the total to $7.7 billion.

Similarly, value of new contracts in the GCC oil sector increased almost three-fold to $4.5 billion during Q2-2022 rising from $1.6 billion during Q2-2021. On the other hand, the gas, construction and power sectors witnessed y-o-y decline in awards, stated the report by the Kuwaiti group.

According to Kamco, the project awards in the construction sector contracted 36 per cent y-oy to $4.3 billion during the quarter.

 Saudi Arabia has enjoyed the best Q2 contract awards since 2014 mainly reflecting elevated oil prices, although the kingdom has clearly stated that it wants to separate project awards and oil market performance.

Total Saudi project awards in Q2-2014 stood at $19.5 billion when compared to $16.5 billion during Q2-2022. The value of contracts awarded in the kingdom witnessed a q-o-q increase of 106.7 per cent (or 8.5 billion) from $8 billion in Q1-2022.

In terms of sectors, the transportation sector leapt into the lead as the largest sector by value of awarded projects in the kingdom accounting 36.1 per cent of the total projects awarded during Q2, mainly due to Neom awards of transport and utility infrastructure.

The Neom project has awarded two key contracts to build two 28-km-long tunnels for high-speed transport and freight services. Moreover, in another major transportation contract DP World and the Saudi Ports Authority (Mawani) have agreed to a 30-year deal worth $133 million to build a large-scale logistic park at the Jeddah Islamic Port.

The agreement includes the construction of a 415,000-sq-m area, which has an in-land container depot with capacity of 250,000 twenty-foot equivalent units (TEU’s).

According to Kamco, the UAE maintained its position as the second largest projects market in the GCC after Saudi Arabia during Q2 despite witnessing a q-o-q decline of 25.4 per cent during the quarter. In terms of y-o-y performance, the decline was steeper at 46.4 per cent.

As a result, the UAE represented 13.8 per cent of the total contracts awarded in the GCC in Q2 this year compared to 25.2 per cent last year.

On Kuwait, the report said the total projects awarded in the oil-rich country plunged by 67.9 per cent from $1.6 billion last year to $521 million in Q2 this year. The transportation sector once again had the lion's share of contract awards worth $377 million up from $18 million last year.