Pipeline Review
Positive outlook for Middle East
onshore pipelines Ben Wilby and Arindam Das, Westwood Global Energy Group, discuss the outlook for the Middle East onshore pipeline market. HE ONSHORE PIPELINE market in 2020 was severely impacted by a combination of low commodity prices and restrictions on construction activity due to the Covid-19 pandemic. The Middle East was not immune to this, with a contraction in installation activity and stalling of future projects with large pipeline infrastructure requirements. However, 2021 to date has seen somewhat of a reversal, with projects such as Jafurah in Saudi Arabia returning to tender as market conditions and sentiment continue to improve. The pipeline infrastructure in the Middle East continues to be attractive to infrastructure investors, as highlighted by the recent ADNOC (gas pipelines) and Saudi Aramco (oil pipelines) transactions, wherein 49% stakes were sold for US$10.14bn and US$12.4bn to a consortia of investors led by Global Infrastructure Partners and EIG Global Energy Partners respectively. Over the forecast period (2021-2025), demand for additional pipeline installations in the Middle East is expected to be strong, predominantly driven by GCC countries. Westwood forecasts that a total of around 20,500 km of additional pipelines could be installed in the region between 2021 and 2025. Notable projects contributing to this forecast include a new export pipeline from Iraq to Turkey and Saudi Arabia’s North & South Haradh GCP pipelines (already under construction). The c. 20,500 km expected over the forecast will be split relatively evenly between gas and liquid pipelines. Gas pipeline installation activity is expected to increase from around 1,600 km in 2021 to around
Demand for additional pipeline installations in the Middle East is expected to be strong.” 18
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Issue 5 2021
Source: Westwood World Onshore Pipeline Market Forecast 2021-2025
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Source: Westwood World Onshore Pipeline Market Forecast 2021-2025
Figure 1: Additional km installations in the Middle East by phase type 2016-2025.
Figure 2: Additional km installations in the Middle East by country and total regional capex 2016-2025.
2,500 km by 2025, driven by countries in the GCC area (eg. Iraq, Saudi Arabia and the UAE) increasing gas production to meet domestic power demand. Many of these countries (Iraq and Saudi Arabia in particular) are also looking to expand their liquid production capacity significantly over the next decade, thereby necessitating significant
pipeline installations. As a result, liquid pipelines are expected to continue to move forward, with an average of around 2,000 km expected to be installed each year over the forecast period. Overall, Westwood expects pipeline capex to total around US$17bn over the forecast period. This represents a decline of around
