Gulf states delay projects to lower costs

Gulf oil producers are delaying some of their projects in energy and other sectors to take advantage of a steady decline in construction costs as a result of the global economic crisis, according to a Saudi financial centre.

Although state-owned oil companies in the six-nation Gulf Co-operation Council (GCC) have sufficient cash to fund planned capacity expansions and new hydrocarbon ventures, some of their projects could also be delayed because it will be more difficult for contractors to obtain credit to finance their work, said the report by the Riyadh-based Jadwa financial and investment consultancy centre.


It said the short-term outlook for oil prices has worsened due to the global financial crisis but has improved in the medium and long term on the grounds higher cost of raising finance will ally with lower crude prices to reduce the attractiveness of non-Opec supply and alternative energy sources.

It noted the bulk of the increments to non-Opec supply would come from the private sector, which is now facing problems in raising the necessary capital.

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