Kuwait is currently the fourth largest projects market in the GCC after the UAE, Saudi Arabia and Qatar. Historically, the local market has underperformed its potential, weighed back by politics and a lack of central authority to help push through projects. This has meant that despite its vast oil wealth and healthy fiscal position, the state rarely exceeds $15bn of contract awards each year.
There were a couple of exceptions to this in 2014 and 2015 when Kuwait awarded more than $30bn of contracts on its clean fuels and new refinery programmes, which briefly made it the regional leader in terms of oil and gas activity. However, the fall in the oil prices since then has seen contract award levels slump as government spending declines.
As a market dominated by public spending, much will therefore depend on both a rise in the crude price and the government’s ability to cut through red tape and political objections from the National Assembly to proceed with its project plans. Given the historical challenges and recent market performance, however, there does not appear to be much confidence that it will be able to do so. There may be a natural rise in spending if the oil price is maintained above $75 a barrel, but it is unlikely that market can repeat the $30bn of contract awards in 2014 and 2015 without the addition of a major megaproject.