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ANALYSIS | INDUSTRY SECTORS


We witnessed major construction activity in Dubai


throughout the 2000s and into the next decade, including the completion of the Palm Jumeirah islands and the development of the Dubai Metro, among countless other major projects. Te logistics sector in the wider UAE benefitted from large-scale power and water projects. Expo 2020, awarded to the UAE in 2013, triggered further widespread investment into the region’s infrastructure. Rapid development has also been witnessed across the wider Middle East Gulf, including Qatar (which was selected to host the 2022 FIFA World Cup) and maybe most significantly, Saudi Arabia. In 2016, Saudi Arabia, in a bid to diversify away from an


oil-backed economy, launched its Vision2030 to develop public service sectors such as health, education, infrastructure, recreation, and tourism.


Oil and gas


As the 2008 financial crisis unfolded, many companies involved in the heavy lift and project forwarding business believed, or at least hoped, that the longer-term nature of much of the work would shield them from any major business downturn. As oil prices steadily moved up towards the USD150 mark, oil companies continued with new offshore exploration and production projects around the world. However, as the financial crisis swiftly became a sharp


SHALE GAS REVOLUTION


Dennis Devlin, senior director at Schenker Inc, said: “In 20 years we are going to look back and say the shale gas revolution was the most significant development [for the project logistics business]. He said that wind and solar will have a major impact, but


the transition to gas-based power generation and chemical manufacturing has had a more immediate effect. “LNG export from the USA has resulted in significant


number of LNG plant projects. The shale gas revolution has also been a major influence in the number of new chemical plants being constructed, particularly on the Gulf coast.”


global economic downturn, and oil prices slumped to around USD40 a barrel in the opening weeks of 2009, a growing number of projects were slowed down, postponed, or cancelled. Te inability to raise capital and the cost of development – particularly in deeper waters – saw exploration players exercise caution. Excluding a few isolated pockets of activity, such as Brazil and the Caspian region, it took until 2012 for the oil and gas business to pick up again. By then, the market was starting to come into its own, with


project forwarders and other logistics providers active in the sector reporting continuing firm demand for their services. Standout sectors included LNG developments in Western Australia and Papua New Guinea; shale gas in China and the USA; heavy crude development in Canada; offshore vessel fabrication in the Nordics, South Korea and Indonesia; biofuels and offshore activity in Brazil; gas development in Qatar; and offshore developments in the Middle East Gulf. Deepwater investment was seen at a much higher rate than


in previous years, Douglas Westwood suggested in 2013 that between 2010-2014 some USD167 billion would be invested offshore. Tree-quarters of that figure would be allocated to the ‘golden triangle’ of Africa, the Gulf of Mexico and Brazil. Te decline of existing reservoirs and technological advances


improved the viability of oil projects much further offshore. Size and scale was the order of the day – the industry demand was for larger, heavier equipment in single transportable


INVESTING IN MEXICO


In Mexico, a USD234 billion national infrastructure programme launched for 2007-2012, made it a buoyant market for project logistics activity despite the 2008 economic downturn. While much of that programme focused on the hydrocarbons


sector and power generation projects, it also included major investments in telecommunications (USD26 billion), highways (USD26.5 billion), railway development (USD4.5 billion), ports (USD6.5 billion), airports (USD5.5 billion) and water, sewerage and


flood control (USD18.6 billion). Mexico was not immune from the 2014 oil price crash.


Tradelossa, speaking in our May/June 2016 edition, said low prices had hindered new oil and gas projects and limited government revenue generated from state-owned oil company Pemex – a situation that has continued to impact on national investment in infrastructure. However, the opening up of Mexico’s oil market enabling


private foreign direct investment during 2016, has provided a welcome boost for the sector.


HLPFI10 | 65


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