Challenges and Adjustments in Global Chemical Engineering Construction

In the interconnected realms of chemical processing and energy infrastructure, persistent imbalances between resource availability and project demands are reshaping investment landscapes. Escalating capital requirements, driven by material and labor inflation, compound these issues, leading to a contraction in new initiatives. This examination explores the multifaceted pressures on engineering, procurement, and construction (EPC) activities, highlighting regional examples and adaptive measures to foster sustainable growth in a competitive environment.

Structural Pressures on Chemical EPC Markets

Global engineering sectors demonstrate varied performance, with segments like liquefied natural gas (LNG) and data center infrastructure maintaining momentum amid broader economic shifts. In contrast, chemical-specific EPC engagements have contracted significantly, totaling $76.5 billion in awards through mid-2025—a 40% drop from the $128 billion recorded in 2024, which itself halved from 2023's $245 billion benchmark.

These declines stem from intertwined factors, including intensified competition for limited opportunities, trade barriers, and slower-than-anticipated progress in sustainable technologies. Leading firms face pronounced revenue segmentation, where chemical divisions contribute modestly compared to energy-focused operations. For instance, Worley Limited allocates 24% of its portfolio to chemicals, 26% to resources including fertilizers and transition materials, and 50% to energy, achieving $12 billion in sales for the first half of 2025—a 4% year-over-year increase overall, yet with a 14% reduction in chemical revenues to $3.05 billion.

Such disparities underscore the need for diversified portfolios, as external variables like supply chain constraints and inflationary trends erode client confidence in committing to large-scale ventures. Stakeholders must prioritize agile frameworks to navigate this "resource-scarce" paradigm, ensuring alignment with evolving market realities.

Impacts of Project Deferrals in Energy Transition

Delays and terminations in low-carbon initiatives exemplify the gap between ambitious goals and practical execution, affecting capacity buildouts across continents. Notable cases include the indefinite postponement of a 1 million metric ton per year low-carbon ammonia facility in Abu Dhabi's Ruwais by Fertiglobe, shifted to a phased rollout amid nascent market maturity and regulatory ambiguities.

In Europe, similar hesitations prevail, with companies like Dow Chemical and Borealis halting plastic recycling schemes due to viability concerns under current economic and policy conditions. Shell's decision to abandon an 820,000 metric ton annual capacity biofuels plant in Rotterdam, Netherlands—initiated in 2022 and paused in mid-2024—highlights cost overruns and diminished competitiveness as key deterrents.

Even frontrunners in green technologies encounter hurdles; Technip Energies, despite securing contracts for major green ammonia developments in India, reports subdued momentum in this domain, falling short of projected expansion. According to insights from S&P Global's report on downstream facilities, costs, and supply chains, while firms increasingly pivot to hydrogen, renewable fuels, and carbon capture utilization and storage (CCUS), these areas constitute a minor fraction of EPC workloads, predominantly lingering in preliminary design phases influenced heavily by policy frameworks.

Escalating Costs and Resource Allocation Dynamics

Construction expenditures continue to surge, with annual growth rates forecasted at 4-5% from 2025 onward, propelled by 2-3% rises in steel and other commodities, alongside amplified equipment and workforce demands. Geopolitical tensions in regions like the Middle East, coupled with U.S. tariffs on imported materials, amplify these pressures, straining global logistics networks.

High-demand sectors such as LNG and data centers exacerbate resource competition, diverting skilled labor and materials from chemical projects. Air Products, for example, is reevaluating its $4.5 billion blue hydrogen initiative in Ascension Parish, Louisiana, contemplating the divestiture of CCUS and ammonia components amid overheated construction markets where alternative clients offer superior returns.

ExxonMobil's suspension of hydrogen and synthetic ammonia expansions at its Baytown refinery in Texas further illustrates how these cost thresholds impede progress, despite prior EPC agreements. Chemical enterprises must integrate robust cost modeling and alternative sourcing strategies to counteract these inflationary cycles, preserving project feasibility in a resource-constrained ecosystem.

Strategic Responses and Long-Term Resilience

Amid these headwinds, industry leaders are recalibrating approaches to enhance adaptability. Worley's sustained overall growth, despite chemical segment challenges, reflects the benefits of balanced exposure across energy and resources. Executives emphasize monitoring trade policies and geopolitical developments to inform investment pacing.

S&P Global analyses suggest that while green segments remain underdeveloped, strategic crossovers into emerging fields could dilute reliance on traditional hydrocarbons. For B2B partners in chemicals and energy, fostering collaborative risk-sharing models and leveraging modular construction techniques may alleviate cost burdens and accelerate timelines.

Forward-looking, the sector's trajectory hinges on resolving supply-demand mismatches through innovation and policy advocacy. By emphasizing operational efficiency and diversified revenue streams, firms can build resilience against cyclical downturns, positioning themselves to capitalize on eventual recoveries in transition-driven demands.