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  OQGN gets approval for 193km gas transport pipeline

  Administrator

  20 November 2024

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  Oman’s OQ Gas Networks (OQGN) has said it has received regulatory approval to build a new 193-kilometre (km) loop line between Fahud and Sohar in the sultanate.

  The Fahud-Sohar loop line project, which will feature a 42-inch gas transport pipeline, “is designed to bolster Oman’s natural gas infrastructure and support regional energy needs”, OQGN said in a filing with the Muscat Stock Exchange (MSX), where its shares started trading in October last year.

  Scheduled for completion in 2027, the new pipeline will have a gas transport capacity of 9 million cubic metres a day.

  OQGN, a subsidiary of Oman’s state-owned energy holding conglomerate OQ, manages a network of 4,045km of gas pipelines, along with three compressor stations at Fahud, Nimr and Buraimi, and 29 gas supply stations. The company delivers gas to 130 consumers, including power plants, desalination facilities and other industrial complexes.

  In August, the company inaugurated a new 208km-long gas pipeline in Dhofar governorate. The project, known as Saib, increases the total size of OQGN’s natural gas transportation network (NGTN) to 4,258km, and raises its transport capacity by 60% from 10 million to 16 million cubic metres a day.

  The new pipeline runs alongside an existing 24-inch pipeline in Dhofar in the southern part of the sultanate.

  ALSO READ: OQ seeks to raise $490m from downstream products unit IPO

  OQGN previously said it plans to increase the pipeline length to 4,222km in 2024, then to 4,287km in 2025, 4,344km in 2026 and 4,472km in 2027.

  The firm expects network capacity to rise from 69.3 billion cubic metres in 2023 to 71.1 billion cubic metres in 2024, 77.1 billion cubic metres in 2025 and 2026, and 79.7 billion cubic metres by 2027.

  Correspondingly, the volume of gas the pipelines transport is projected to increase from 40.5 billion cubic metres in 2023 to 41.7 billion cubic metres in 2024, 43 billion cubic metres in 2025, 44.3 billion cubic metres in 2026, and 45.6 billion cubic metres by 2027.

  Parent entity OQ published details on OQGN’s current and upcoming projects in a prospectus released last October as part of its subsidiary’s initial public offering (IPO) exercise.

  OQGN had been allocated a capex budget of $148m for 2023, while spending in the medium term has been set in the $600m-$750m range, OQ said in the IPO prospectus.

  OQGN has also been tasked with pushing through several projects to expand its NGTN and improve connections with its consumers.

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  Indrajit Sen
• 
  Nexi to insure Egypt wind project expansion loans

  Administrator

  20 November 2024

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  Japan’s Nippon Export and Investment Insurance (Nexi) has agreed to provide insurance for loans extended by commercial financial institutions for the expansion of the Gulf of Suez Wind Farm 2 project in Egypt.

  This development coincides with the signing of the deal to expand the capacity of the under-construction wind farm project, which a senior executive at the European Bank for Reconstruction & Development (EBRD) confirmed on 19 November.

  The wind farm will be built, owned and operated by Red Sea Wind Energy, a consortium of France’s Engie with a 35% stake, the local Orascom Construction, which holds 25%, Japan’s Toyota Tsusho Corporation with 20% and Eurus Energy Holdings Corporation with 20%.

  The original capacity of the project, which reached financial close in early 2023, has been expanded from 500MW to 650MW, making it the largest such project in the North African state.

  According to Nexi, it will provide cover for an approximately $35m loan extended by the commercial banks, as well as for the interest rate swap agreement guaranteed by Sumitomo Mitsui Banking Corporation (SMBC).

  In addition to SMBC, other lenders for the original 500MW project include EBRD, Japan Bank for International Cooperation (Jbic), Societe Generale Tokyo Branch and The Norinchukin Bank.

  The project company has been developing the 500MW onshore wind farm, located in the Ras Ghareb region facing the Red Sea, approximately 200 kilometres southeast of the capital, Cairo. It consists of 84 wind turbine generators.

  The 150MW expansion of the project entails the addition of a further 20 wind turbine generators, according to Nexi. 

  MEED reported in September that the Egyptian cabinet had approved Red Sea Wind Energy’s request to increase the capacity of the project.

  At the time, a source told MEED that the required additional investment of roughly $127m was still under negotiation.

  The expanded project is expected to be completed by mid-2025.

  The consortium will operate and maintain the plant under a 25-year power-purchase agreement (PPA) with Egyptian Electricity Transmission Company (EETC). Egypt’s Ministry of Finance is backing EETC’s obligations under the PPA.

  Orascom Construction will execute the construction of the civil and electrical works for the wind farm.

  HSBC Bank Egypt acted as the working capital bank and onshore security agent for the transaction, which closed in 2023.

  This project marked the first cofinancing between Jbic and EBRD since the signing of a memorandum of understanding (MoU) in October 2022 and the first joint project between Nexi and EBRD since an MoU in October 2020.

  MEED reported in March 2023 that Jbic had signed a loan agreement to finance up to $240m of the project.

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  Jennifer Aguinaldo
• 
  Taqa evaluates 1GW Dhafra OCGT bids

  Administrator

  20 November 2024

  Abu Dhabi National Energy Company (Taqa) is understood to be evaluating the proposals it received for a contract to build an open-cycle gas turbine (OCGT) power generation plant project in Abu Dhabi.

  The Al-Dhafra OCGT plant is being tendered on a fast-track basis and is expected to have an installed capacity of between 1,000MW and 1,100MW.

  According to industry sources,  engineering, procurement and construction (EPC) contractors submitted their proposals for the contract in late September.

  MEED reported in the same month that Taqa plans to procure an estimated 5,000MW of gas-fired power plant capacity, mainly to support the UAE’s artificial intelligence (AI) strategy.

  In addition to Al-Dhafra, sources said a second site is being considered for the projects in Al-Nouf.

  The UAE National Artificial Intelligence Strategy 2031 has set eight strategic objectives, including building a reputation as an AI destination, deploying AI in priority sectors, attracting AI talent and ensuring strong governance and effective regulation.

  Related read: Region plays high-stakes AI game

  Separately, Abu Dhabi Future Energy Company (Masdar) is understood to be planning to procure a solar independent power project (IPP) to provide round-the-clock (RTC) power during the summer months.

  According to industry sources, the scheme will include a substantial battery energy storage system (bess) capacity to provide RTC or 24×7 power between April and October of every year.

  The solar IPP capacity being considered is about 5,000MW, while the bess capacity is approximately 20 gigawatt-hours.

  It is understood that Abu Dhabi’s Emirates Water & Electricity Company (Ewec) and Masdar are working to develop or implement the project.

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  Jennifer Aguinaldo
• 
  Al-Jouf Cement and Engie to build captive solar plant

  Administrator

  20 November 2024

  Saudi-listed Al-Jouf Cement Company has signed an agreement with French utility developer and investor Engie to construct and operate a solar power plant for 25 years at the company's site Turaif.

  The solar plant will have a generation capacity of 22MW.

  Al-Jouf will purchase the electricity generated from the plant for 25 years starting from the actual commencement of the plant’s operations.

  In a bourse filing on 19 November, Al-Jouf said the project cost will be lower than the company’s current production costs from its heavy fuel oil power plant and lower than the industrial electricity costs if connected to the national grid.

  It added: "The solar power plant is expected to contribute approximately 25% of the company’s electricity needs upon completion. Al-Jouf Cement Company will not incur any financing for the project, as it will not bear any capital or operational expenses."

  According to the company’s initial estimates, the positive impact of cost reduction will gradually begin to appear from the first year of operation. The financial impact will be determined based on prevailing fuel prices at that time.

  The positive impact, compared to the current industrial electricity tariff from the Saudi Electricity Company, is expected to be SR3.6m annually.

  The contract will also have a positive environmental impact by reducing carbon emissions by 1,481,100 tonnes, supporting the Saudi government’s efforts to decarbonise the energy-intensive cement sector and the company's strategy to enhance the consumption of renewable energy.

  It is the second major commercial and industrial renewable energy project for Engie in Saudi Arabia, following the signing of a similar contract with agricultural group Nadec in 2019.

  Photo credit: Pixabay (for illustrative purposes only)

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  Jennifer Aguinaldo
• 
  Morocco extends Noor Midelt 2 and 3 bid deadline

  Administrator

  20 November 2024

  

   

  The Moroccan Agency for Sustainable Energy (Masen) has extended the tender closing dates for the Noor Midelt 2 and Noor Midelt 3 solar photovoltaic (PV) and battery energy storage system (bess) projects.

  The Noor Midelt 2 solar independent power project (IPP) consists of a 400MW solar PV power plant with battery storage of two hours.

  It replaces a previous scheme that was expected to include thermal concentrated solar power and PV solar components, similar to Noor Midelt 1, which was previously awarded to a consortium of EDF and Masdar.

  The Noor Midelt 3 IPP scheme is expected to have a solar PV capacity of up to 400MW and a bess capacity not exceeding 400 megawatt-hours (MWh).     

  The client has moved the last day for bid submissions from 29 November to 12 December, according to a source close to the projects.

  Masen prequalified the following firms that can bid for the Noor Midelt 2 solar IPP in July last year: 

  • Acwa Power (Saudi Arabia)
  • Cobra Servicios, Communicaciones y Energia / Cobra Instalaciones y Servicios (Spain)
  • EDF Renouvelables (France) / Abu Dhabi Future Energy Company (Masdar, UAE)
  • Enel Green Power (Italy) / Taqa Morocco (local)
  • Iberdrola Renovables (Spain) / Dongfang Electric (China) / Gaia Project (local)
  • International Power (Belgium) / Nareva (local)

  In December 2023, Masen prequalified eight groups to bid for the Noor Midelt 3 solar IPP contract. These were:

  • Abu Dhabi Future Energy Company (Masdar) (UAE) / Taqa Morocco (local)
  • Acciona (Spain) / Green of Africa (local)
  • Acwa Power (Saudi Arabia) / Nareva Holding (local)
  • Cobra (Spain) / Vinci Concessions (France)
  • EDF Renouvelables (France) / Mitsui & Co (Japan)  
  • Iberdrola (Spain)
  • Kahrabel (UAE) / GDF International (France)
  • SPIC Huanghe Hydropower Development (China) / Amea Power (UAE)

  The Noor Midelt 2 and 3 IPP projects will be implemented according to a 30-year power-purchase agreement between Masen as the offtaker and the project company that will be formed for the scheme. 

  In the case of participation by any international finance institutions, such as Germany’s KFW or the European Investment Bank, those banks’ procurement rules will be applied to the project, according to Masen.

  The solar and bess plants are expected to be built on a dedicated and available site that Masen will provide under a land lease or equivalent agreement.

  This suggests that common infrastructure such as the water supply, roads and telecommunications services will be shared, and will be constructed “to ensure overall consistency of the solar complex and optimise benefits from a simultaneous development of the infrastructure”.   

  US/India-based Synergy Consulting is the client's financial adviser for the projects.

  Clean energy target

  Morocco has set a target for 52% of its energy to be produced from clean energy sources by 2030, one of the most ambitious targets in the Middle East and North Africa region.

  Morocco aims to increase its renewable capacity to 10,000MW by 2030. Solar PV capacity is expected to comprise 4,500MW, with wind and hydroelectric comprising 4,200MW and 1,300MW, respectively.

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  Jennifer Aguinaldo
• 
  Middle East faces a reckoning

  Administrator

  19 November 2024

  Commentary
  Edmund O'Sullivan
  Former editor of MEED

  For a year, the carnage in Gaza that has spread to the West Bank and Lebanon has been a source of dismay for the Middle East. But its impact has been limited – unless you were a target or know someone who is.

  The moment is coming when that will change. Donald Trump’s decisive victory in the US general election has been swiftly followed by the announcement of senior government appointments of people who are both ideological and uncompromising. And they are in a hurry.

  Iran is Trump’s top Middle East foe, but that is not new. In his first term, Trump pulled the US out of the nuclear deal with Tehran, ratcheted up economic sanctions and ordered the assassination in Baghdad of Qasem Soleimani, commander of Iran’s Quds Force. 

  Iran’s allies in Iraq, Syria, Lebanon and Yemen will also be hit, but that is something the administration of President Joe Biden also did.

  Regional focus

  The new administration’s sights are now also set on Gulf Arab states and others in the region that have expressed support for Gaza and the Palestinians without doing much to help. 

  There is speculation that Trump is preparing to recognise occupied Palestinian territories as part of Israel. This is a nightmare for Middle East moderates.

  The new administration’s sights are now set on Gulf Arab states

  On 11 November, Saudi Arabia’s Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud told a summit of the leaders of Muslim nations in Riyadh that the attack on Gaza was genocide, called for action to create a Palestinian state and demanded an end to Israel’s offensives in Palestine and Lebanon. Countries that are party to the Abraham Accords of 2020 have been more measured in their public statements, but not by much.

  And yet, these are the ones that are likely to be under pressure from Washington to recognise Israel, assent to its destruction of hope for the twin-state solution and – going by the calls made by Republican US senator Lindsay Graham in a visit to the region in October – both run Gaza and finance its reconstruction.

  This seems completely impossible, but not for those who will dominate US government from 20 January 2025. Whoever will be secretary of state under Trump may have other priorities, including ending the war in Ukraine, but the tone for US policy in the Middle East has been set. Arab states that welcome Trump and want a defence and security relationship with Washington are going to have to balance that with their demand for justice for Palestine. 

  These priorities are now irreconcilable. A reckoning for the region is coming.

  ---

  Connect with Edmund O’Sullivan on X

  ---

  More from Edmund O’Sullivan:

  > Biden leaves a mixed legacy
  > Desperate days drag on
  > The beginning of the end
  > The death of political risk
  > Italy at centre of new reduced Europe
  > US foreign policy approach remains adrift
  > Rainmaking in the world economy
  > New shock treatment for Egypt’s economy
  > Syria’s long march in from the cold
  > Lebanon’s pain captured in a call from Beirut

  ---

  

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  Edmund O’Sullivan
• 
  Talabat IPO to raise up to $1.5bn

  Administrator

  19 November 2024

  The planned initial public offering (IPO) of Dubai-based Talabat Holding on the Dubai Financial Market could raise $1.4bn-$1.5bn, its parent company, Berlin-headquartered and Frankfurt Stock Exchange-listed Delivery Hero, said on 18 November.

  The approved price range for the shares in Talabat is AED1.50-AED1.60, or about $0.41-$0.44 a share.

  In total, 3,493,236,093 shares of Talabat will be offered to investors during the offer period that will start on 19 November and is scheduled to end on 28 November.

  Talabat is a food delivery and quick commerce business operating across the Middle East and North Africa region.

  Delivery Hero said: "Depending on the final offer price, the gross proceeds to be received by Delivery Hero from the sale of 3,493,236,093 shares will be between AED5.2bn ($1.4bn) and AED5.6bn ($1.5bn). The final offer price is expected to be announced on 29 November 2024."

  The company added that it may amend the size of the offering subject to required approvals of its company's management and of the UAE Securities & Commodities Authority. 

  The shares in Talabat are expected to start trading on 10 December.

  Founded in Kuwait in 2004, Talabat is one of the region's largest food delivery and grocery platforms, with operations in Kuwait, the UAE, Qatar, Egypt, Oman, Bahrain and Jordan.  

  Delivery Hero acquired the startup in 2015 and now operates in more than 40 countries. It also partners with over 500,000 restaurants, according to its website.

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  Jennifer Aguinaldo
• 
  Remah and Nairiyah tariffs set precedent

  Administrator

  19 November 2024

  Commentary
  Jennifer Aguinaldo
  Energy & technology editor

  The levelised costs of electricity (LCOEs) for the four combined-cycle gas turbine independent power projects (IPPs) recently awarded in Saudi Arabia are expected to set a precedent for tariffs in upcoming thermal IPPs procured in the GCC region.

  Two separate developer consortiums bid for and won the contracts to develop the Remah 1 and 2 and Nairiyah 1 and 2 IPPs, which are located in Riyadh and the Eastern Province, respectively.

  A consortium comprising Saudi Electricity Company (SEC), Riyadh-based utility developer Acwa Power and South Korea’s Korea Electric Power Corporation (Kepco) won the contract to develop the Remah 1 and Nairiyah 1 IPPs, each with a capacity of 1,800MW.

  The team offered an LCOE of $cents 4.5859 a kilowatt-hour ($c/kWh) for Remah 1, and $c4.6114/kWh for Nairiyah 1.

  A consortium comprising the UAE-based Abu Dhabi National Energy Company (Taqa), Japan’s Jera Company and the local Albawani Company won the contract to develop and operate the Remah 2 and Nairyiah 2 IPPs. 

  The Taqa-Jera-Albawani consortium offered an LCOE of $c4.5613/kWh for Remah 2, and $c4.4960/kWh for Nairiyah 2.

  LCOEs represent an all-in tariff including capital and operating expenditures during the power-purchase agreement (PPA) period. In this case, the principal buyer, Saudi Power Procurement Company, agreed to buy the electricity from the project companies for 25 years.

  The last comparable IPP procured by SEC in Saudi Arabia was Rabigh 2, for which Acwa Power proposed a tariff of $c1.9/kWh in 2012-13. Rabigh 2 is older than the Fadhili IPP, which was awarded in 2016, but the latter is a cogeneration plant, which was won by France's Engie.

  Engineering, procurement and construction (EPC) contractors and original equipment manufacturers say that capital expenditure (capex) for building thermal plants has significantly increased compared to before the Covid-19 pandemic.

  Estimates indicate that EPC costs have increased from about $500/kWh to $700-$800/kWh since last year.

  Despite this, the latest thermal IPP tariffs in Saudi Arabia do not appear significantly higher compared to the tariff for the Fujairah F3 IPP in the UAE, which was procured in 2020.

  Several factors underpin tariff trends, according to experts. LCOEs cover fuel capex recovery and operating expenses, where fuel can represent 70%-80%, depending on the prevailing fuel price during the proposals stage.

  It should also be noted that the fuel prices and project ownership structures vary depending on jurisdiction, which directly affects the LCOE.

  Scale, with the four Saudi plants being awarded together, is also an important factor, as is the technology, because more energy-efficient gas turbines could have contributed to keeping the Saudi tariffs lower than initially expected.

  A transaction adviser also notes that the 2024 cost of debt outlook is lower, so swap rates are lower.

  Crucially, MEED understands that the tariffs submitted for Remah and Nairiyah do not yet include potential exit costs, assuming a carbon capture, utilisation and storage (CCUS) solution is not reached while the PPAs are in force.

  According to an industry source, CCUS discussions for the Remah and Nairyah IPPs are set to begin in the 2030s, and the tariffs agreed today will be adjusted based on the outcome of those discussions. 

  All this suggests that interesting comparisons will be soon drawn between the Remah and Nairiyah tariffs in Saudi Arabia and the tariffs that bidders plan to propose for the Taweelah C and Madinat Zayed schemes in Abu Dhabi.

  

   

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  Jennifer Aguinaldo