Related Articles

• 
  Dorra gas project package bidders get more time

  13 May 2025

  

  Al-Khafji Joint Operations (KJO) has allowed contractors additional time to prepare proposals for one of the offshore engineering, procurement and construction (EPC) packages of the Dorra gas field development project.

  MEED reported in March that KJO was pushing forward with a major project to produce gas from the Dorra offshore field, located in Gulf waters in the Neutral Zone shared by Saudi Arabia and Kuwait.

  KJO has divided the scope of work on the Dorra gas field development project, which is estimated to be valued at up to $10bn, into four EPC packages – three offshore and one onshore.

  According to sources, contractors bidding for offshore package one now have until 19 May to prepare bids. The previous bid submission deadlines for the package were 6 May, 22 April, 8 April and 24 March.

  The EPC scope of work on the Dorra gas field development project packages and their submission deadlines are as follows:

  • Package 1: Seven offshore jackets and laying of intra-field lines – 19 May
  • Package 2A: Seven production deck modules and associated corrosion-resistant, alloy-lined pipes connecting to the gas compression plant – 30 June
  • Package 2B: Compression and auxiliary platforms, accommodation platform, associated trunklines and cables connecting to the shoreline – 30 June
  • Package 3: Onshore gas processing plant – 30 June

  The following contractors are understood to be among those bidding for the three offshore packages:

  • Lamprell (Saudi Arabia/UAE)
  • Larsen & Toubro Energy Hydrocarbon (India)
  • McDermott (US)
  • NMDC Energy (UAE)
  • Saipem (Italy)

  Contractors bidding for offshore packages 2A and 2B have the option of submitting a combined proposal, sources previously told MEED.

  The Dorra field is estimated to hold 20 trillion cubic metres of gas and 310 million barrels of oil.

  Kuwait and Saudi Arabia have been working together to develop the offshore field since it was discovered in 1965. The two sides expect to produce about 1 billion cubic feet a day of gas from the asset and have agreed to split the gas output equally.

  A geopolitical tussle over ownership of the asset has hampered progress.

  Iran, which calls the field Arash, claims that it partially extends into its territory and that Tehran should be a stakeholder in any development project. 

  Kuwait and Saudi Arabia maintain that the Dorra field lies entirely in the waters of their shared territory, known as the Neutral Zone or Divided Zone, and that Iran has no legal basis for its claim. 

  In February 2024, Kuwait and Saudi Arabia reiterated their claim over Dorra through a joint statement issued during an official meeting between Kuwaiti Emir Sheikh Mishal Al-Ahmad Al-Jaber Al-Sabah and Saudi Crown Prince and Prime Minister Mohammed Bin Salman Bin Abdulaziz Al-Saud in Riyadh.

  KJO, which is jointly owned by Saudi Aramco subsidiary Aramco Gulf Operations Company and Kuwait Gulf Oil Company, a subsidiary of state-owned Kuwait Petroleum Corporation (KPC), is understood to have issued the tenders for the project in August last year.

  MEED reported in September 2023 that Aramco and KPC had selected France’s Technip Energies to carry out front-end engineering and design (feed) and pre-feed work on the Dorra offshore field development project.

  The original feed work for a project to develop the field was performed more than a decade ago. However, due to changes in technology, the engineering design needed to be updated before the project could reach a final investment decision.

  ALSO READ: Construction starts on Kuwait Gulf Oil Company headquarters

  https://image.digitalinsightresearch.in/uploads/NewsArticle/13870796/main25073300.jpg

  Indrajit Sen
• 
  Dubai Municipality meets $22bn tunnels package bidders

  13 May 2025

  Dubai Municipality has met with the teams that are planning to bid for the contracts to develop the first two packages of the $22bn Dubai Strategic Sewerage Tunnels (DSST) project.

  In a social media post, Fahd Al-Awadhi, director of the drainage and recycled water projects department at Dubai Municipality, said that the municipality had hosted a workshop for the DSST project.

  He said the gathering brought together project leaders, technical advisers and public-private partnerships (PPP) specialists to align on the strategic direction, procurement structure and delivery plan for the DSST.

  The session covered:

  • a comprehensive overview of DSST packages J1 and W
  • the shift from a pumped to a gravity-based system
  • the engineering, procurement and construction (EPC) and developer procurement timelines
  • bid submission structures and evaluation processes
  • geotechnical planning and no-objection certificates coordination mechanisms

  MEED previously reported that five consortiums have formed or are being formed to bid for the J1 and W contracts.

  The overall project aims to convert Dubai’s existing sewerage system from a pumped system to a gravity system by decommissioning the existing pump stations and providing “a sustainable, innovative, reliable service for future generations”.

  Under the current plan, the $22bn project is broken down into six packages, which will be tendered as PPP packages with concession periods lasting 25-35 years.

  The project client, Dubai Municipality, issued the request for proposals for the DSST's J1 and W packages earlier this month.

  According to industry sources, the consortiums that have been formed or are forming to bid for the J1 and W contracts include:

  • China Railway Construction Corporation (China)
  • Etihad Water & Electricity (local) / Larsen & Toubro (India) / Wade Adams (local) / PowerChina (China)
  • Itochu (Japan) / Plenary (Australia) / Samsung C&T (South Korea) / Webuild (Italy)
  • Vision Invest (Saudi Arabia) / China Railway Engineering Group (China)

  A fifth team, led by Belgian contracting firm Besix, is also being formed, according to one of the sources. 

  MEED understands that bids are due on 30 September for packages J1 and W.

  The two packages will be developed using "typical concession agreement" models and will be financed 80:20 by debt and equity.

  The consortiums can bid for either or both packages. 

  DSST six packages

  The first package, J1, comprises Jebel Ali tunnels (North) and terminal pump stations (TPS). The tunnels will extend approximately 42 kilometres (km), and the links will extend 10km. 

  The other tendered package, W for Warsan, comprises 16km of tunnels, TPS and 46km of links.

  The remaining packages include J2, which covers the southern section of the Jebel Ali tunnels and will extend 16km and have a link stretching 46km.

  J1, J2, W and J3 will comprise the deep sewerage tunnels, links and TPS components of the overall project.

  J1, J2 and W will be procured under a design, build, finance, operate and maintain model with a concession period of 25-35 years.

  J3 will be procured under a design, build and finance model with a concession period of 25-35 years. Once completed, Dubai Municipality will operate J3, unlike the first three packages, which are planned to be operated and maintained by the winning PPP contractors.  

  The project’s remaining two packages entail expanding and upgrading the Jebel Ali and Warsan sewage treatment plants. MEED understands that these packages will be procured at a later stage.

  Separate contracts for packages J1 and W are being tendered first, followed by J2 and J3, with the requests for proposals to be issued sequentially, staggered about six to 12 months apart.

  The overall project will require a capital expenditure of about AED30bn ($8bn), while the whole-life cost over the full concession terms of the entire project is estimated to reach AED80bn.

  Photo credit: Dubai Municipality

  https://image.digitalinsightresearch.in/uploads/NewsArticle/13870515/main0616.jpeg

  Jennifer Aguinaldo
• 
  PIF launches AI investment arm

  13 May 2025

  Saudi Crown Prince Mohammed Bin Salman Bin Abdulaziz Al-Saud has launched Humain, a new company that will operate and invest across the artificial intelligence (AI) value chain.

  Saudi sovereign wealth vehicle the Public Investment Fund (PIF) will own Humain, which will function as a “unified operating company”.

  Prince Mohammed, the Saudi Prime Minister and PIF chairman, will chair Humain.

  The new company will provide a range of AI services, products and tools, including “next-generation data centres, AI infrastructure and cloud capabilities, and advanced AI models and solutions”.

  The company will also offer one of the world’s most powerful multimodal Arabic large language models, the PIF said.

   It added: “The company will enable capabilities to develop and deliver AI solutions locally, regionally and globally.”

  The PIF and its companies are actively investing in building an AI ecosystem and fostering international AI partnerships.

  In November, it was reported that Saudi Arabia was planning a new AI project with backing of up to $100bn.

  Known as Project Transcendence, the state-backed entity will invest in data centres, startups and other related infrastructure to develop AI.

  The entity is expected to be set up with a structure similar to Alat, which aims to transform the kingdom into a global manufacturing hub for electronics and advanced industries and is backed by $100bn in capital from the PIF.

  https://image.digitalinsightresearch.in/uploads/NewsArticle/13870497/main5434.jpg

  Jennifer Aguinaldo
• 
  Iraq’s economy faces brewing storm

  13 May 2025

  

   

  Policymakers in Baghdad are facing some tough decisions this year. A toxic mixture of external shocks – lower oil prices eroding the country’s earnings and the follow-through from US President Donald Trump’s tariff regime – and self-inflicted problems, notably the expansionary public spending associated with the 2023-25 budget, raise the prospect of recession and a spiralling of the country’s debt to alarming levels.

  Prime Minister Mohammed Shia Al-Sudani’s government is going into an election year with a troubling economic inheritance. Put simply, oil prices trading at about $60 a barrel present an existential threat to a state budget for which the breakeven oil price has been set significantly higher. The Washington-based IMF sees Iraq heading into a current account deficit if prices average just $65 a barrel.

  Much of this situation is structural in nature, even if the situation has been rendered more acute by the consequences of the government’s high-spending budget of June 2023.

  “The most material credit constraint for Iraq remains the longstanding reliance on the hydrocarbons sector of the economy, government finances – more than 90% of government revenue stems from oil – and external accounts, exposing the sovereign to declines in global oil demand and prices,” says Mickael Gondrand, assistant vice president and analyst at Moody’s Investors Service.

  Weak public expenditure controls, and a tendency to increase spending in a procyclical manner when oil revenue rises – as observed through the expansionary triennial budget for 2023-25, which hiked current spending by 21.5% – have further amplified this vulnerability to oil price shocks.

  Not that the government is panicking just yet. As Gondrand points out, the Central Bank of Iraq's foreign-exchange reserve position, at $84bn or about a third of GDP as of January 2025, provides a degree of resilience against external shocks.

  Yet those external shocks are growing more acute as a result of the ripple effects flowing from Trump’s Liberation Day tariff announcement.

  Unsupported spending

  What makes the situation particularly challenging is that Iraq has entered into a declining oil market on the back of very high fiscal expenditure. Oxford Economics, a consultancy, puts the fiscal breakeven price for the budget this year at $110 a barrel. That is a significant jump from just $68 a barrel in 2022.

  “Looking at the oil price going forward, there's no way that they can cover their fiscal deficit. Oxford Economics expects the accumulated funding gap for 2025-27 will reach $230bn, which is the equivalent to around 140% of Iraq's 2023 nominal GDP,” says Tianchen Peng, an economist at Oxford Economics.

  This will exert a massive impact on Iraq’s fiscal balance, and will translate into more domestic debt issuance, fuelling concerns about a full-blown foreign exchange liquidity crisis happening in the next couple of years.

  There is now a policymaking dilemma facing Iraq’s political leaders, who are under pressure to keep increasing fiscal expenditure in exchange for public support. In this context, the political calculus in Baghdad will be to drive up spending rather than de-escalate. 

  “The economic growth methodology is for the government to spend on hiring more people into the public agencies, and making the government become the country’s economic engine. That is leading Iraq into a fiscal trap,” says Peng.

  Meanwhile, modelling by Oxford Economics shows that if the government starts to cap the fiscal expenditure now, it could avoid such a crisis. However, if this is only enacted after the election, in the 2026-27 period, it could be too late.

  Capital spending risk

  The other danger associated with delaying an attempt to address state finances is that, with public sector wages and pensions absorbing upwards of 40% of the country’s budget outlays, there is a squeeze on the amount needed for investment in growth-oriented projects. With salaries and benefits ringfenced, the only route for keeping spending under control would be to lower public investment.

  Such expenditure restraints could bring non-operational spending to a halt, notably the logistics corridor plans set out in the Development Road project, a Turkish-backed regional cross-border scheme that positions Iraq as a major geo-economic hub between East and West. With phases one and two of the estimated $17bn-$20bn scheme due for completion in 2028 and 2033, Iraq will need to secure funding for this road, rail and ports project soon.

  “The Development Road project is a positive the Iraqi economy, and will contribute to stability. But if Iraq experiences fiscal stress, then it definitely will impact the progress of that project. It may not be the life saver of the Iraq economy that the government hopes,” says Peng.

  Alongside the Development Road stands the Basra-based Gas Growth Integrated Project (GGIP), a TotalEnergies-backed scheme that aims to unlock associated gas, eliminate gas flaring and develop 1GW of solar power.

  On this front, there may be room for guarded optimism. In April, the government approved two major energy contracts that form part of the GGIP, one of which is to develop the Ratawi gas field, which is also known as the Artawi field.

  Building up Iraq’s untapped gas potential is central to the authorities’ ambition to end the expensive and inefficient current method of importing gas and power from Iran, with unreliable access to electricity proving a constraint to growth in the non-oil sector.

  “Imports of Iranian gas remain critical to supporting Iraq’s strained electricity generation capacity, particularly during the annual summer demand surges,” says Moody’s Gondrand.

  In March 2025, the US suspended its rolling waiver to Iraq for the import of Iranian electricity, but a waiver for gas imports remains in place. 

  “The government has sought alternative supply sources – for example by targeting greater integration into the GCC electric grid – and has also announced several large-scale energy investment projects in recent years. Progress on these projects would help diversify Iraq’s sources of energy, reduce reliance on costly gas imports and allow greater utilisation of gas that would otherwise be flared,” says Gondrand.

  However, diversifying energy supplies will take time and require additional infrastructure, while many investment projects are still at an early phase.

  Few would want to be in Prime Minister Al-Sudani’s position when he is forced to inflict some necessary pain on the Iraqi public sector in a bid to ensure that a looming fiscal and foreign exchange market crisis can be averted.

  https://image.digitalinsightresearch.in/uploads/NewsArticle/13865926/main.png

  James Gavin
• 
  Iraqi cabinet approves Tuba oil field development

  13 May 2025

  Iraq’s cabinet has approved a contract for the development of the Tuba oil field, according to statements released by the country’s oil ministry and the prime minster’s office.

  The South Basra Integrated Project (SBIP) will combine upstream oil and gas production with downstream refining, petrochemicals and power generation, according to previous statements made by Basra Oil Company (BOC).

  The project scope will include:

  • Development of the Tuba oil field
  • Infrastructure to process and develop associated gas
  • A refinery
  • A fertiliser plant
  • A petrochemicals plant
  • Two power plants

  Previously, BOC has stated that the project will be implemented by an investor consortium under an agreement facilitated by the oil ministry.

  In May 2024, the oil ministry signed an agreement with a Chinese-Iraqi consortium of Geo-Jade and Hilal Al-Basra to develop the Tuba oil field, targeting an output of 200,000 barrels a day of oil and 50 million cubic feet a day of gas.

  https://image.digitalinsightresearch.in/uploads/NewsArticle/13869410/main5919.png

  Wil Crisp