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  Infrastructure schemes support Riyadh’s ambitions

  13 September 2024

  

   

  Saudi Arabia reiterated its commitment to achieving its Vision 2030 goals when it launched the prequalification process in August for what, upon completion, Riyadh says will be the ‘world’s largest airport’.

  The kingdom is also taking giant strides towards improving the traffic situation in the capital as it prepares to expand the Riyadh metro lines further and develop new roads. 

  The moves are in line with Riyadh’s ambitions for infrastructure development, which aim to transform the kingdom’s economy and position it as a global hub for investment, tourism and innovation. Under Vision 2030, the country is undertaking a wide range of infrastructure projects that reflect its ambition to diversify its oil-dependent economy and improve the quality of life for its citizens, especially around the more established urban centres.

  Airport ambitions 

  The key to Riyadh’s success is developing infrastructure across the country. According to regional projects tracker MEED Projects, there are $247bn-worth of active transport projects in Saudi Arabia.

  Airports represent a significant subsector, accounting for $67bn of planned or underway projects, or about 27% of the transport total.

  The largest upcoming airport project is the development of King Salman International airport, which will ultimately expand and replace the existing King Khaled International airport. Contractors are teaming up to deliver the airport’s main packages, aiming to accommodate up to 120 million passengers by 2030 and 185 million by 2050. For cargo, the goal is to process 3.5 million tonnes a year by 2050.

  The other major airport project planned in the kingdom is the Abha International airport in the Asir province. In May, interested companies submitted their statements of qualifications for a contract to develop and operate a new passenger terminal building and related facilities at the airport. The project will be developed using a build-transfer-operate model.

  Resurgence of rail

  Rail projects have revived in the kingdom after a lull of several years. Rail accounts for about 30% of transport projects, with almost $75bn of active projects.

  The most immediate of the upcoming rail schemes is the expansion of the Riyadh Metro scheme. It is understood that the bid evaluation has reached the final stages, and the contract will likely be awarded by the end of October. The Line 2 extension is 8.4 kilometres (km), of which 1.3km is elevated and 7.1km is underground. It includes five stations – two elevated and three underground.

  The other significant project is adding Line 7 to the Riyadh Metro scheme. The tender for the main contract is in the market, and the project will likely be awarded by Q3 next year.

  Nationally, the largest upcoming rail scheme is the long-awaited Saudi Landbridge project, which involves building railways to connect ports and industrial areas on the Red Sea coast in the west with Riyadh in the centre of the kingdom and the Gulf coast in the east.

  Other rail projects planned include high-speed connections between Riyadh and other GCC capitals, including Doha and Kuwait City, urban rail projects in Riyadh and the Saudi sections of the GCC railway network.  

  Roads development 

  Expanding the Saudi road network is essential to completing the transport infrastructure rollout. The kingdom has $57bn of road projects under development, which accounts for about 23% of the transport total. 

  Some of the major schemes under development are in Riyadh and are being undertaken by the Royal Commission for Riyadh City (RCRC). The masterplan consists of developing 15 road schemes in the capital, four of which are in execution. 

  These include the construction of phases two and three of the second southern ring road scheme. Earlier this year, RCRC awarded an estimated SR7.5bn ($2bn) of contracts to construct these projects.

  The second project is the upgrade of the Wadi Laban cable bridge in Riyadh, for which the client awarded a SR4bn ($1bn) design-and-build contract earlier this year.

  The third project involves developing the western part of the Al-Thumama Road Axis, which is 6km long and extends from King Khalid Road in the west to King Fahd Road in the east.

  The fourth road project extends from Taif Road in the Laban neighbourhood to the Qiddiya project. The package has a total length of 16km.

  Firms are also submitting bids for the contract to deliver the second section of the Al-Thumama Road development project in Riyadh, which stretches from Mohammed Bin Salman Road to Uthman Bin Affan Road and has a total length of 8.8km.

  These schemes will provide vital links between the new and expanded airport and ports and the other projects under development in the kingdom.

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  Yasir Iqbal
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  Saudi downstream programmes gain traction

  13 September 2024

  Progress on a programme as mammoth as Saudi Aramco’s liquids-to-chemicals scheme is expected to be measured and laboured. The programme’s central ambition is to derive greater economic value from every barrel of crude produced in the kingdom by converting 4 million barrels a day (b/d) of Aramco’s oil production into high-value petrochemicals and chemicals feedstocks by 2030.

  Aramco and its subsidiary, Saudi Basic Industries Corporation (Sabic) – the two primary stakeholders of the liquids-to-chemicals programme – are still in the initial phase and are giving shape to various projects and components.

  Considering that the operators are “still working out” how best to attain the liquids-to-chemicals conversion goal from across their global portfolio, achieving “cohesion and synergies” with the consultants they have appointed during the conceptualisation phase is proving to be a “sticking point”, several sources told MEED.

  While day-to-day progress might appear sluggish, Amin Nasser, Aramco’s president and CEO, assured earlier in the year that the Saudi energy giant is on track to achieve its crude oil-to-chemicals (COTC) conversion goal by 2030.

  “We are on track to achieve our target of 4 million b/d liquids-to-chemicals [conversion capacity] by 2030,” Nasser said during an online press conference held on 30 May to discuss Aramco’s secondary shares offering.

  “We’re slightly above 2 million b/d liquids-to-chemicals [output], so progressing very well in our programme,” he said in response to a question by MEED during the media briefing.

  Liquids-to-chemicals programme

  When completed, the liquids-to-chemicals programme will make Saudi Arabia one of the world’s largest petrochemicals producers. Aramco, along with Sabic, have been tasked with establishing 10-11 large mixed-feed crackers by 2030. These petrochemicals crackers, which include greenfield developments and expansions of existing facilities, will be built both in Saudi Arabia and in overseas markets.

  The Saudi energy giant is said to have been allocated a total capital expenditure budget of up to $100bn for projects as part of this campaign, MEED has previously reported.

  Aramco has divided its liquids-to-chemicals programme in Saudi Arabia into four main projects. It took a major step forward in September last year by appointing project management consultants (PMC) for the different segments of the scheme.

  Aramco selected US firm KBR, France’s Technip Energies, UK-based Wood Group and Australia-headquartered Worley to provide PMC services for the four projects, which include: 

  • Project East (PMC 1) – involves converting the Saudi Aramco Jubail Refinery Company (Sasref) complex in Jubail into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. The project also involves building an ethane cracker that will draw feedstock from the Sasref refinery. China’s Rongsheng Petrochemical Company recently signed a preliminary agreement with Aramco to potentially become a 50% investor in this project.
  • Project West (PMC 2) – involves converting the Yanbu Aramco Sinopec Refining Company (Yasref) complex in Yanbu into an integrated refinery and petrochemicals complex by adding a mixed-feed cracker. Aramco and state-owned China Petroleum & Chemical Corporation (Sinopec) signed a memorandum of understanding in October for joint investment in the project, known as the Yanbu Refinery+ project.
  • Project X (PMC 3) – involves converting the Saudi Aramco Mobil Refinery Company (Samref) complex in Yanbu into an integrated refinery and petrochemicals complex by building a mixed-feed cracker. 
  • Project RTC (PMC 4) – involves establishing a COTC complex in Ras Al-Khair in the Eastern Province. Sabic is a partner in the Ras Al-Khair COTC project.

  Aramco has initiated a separate tendering exercise to provide front-end engineering and design (feed) services on the projects in the future. Feed contracts are scheduled to be awarded in 2024, while the main EPC contracts are due for award in 2025.

  Ramping up gas processing capacity

  To process incremental volumes of gas entering the grid due to Aramco spiking its conventional and unconventional gas production, the state enterprise has already spent $16.5bn on gas processing and transportation projects this year.

  In April, Aramco awarded $7.7bn in EPC contracts for a project to expand the Fadhili gas plant in the Eastern Province of Saudi Arabia. The project is expected to increase the plant’s processing capacity from 2.5 billion cubic feet a day (cf/d) to up to 4 billion cf/d.

  On 30 June, Aramco awarded 15 lump-sum turnkey contracts for the third expansion phase of the Master Gas System (MGS-3), worth $8.8bn. Aramco has divided EPC works on the MGS-3 project into 17 packages. The first two packages involve upgrading existing gas compression systems and installing new gas compressors. The 15 other packages relate to laying gas transport pipelines at various locations in the kingdom.

  The expansion will increase the size of the network and raise its total capacity by an additional 3.15 billion cf/d by 2028 through installing about 4,000 kilometres of pipelines and 17 new gas compression trains.

  Going forward, Aramco is expected to pursue other projects this year to boost the gas processing potential of its key plants, such as Haradh, Shedgum and Uthmaniya.

  Aramco has already received interest from contractors for the main tender for a project to expand the Haradh Gas Oil Separation Plant 3 (GOSP 3). The state enterprise is in the feed stage of a separate project to expand the Shedgum and Uthmaniya plants, with the main EPC tender expected to be issued by the end of the year.

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  Indrajit Sen
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  Riyadh AI goals require collosal mindset and capital shift

  13 September 2024

  The ongoing Global AI (Gain) summit in Riyadh is not short on showmanship. Event-branded cars and coaches ferry delegates between their hotels and the car park of the Diplomatic Quarter, where golf carts driven by enthusiastic, cheerful young Saudis await to take them to the chandelier-laden King Abdulaziz International Convention Centre.

  The chassis of a luxury electric vehicle from Lucid, which is majority owned by the Public Investment Fund (PIF) and a bright yellow canine-like mobile thermal camera from Boston Dynamics are some of the top crowd drawers at the show, which thousands are attending.

  The opening performance of a young Saudi named Omar of the late John Lennon's provocative song Imagine enthralled the audience, composed mainly and albeit ironically of established technology suppliers, startups and venture capitalists looking to create a business or bring home deals out of Saudi Arabia's outsized AI fervour, driven mainly by the need to drive efficiency and foster new industries post-oil.

  Abdullah Al-Sharif Alghamdi, president of event proponent Saudi Data and AI Authority (SDAIA) – pronounced Sadaya locally – underscored the kingdom's desire to influence the development of global AI standards, ethics and regulations.

  Saudi Arabia ascended the 39-member UN Advisory Body on Artificial Intelligence last year. SDAIA has also established the International Centre for AI Research & Ethics (ICAIRE), which is being classified as a Category 2 institution under the UN Educational, Scientific & Cultural Organisation (Unesco).

  During the event, SDAIA and the Organisation for Economic Co-operation & Development (OECD) announced the establishment of a Middle East hub of OECD's AI Policy Observatory, which tracks over 1,000 AI-related policies globally.

  Several memorandums of understanding have been signed over the past two days, including making the homegrown seven billion-parameter Allam large-language model available on Microsoft's Azure cloud computing platform.

  Graphics processing unit (GPU) leader Nvidia also pledged to work with SDAIA to build a 5,000-GPU supercomputing platform in the kingdom, which will likely require close to $200m in investments based on the average unit price of each Blackwell chip. 

  PIF, which plans to create a $40bn AI fund, has not so far made any new announcements at the show, where foreign venture capitalists openly declared that they are looking at world-class AI products to invest in.

  Crucially, the presence of female Saudis staffing companies that are exhibiting at the show or visiting it is palpable, and somewhat unprecedented for a technology event being held in one of the world's most conservative societies.

  It confirms National Center for AI assistant CEO Steve Plimsoll's statement that there are more female Saudis taking engineering and IT courses today than there are males.

  This trend, he says, persists in most Saudi startups, providing the best hope yet of overcoming the kingdom's greatest perceived weakness in implementing its AI strategy – the lack of foundational skillsets, which have been the hallmark of technology epicentres such as the US Silicon Valley.

  Plimsoll also told MEED that Allam 7B has outperformed the latest, 13 billlion-parameter version of Google's LLM, Llama, in, a recent benchmark, which indicates that the Saudis are indeed making some headways in realising their AI aspirations.

  The executive, who previously served as global chief analytics officer at UK-headquartered HSBC, said over 150 developers worked on Allam, which is envisaged, first and foremost, as an enabler of Saudi government services.  

  As the excitement and hype dissipate, the real job of making AI deliver on its promise to foster a prosperous, just society will have to begin for the rest of the kingdom's 36.4 million population.

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  Jennifer Aguinaldo
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  Enowa sets Oxagon water recycling EPC deadline

  12 September 2024

  Enowa, the utility and energy subsidiary of Saudi gigaproject developer Neom, is understood to have set a new bid deadline for the contract to design and build a wastewater recycling plant catering to Oxagon, the development's industrial cluster.

  Engineering, procurement and construction (EPC) contractors are expected to submit revised proposals for the contract on 3 October, sources close to the Oxagon Village Water Recycling Plant project tell MEED.

  According to one of the sources, EPC contractors had previously submitted bids for the contract.

  However, following initial post-tender negotiations, Enowa issued an addendum, which necessitates the submission of revised proposals.

  According to data first obtained by regional projects tracking service MEED Projects, the Oxagon Village Water Recycling Plant project entails the construction of the following:

  • Wastewater truck receiving facility
  • Pretreatment facilities including screens and equalization
  • Main biological treatment adopting a food chain reactor (FCR) technology

  The scope also includes the construction of tertiary treatment and sludge handling facilities and recycled water storage tanks, as well as internal roads, offices and education centres.

  This project is separate from the Hidden Marina wastewater recycling plant project, which is being procured on a public-private partnership (PPP) basis.

  The bidder prequalification process is under way for this project, which will have the capacity to treat 64,000 cubic metres a day (cm/d) of wastewater, expandable to 80,000 cm/d.

  The Hidden Marina project will supply water recycling services to the anticipated occupants of the 170-kilometre-long pair of parallel buildings that will make up The Line at Neom.

  It will utilise a build-own-operate-transfer model, with the sewage treatment concession period extending 25 years from the date of operation, which is expected to be in the second quarter of 2027.

  The project's first phase is expected to cost approximately SR1.3bn ($347m).

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  Jennifer Aguinaldo
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  China’s Top starts $400m Aramco housing construction

  12 September 2024

  Top International Engineering Corporation, the international entity of China’s Shaanxi Construction Corporation, has started the engineering, procurement and construction (EPC) works on the SR1.5bn ($400m) Saudi Aramco staff accommodation across the remote sites of Haradh and Wudayhi.

  Senior executives from the developer team that won the contract, which comprises local companies Lamar Holding and Asyad Group, and Top broke ground on the project on 11 September, less than two months after the project reached financial close.

   A special project vehicle, First Developers Real Estate Development Company, has been formed to implement the Haradh and Wudayhi housing public-private partnership (PPP) project.

  According to Hani Abdulhadi, Lamar Holding's managing director, Top’s proven ability to deliver complex infrastructure projects on a global scale makes them the “perfect partner for this ambitious development”.

  The project’s total built-up area will exceed 140,000 square metres, making it one of the largest staff housing developments in the region.

  The complexes are expected to house up to 2,800 employees across 11 residential buildings. There are also two mosques and a clinic, as well as a refurbished recreational facility and an expanded medical facility at each complex.

  The scope of the contract includes the construction of a sewage treatment plant operations building and the installation of chiller plants, according to regional projects tracker MEED Projects.

  Aramco first tendered the Haradh and Wudayhi PPP contract in 2019, before retendering it in 2022.

  Saudi Aramco received three bids for the retendered contract on 25 August 2022. The other two bidding teams were led by Al-Rajhi Development Company and Yamama, both based in Saudi Arabia.

  MEED previously reported that local lenders led by Riyad Bank had agreed to provide debt for the project.

  US/India-based Synergy Consulting provided financial advisory services to the Lamar-Asyad team.  

  Aramco is procuring two other housing PPP schemes. 

  A team led by the local El-Seif Engineering Contracting Company was awarded the contract to develop and implement the Tanajib housing PPP project in early 2022. The project scope included the development of 2,500 housing units, in addition to a food court, parking facilities and infrastructure.

  In January 2023, a team led by Lamar Holding is understood to have won the contract to develop Aramco's staff accommodation located on Abu Ali Island. The project is expected to house 700 employees and is valued at an estimated $250m.

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  Jennifer Aguinaldo