meed-logo

line1 line2 line3
SIGN IN / REGISTER

Iraq power projects make headway

9 May 2023

 

The inefficiency of Iraq’s electricity generation and transmission and distribution (T&D) infrastructure is well documented and ironic, given that the country is the second-largest Opec crude oil producer and home to the world’s largest crude oil reserves.

Decades-long protracted armed conflicts have routinely targeted Iraq’s substations, while economic and political upheavals have deterred further investments within the sector.

Over the past few months, however, there have been positive indications that the tide could be turning in favour of Iraq’s plans to improve the sector’s performance and output and reduce its carbon intensity.

In February, US-headquartered GE and Iraq’s Ministry of Electricity (MoE) agreed to pursue new projects to boost the country’s electricity infrastructure.

The parties signed principles of cooperation (PoC) to explore several projects, including establishing new power plants, expanding capacity at existing facilities, and building new substations to relieve grid congestion across a range of directorates.

This is on top of the power generation and T&D projects that the US firm has delivered in Iraq since 2011.

MOE also signed five-year service agreements with Germany’s Siemens Energy for three power plants with a combined total capacity of 1GW in March. Further cooperation is expected to be finalised for conventional and renewable generation capacity of up to 11GW.

In addition, Iraq has an estimated $10bn-worth of greenfield and brownfield thermal power generation projects in various planning and procurement stages, along with some $5bn of solar photovoltaic (PV) power plants, data from regional projects tracker MEED Projects reveals.

France’s TotalEnergies is in advanced talks to develop a 1GW solar power project catering to the southern Basra region as part of its $27bn Iraq energy programme.

“Talks are … progressing positively with the government. There are discussions about contracts and doing development activities,” a source close to the project tells MEED.

Power links

Similarly, plans to link Iraq to the regional GCC, Saudi Arabia and Jordan electricity grids have made good progress in recent months.

In February, the GCC Interconnection Authority (GCCIA) confirmed the award of five contracts worth $220m for the construction of infrastructure linking the region’s electricity grid with Iraq’s.

The project involves the construction of a double circuit 400-kilovolt (kV) transmission line from the Wafra station in Kuwait to the Al-Faw station in south Iraq with a total transmission capacity of 1,800MW and a length of 295 kilometres.

To be completed within 24 months, the project’s first stage is expected to supply Iraq with 500MW of electricity.

Work on the first 150MW phase of the Iraq-Jordan power link is also understood to start this month, following the award of the contract to GE.

A third power transmission link is planned by Saudi Electricity Company and Iraq’s MoE, between Arar in northern Saudi Arabia and Yousifiyah, a township in Iraq’s Baghdad Governorate.

These projects will help alleviate Iraq’s worsening power deficit, especially in the summer months when its existing infrastructure cannot cope with demand spikes.

It could also reduce dependence on Iran, from which Iraq imports an average of 1,200MW of electricity annually to augment supply.

It is understood Baghdad accrued a debt of $1.6bn for its Iranian gas and electricity purchases between 2019 and 2021, although most of the debt, if not all, was reportedly settled in October 2022.

Setbacks

As expected in Iraq, there have been some setbacks despite the encouraging developments.

Norwegian utility developer and investor Scatec has exited the deals it signed in 2021 to develop two solar independent power projects (IPPs) with a total combined capacity of 525MW in Karbala and Iskandariya.

Reports cite that difficulties and delays in negotiations led to the firm’s decision to exit the projects, for which power-purchase agreements (PPAs) are understood to have not yet been signed.

Scatec’s partners for the project, Egypt’s Orascom and the local firm Iraqi al-Bilal, may go ahead with implementing the projects, according to an industry source. 

The start of construction work has also been delayed for the first phase of a planned 1,400MW thermal power plant in Karbala due to the lack of a financial agreement between the developer and the Iraqi government.

Baghdad-based Harlow International was selected to develop the project in February 2021. During the intervening period, it acquired land, signed a power-purchase agreement and appointed China’s Citic Construction to build the first and second phases of the planned power plant. 

Citic has agreed to co-finance the project along with Harlow International.

Decarbonisation route

In addition to an estimated 5.5GW of solar PV projects in various stages of negotiations, other plans are under way to reduce the carbon intensity of Iraq’s energy sector.

For example, the recent PoC that the Electricity Ministry signed with GE includes a proposed 10-point strategy to accelerate Iraq’s energy transition.

The plan includes a flare gas-to-power project so that Iraq can utilise gas that is currently flared to produce electricity. Maintenance, upgrades and rehabilitation of the traditional fuel fleet are also planned.

It additionally includes a combined-cycle conversion programme, which is expected to “enhance efficiency, leading to significant fuel savings and decreasing greenhouse gas (GHG) emissions intensity”.

Notably, Iraq has tendered and awarded several plant conversion projects in recent years. In February, MOE awarded a team of China’s Dongfang Electric and China State Construction Engineering Corporation a contract to convert a simple-cycle power generation plant in Al-Zubair into a combined-cycle gas turbine (CCGT) facility.

Similar projects are in the procurement and execution stages. These include converting three power plants in Baghdad and two in Quds.

In 2021, MOE prequalified companies to bid for the contracts to convert two simple-cycle power plants in Diwaniya and Haidariya into CCGT facilities. Other similar projects include an existing power plant in Karbala, which has 10 units of GE’s F9E gas turbines, and another power plant in Najaf, which runs on two GE F9E units.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10822122/main.gif
Jennifer Aguinaldo

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Region positions itself for sustainable future

    6 June 2023

    Commentary
    Colin Foreman
    Editor

    At the end of November, the region will host the UN’s climate change conference for the second time in two years. Cop28 in the UAE, like Egypt’s Cop27 last year, will bring world leaders together to discuss energy transition and the fight against climate change.

    Arresting climate change will arguably be humankind’s greatest challenge over the coming decades. To succeed, people from all over the world will need to work with each other, which is why events like Cop28 that bring countries together are so important – despite the criticism they can attract. 

    At the project level, cooperation will also become an increasingly important trend.

    This year there are clear signs that governments are jointly working on projects that will contribute to the fight against climate change. 

    Some of the best examples are in the transmission and distribution sector. In recent months, significant steps have been taken across a range of interconnection projects to link countries’ electricity grids. 

    Efficiency is the main driver for these projects. Particularly for GCC nations, the capacity to obtain large-scale solar energy affordably, combined with the marked differences in peak energy demands between the colder and hotter months, frequently leads to considerable surplus capacity.

    Smoothing out these peaks and troughs as part of a larger regional or international grid also means less power generation is required and reduced carbon emissions.

    As the shared challenge of climate change rises up the global agenda, more projects that pool resources, share expertise, and transcend borders and politics will be needed. 

    From regional collaborations on electricity grid interconnections to international climate conferences, the region is positioning itself at the centre of a more collaborative and sustainable future.

    This package includes:

    > Region plans vital big grid connections
    > Soaring data demand drives boom
    > Read the June 2023 MEED Business Review

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10910825/main.gif
    Colin Foreman
  • Hospital boost for Jordan construction

    5 June 2023

    This package on Jordan's construction sector also includes:

    > Egis selected for Jordan hospital project
    > Jordan's largest construction project to move onsite
    > Hill wins work on Saudi-backed hospital project in Jordan
    > PIF to invest $24bn in six Mena countries

     

    Jordan’s construction sector will get a major boost this year as the country’s largest project prepares to move onsite over the summer after the first phase of its masterplan has been finalised.

    The $400m hospital project is being developed by the Saudi Jordanian Fund for Medical and Educational Investments Company (SJFMEI) on a build-operate-transfer (BOT) basis.

    For the hospital project, SJFMEI appointed US-based Hill International in partnership with the local sub-consultant Dar al-Omran to provide project construction management services last year. The project team is now preparing to tender construction contracts.

    “We have completed the first phase of the masterplan,” Said Mneimne, senior vice-president of Hill International, told MEED in an interview.

    “This summer, we will appoint a contractor for the enabling works. We will then appoint a contractor for the foundations and the structure,” he added.

    The scale of the project is a challenge for Jordan’s construction sector, and an international engineering, procurement and construction (EPC) contractor may be needed to deliver the project.

    “We have not yet decided what the contracting strategy will be,” Mneimne said. 

    The project involves the construction of a university hospital with 330 beds, 72 outpatient clinics, a children’s hospital, and a medical school with a total capacity of 600 students and a projected annual intake of 100 students.

    The project also includes five medical centres of excellence focused on disciplines such as cardiology, oncology, neurology, gastroenterology and orthopaedics. There will also be four scientific research centres in genomics and precision medicine, stem cells and regenerative medicine, health systems and public health, and bioinformatics.

    The built-up area is estimated at 110,000 square metres. It will be located on the airport road, near the Ghamadan area on the outskirts of Amman.

    A joint venture of Lebanon’s Dar al-Handasah (Shair & Partners) and Perkins & Will was appointed for the engineering design and supervision services.

    SJFMEI is a wholly owned subsidiary of the Saudi Jordanian Investment Fund (SJIF). Saudi Arabia’s Public Investment Fund (PIF) owns 95 per cent of the fund, while Jordanian banks hold the remaining 5 per cent.

    Ownership of the project will be transferred to the Jordanian government after the end of the investment period.

    The hospital is the largest active standalone project in Jordan, according to regional projects tracker MEED Projects. The second-largest project is the estimated $228m King Hussein Bridge Terminal and Freight Yard project, which is at the prequalification stage.

    Disappointing decade

    Major projects are needed after a disappointing decade for Jordan’s construction sector. 

    Data from MEED Projects shows a fluctuating trend in the value of construction and transport contracts awarded in Jordan over the past 10 years.

    In 2013, the total value stood at $1.429bn. A sharp rise in 2014 to $2.475bn marked the peak of contract awards during the period.

    A steep fall was witnessed in the subsequent years, with the total value plunging to just $662m in 2015, a dramatic decrease of nearly 73 per cent from the previous year. This downward trajectory continued, with the value plummeting further to a record low of $79m in 2020 amid the global economic disruption caused by the Covid-19 pandemic.

    A closer look at the data indicates periods of minor recovery, notably in 2017, when contract awards rose to $866m, following a particularly poor performance in 2016 at just $159m.

    Despite these rebounds, the overall trend illustrates a declining construction and transport sector in Jordan, with the years 2021 and 2022 recording values of $32m and $86m, respectively, a stark contrast to the highs of 2013 and 2014.

    The fluctuating values in contract awards reveal the industry’s volatility over the past decade, linked to regional instability, economic downturns and global disruptions including the Covid-19 pandemic.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10914437/main.gif
    Colin Foreman
  • Political deadlock in Lebanon blocks reforms

    5 June 2023

     

    Lebanon’s political deadlock is likely to continue to weigh on the country’s economy and undermine security over the medium term, according to experts.

    The country currently has an interim government and has been without a president since former President Michel Aoun’s term ended at the end of October last year.

    Progress towards forming a new government is likely to be slow, with the legislature divided over who should replace Aoun as president.

    In March, the Iran-backed Hezbollah group and House Speaker Nabih Berri’s Amal Movement party – which together constitute Lebanon’s Shia base – announced their support for the Christian politician Sleiman Frangieh.

    Hezbollah and its allies have since tried to gather support for Frangieh as president, but strong opposition from the majority of the country’s Christian, Sunni and Druze political blocs has left him short of the 65 votes required to be elected in the 128-member legislature.

    Over recent weeks, members of Lebanon’s parliament that oppose Frangieh have started to rally around the former finance minister Jihad Azour.

    Azour currently serves as the director of the Middle East and Central Asia Department at the International Monetary Fund (IMF).

    As the parliament is divided, whether either candidate can obtain a majority vote remains uncertain. According to experts, even if a president is named, it will be extremely difficult for them to form a government.

    Nicholas Blanford, a non-resident senior fellow with the Atlantic Council’s Middle East programmes, says it will likely be some time before a government is formed.

    “Getting a president elected is only the first step,” he said. “Once the new president is in place, there is the tricky task of forming a new government.

    “As we’ve seen over the past 20 years, forming a new government can take months as people bicker and jostle for various lucrative and influential portfolios.”

    Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon

    Outside pressure

    Only when a government has been formed will Lebanon be able to start initiating the series of reforms that the international community has demanded to unlock aid, grants and loans to try to put the country on the path to economic recovery.

    As Lebanon’s economic crisis has worsened and the security situation has declined, increasing pressure has been applied from other countries that want to try to restore stability in the region.

    Barbara Leaf, the US assistant secretary for Near Eastern affairs, said on 31 May, during a Senate committee hearing, that the Biden administration was considering sanctions if a new president is not elected soon.

    Separately, two members of the US House Foreign Affairs Committee called on the administration to impose sanctions on individuals involved in corruption to “make clear to Lebanon’s political class that the status quo is not acceptable”.

    In a letter to Secretary of State Antony Blinken on 30 May, they said: “We also call on the administration to continue pressing for full accountability for the August 2020 Beirut port blast and support independent, international investigatory efforts into egregious fraud and malfeasance by the governor of Lebanon’s central bank.

    They added: “We must not allow Lebanon to be held hostage by those looking to advance their own selfish interests.”

    French crackdown

    French officials have also taken action to try to crack down on perceived corruption by members of Lebanon’s political elite.

    In May, French prosecutors issued an arrest warrant for Lebanon’s central bank governor, Riad Salameh.

    The warrant followed Salameh’s failure to appear before French prosecutors to be questioned on corruption charges.

    In response, Salameh issued a statement saying that the arrest warrant violated the law.

    Salameh has been the target of a series of judicial investigations at home and abroad on allegations that include fraud, money laundering and illicit enrichment.

    European investigators looking into the fortune he has amassed during three decades in the job had scheduled a hearing in Paris for 16 May.

    A key problem is you still have the same cabal of oligarchs in power and it is likely they will still be represented in the next government
    Nicholas Blanford, Atlantic Council’s Middle East programmes

    Breaking the deadlock

    Analysts believe cracking down on corruption among Lebanon’s political elite is key to breaking the country’s political deadlock.

    “A key problem is that you still have the same cabal of oligarchs in power and it is likely that they will still be represented in the next government,” said Blanford. “These oligarchs do not want reform because if they implement a meaningful reform process, they run the risk of losing their positions of power.”

    While the country’s opposing political blocs continue to vie for power and the formation of a new government seemingly remains only possible after at least several months of negotiations, the outlook for Lebanon in the short term looks bleak.

    Meaningful government assistance for Lebanese citizens struggling with declining security and heightened economic pressures remains a distant prospect. High levels of emigration are also likely to continue as the country’s population seeks relief from the hardships at home.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10907713/main.gif
    Wil Crisp
  • Saudi construction boom still in early stages

    5 June 2023

     

    Register for MEED’s guest programme 

    Construction activity associated with Saudi Arabia’s Vision 2030 and the kingdom’s gigaprojects is ramping up fast, but is still in the early stages.

    “MEED estimates that there are $879bn of projects planned, of which only about $50bn have been awarded so far,” said MEED’s head of content and research, Ed James, while opening MEED’s Saudi Giga Projects 2023 conference in Riyadh on 5 June.  

    While much work is still needed, progress is being made on projects with a step change in the total value of contracts awarded.

    “According to data from MEED Projects, the total value of contract awards in 2022 more than doubled compared to 2021,” said James. “In 2021, there was $11.9bn of contract awards, and in 2022 there was $24bn of awards.”

    The Saudi Giga Projects 2023 event has speakers from projects including Roshn, Diriyah Company, Red Sea Global, Boutique Group, King Salman Park Foundation, Sports Boulevard Foundation and the Royal Commission for AlUla.

    Saudi Giga Projects 2023 is followed by MEED’s Mena Construction Summit on 6 June, focusing on how the industry rises to the challenge of delivering projects amid unprecedented global demand and competition for resources.

    Companies speaking at the event include Al-Bawani Capital, Autodesk, Bechtel, Caldwell, Diriyah Company, Amana, DuBox, HKA, Jacobs, KEO Infrastructure, LITE Development & Consulting, Ministry of Investment Saudi Arabia (Misa), Mott MacDonald, MZ Engineering, Nesma & Partners, Oracle, Procore, Red Sea Global, Roshn, Parsons Saudi Arabia, Saudi Entertainment Ventures (Seven), Socotec and Thinkproject.

    Find out more about tomorrow’s event here.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10913130/main.gif
    Colin Foreman
  • Kuwait to complete remediation projects before 2028

    5 June 2023

    All of the ongoing remediation projects that are part of the multibillion-dollar Kuwait Environmental Remediation Programme (Kerp) are expected to be completed before the end of 2027, according to Muthanna al-Mumin, a team leader for remediation projects at Kuwait Oil Company (KOC).

    The five contracts awarded in 2021 are worth $949m and are expected to be completed either in late 2025 or early 2026, according to Al-Mumin.

    These are:

    • NKETR A – Sabria – Kharafi (Kuwait)/Lamor (Finland) $194m
    • NKETR B – Raudatain – KCPC (Kuwait)/ETC (Saudi Arabia) $188m
    • SKETR A – Greater Burgan – Kharafi/Lamor $197m
    • SKETR B – Greater Burgan – HEISCO (Kuwait)/Zaopin Hangzhou (China) $185m
    • SKETR C – Greater Burgan – Enshaat Alsayer/Water & Soil Remediation (Italy) $185m

    Three additional contracts signed on 7 March this year had a total value of $460m.

    These are:

    • Zone A – Al-Sayer Group (Kuwait) $155m
    • Zone B – Al-Ghanim International Trading & Contracting Company (Kuwait) $153m
    • Zone C – Zaopin Hangzhou (China) $152m

    Speaking in an interview with MEED, Al-Mumin said: “The planned completion of the present five contracts is between late 2025 and early 2026 whilst three more contracts have recently commenced and the planned completion is before the end of 2027.”

    Kerp is the largest environmental remediation project in the world and was established by the UN Compensation Commission to allow Kuwait to address the ecological damage resulting from the 1990-91 Gulf War.

    As part of Kerp, KOC aims to award contracts for planned revegetation works in late 2023 or early 2024.

    Earlier this year, KOC extended the bid deadlines for the recently tendered revegetation contracts, increasing expectations that the scheme would be significantly delayed.

    Bids for the contracts are currently due to be submitted by 18 June 2023. Previously, the deadline for the bids was 16 April.

    The project is expected to be divided into four packages with a combined value of about $675m.

    The four revegetation contracts being tendered by KOC are expected to be awarded to four separate contractors and include a wide range of work activities.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10912851/main4752.jpg
    Wil Crisp