Legacy building at Diriyah
1 August 2024
It is impossible to talk about Saudi Arabia’s history without referencing Diriyah. Founded in 1446 in the Wadi Hanifa valley on the western outskirts of Riyadh, the historic town was the first capital of the Al-Saud dynasty and the launchpad for the kingdom’s unification campaign at the turn of the 20th century. In recognition, its central Turaif district was inscribed as a Unesco World Heritage site in 2010.
Today, the mud-brick settlement, built in the distinctive Najdi architectural style, has lent its name to one of the world’s most ambitious transformative developments. Sensitively conserving and building on its historical importance, it has created a unique cultural, educational, residential and tourism hub in the capital.
With an official budget of some $63bn, Diriyah is one of Saudi Arabia’s five official gigaprojects. It has held this label since early 2023, when responsibility for its development was handed to Diriyah Company, a project company formed as a Public Investment Fund (PIF) subsidiary a year earlier.
Covering an area of 14 square kilometres, Diriyah is targeting a population of 100,000 by its stated completion date of 2030. With more than 40 hotels, nine museums, 400 luxury boutiques, 100-plus restaurants and multiple educational institutions, it hopes to draw in more than 50 million annual visits.
Progress since ground was first broken four years ago has been rapid. As of May 2024, more than SR53bn ($14.1bn)-worth of construction contracts had been awarded. Today, visitors to the area can see hundreds of mobile cranes, plant and piling equipment rising over the boundary wall.
“We are in a good place,” says Mohammed Saad, Diriyah Company’s chief development officer. “We’ve finished our essential underground infrastructure and civil works, the super basement and all the tunnels that connect the basements together.”
But the real work has only just begun. Saad says a further SR30bn-35bn is scheduled to be awarded by the end of 2024, rising to SR40bn-45bn in 2025. By the end of this year, the public can expect to see substantial above-ground construction, particularly on the western side of the gigaproject, providing more tangible evidence of its advancement, which until now has been primarily below ground.
This is not to say that any vertical assets will be particularly tall. Because of the district's traditional low-rise nature, any building must be no higher than the historic structures. It should also emulate the Najdi style. For the same reason, most of the essential infrastructure, utilities and roads are hidden below ground.
Major project scopes
A significant step was made in early July when Diriyah Company awarded an estimated $2bn contract to a joint venture of El-Seif Engineering & Contracting and China State to build the North Cultural District. The deal, the largest let on the gigaproject to date, covers multiple assets, including hotels, the King Salman Foundation Library, King Salman University and the House of Saud Museum.
The work was originally planned as multiple construction packages until Diriyah Company took the commercial decision last year to bundle them into one contract. The decision to adopt super packages was driven by a dynamic market in which contractors have been almost overwhelmed with the volume of tenders from various gigaprojects and where cost inflation is taking hold.
“You will not get the attention of the big contractors if you offer small contracts,” Saad explains. By consolidating projects, contractors can focus their resources more effectively and efficiently and provide more competitive pricing.
“We have a hotel, we have an office building, we have a museum, and when we tendered them as one super package, there was a very solid response and interest from the big players because they could focus their resources and pricing and more efficiently engage their supply chains and subcontractors.”
The approach appears to be working. In late July, another estimated $2bn super package was awarded to a joint venture of local contractor Albawani and Qatar’s Urbacon to construct assets in the Wadi Safar district of the gigaproject. Featuring a mix of residential, residential farm plots, hotels, branded hotel villas, a golf course, an equestrian and polo club, and other leisure and entertainment facilities, including Aman, Chedi, Faena and Six Senses-branded hotels, Wadi Safar is positioned as the most upscale and exclusive development in Riyadh and indeed the kingdom as a whole.
The consolidated contract packages strategy reflects the supercharged nature of the Saudi projects market. With various clients, including the gigaprojects, all competing for a limited amount of contracting, material and labour resources, more innovative procurement strategies need to be adopted.
This is particularly critical for Diriyah and its enormous material requirements. For example, it has previously said that it will ultimately need some 350,000 doors, 1.5 million square metres of tiles, 1.2 million tonnes of rebar and 140,000 HVAC units.
Supply-side obstacles
Despite the progress, the project faces challenges related to contracting, engineering and material supply. The high demand for key materials, coupled with global supply chain disruptions, poses a significant conundrum. However, the delivery team has proactively secured and signed framework agreements with manufacturers to ensure a steady flow of required materials.
Transparent demand signalling is a core component of this. “We’ve analysed our material needs up to 2030 and prepared comprehensive requests for proposals for all key items,” says Saad. “We went out to the manufacturers and the supply chain in general to let them see the pipeline is tangible and secure. We are listening to vendors in order to speed things up and to lock down prices.”
Saad lists specific materials not naturally available in Saudi Arabia, such as finishing stones, as items that may be in short supply, in addition to some specialised MEP equipment that is only manufactured abroad. Overall, he is optimistic about the market’s ability to adapt. “The market will adjust itself,” he states. “Of course, there are challenges, but there are also opportunities for manufacturers to up their game.”
Likewise, contractors are being brought into discussions at earlier stages of contract planning. Diriyah is adopting strategies such as early contractor involvement in the design process to help better understand and manage construction risk. “We’re engaging with contractors and delivery partners as early as the concept design stages to get their feedback on the project’s constructability,” says Saad. “Later, these contractors can be invited to bid for the contract, which makes it easier for them and so they can be aware of any issues.”
Financial constraints
Another increasingly evident challenge is financing. As the gigaprojects programme steps up a gear, there have been growing strains on funding the huge costs associated with it, expenditure which in some cases is considerably higher than when first estimated during the initial master planning stages due to cost inflation and disruptions in the supply chain.
As with the other gigaprojects, Diriyah’s initial work has been fully funded by its PIF parent, but later phases will likely require other financing mechanisms. While some of this will come from the $100m in revenues it expects to make over the next year, the client company has been actively tapping into the capital markets, following in the footsteps of other gigaprojects such as Neom and Red Sea Global, which have concluded sizeable borrowing deals in the past two years.
This includes all options up to and including an initial public offering (IPO). The market consensus is that eventually all the PIF project company subsidiaries will go public when the time is right, and Diriyah is unlikely to be an exception.
For the same reason, the client is also exploring public-private partnerships (PPPs) to enable the private sector to take on some of the financial burden. For instance, City Cool Cooling Company recently won a $186m 25-year build-own-operate (BOO) concession to develop a 72,000-refrigeration-tonne district cooling plant. Future opportunities may include expansion of cooling capacity, other utilities and car parking operations.
“PPPs are a key component of our strategy,” says Saad. They provide a platform for private investors to participate in Diriyah's growth while leveraging the expertise and resources of the public sector. We realise we cannot build 10 million square metres alone. We need the private sector to participate and partner with us and give them an opportunity to be part of this journey.”
Another funding source will be off-plan property sales once its real estate offering comes to market. Based on the development plans, this is expected to be significant. With a mix of some 30,000 villas, apartments and townhouses, the ambition is to attract both local and expatriate residents, if or when the kingdom opens its property market to non-nationals.
Investment pathway
Eventually, third parties will also need to invest in the various real estate elements of the gigaproject. Diriyah Company, as a master developer, is actively seeking to attract other developers, family offices and financial institutions to develop land parcels for mixed-use, residential, hospitality, commercial, education and healthcare assets.
“We are already opening up to investors and meeting developers who are interested in partnering with us or buying land,” notes Saad. “It’s a good problem to have – there’s more interest than we can handle right now, which speaks volumes about the project's attractiveness.”
This is just as well. One criticism of the gigaprojects programme has been the shortfall in both local and international investment to date. A lack of understanding of what the gigaprojects are and will be, demand uncertainty, timeframe ambiguities and general market hesitancy have been identified as the stumbling blocks.
Diriyah is determined to change this situation. It is focusing on increasing public and investor awareness of the potential opportunity through initiatives such as its two-day Bashayer event last November, which showcased the masterplan and construction progress to selected key stakeholders. There has also been a push for greater transparency and publishing more specific details about the overall development to make it stand out from the crowded market.
The giant gigaproject is not being developed in isolation. Experience from successful developments worldwide highlights that connectivity and coordination with other government stakeholders are key. Diriyah is planned to be connected to an extension of Riyadh Metro’s Line 2 and a planned Line 7 linking it with King Khalid International airport and another gigaproject, Qiddiya. In total, four metro stations are planned for the development.
At the same time, talks are under way for Diriyah to be one of the main stations on the planned Q-Express high-speed rail link between the airport and Qiddiya, which will complement the metro network. For those arriving by car, there will be the opportunity to use the three-level, 1 million square-metre underground ‘super basement’ car park, which, with a capacity for 10,500 vehicles, will be the fifth-largest parking facility in the world, and by far the biggest in the region.
As Diriyah’s construction accelerates, it is already starting to define its identity more clearly. Building on the kingdom’s historical roots, it is set to create a new legacy for future generations.
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Adnoc Gas expects Habshan to hit full capacity in 202711 August 2026
Adnoc Gas hopes to restore full output capacity at its Habshan gas processing facility in Abu Dhabi by the second quarter of next year, following attacks on the facility in March and April during the US-Iran conflict.
Adnoc Gas, the natural gas processing business of Abu Dhabi National Oil Company (Adnoc Group), said it has already restored 85% of the Habshan facility’s capacity, surpassing the year-end target set in May.
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The Habshan facility was struck at least three times in March and April by Iranian drones and missiles. On 19 March, UAE authorities suspended operations at Habshan after it was affected by debris falling from Iranian missiles intercepted by the country’s air defence systems.
Adnoc Gas then announced on 23 March that operations were continuing safely across its asset base, after similar missile and drone attacks by Iran on facilities owned by its parent, Adnoc Group, although it did not specifically mention the Habshan plant.
The worst of the attacks on Habshan took place on 3 April, when Iranian drones intercepted by the UAE’s air defence systems caused damage at the site, resulting in the death of an engineer working at the facility for Egyptian contractor Petrojet during an evacuation. Four other contractors sustained minor injuries, but were later discharged from hospital after receiving treatment.
ALSO READ: Adnoc Gas to move prudently on Bab Gas Cap project
On 8 April, Abu Dhabi authorities said three people – two Emiratis and an Indian national – sustained minor injuries after debris fell at the Habshan gas complex following a successful interception by the UAE’s air defence systems.
The debris also sparked several fires at the facility, prompting a temporary suspension of operations as safety and response teams assessed the situation.
“Adnoc Gas responded swiftly to the security-related incidents at the Habshan site on 3 and 8 April, prioritising safety and minimising disruptions to customers,” the company said on 10 August.
“The company has concluded its technical assessment of the impact from these incidents and recovery has progressed ahead of schedule, with gas supply already restored to 85%,” Adnoc Gas said as part of its announcement of financial results for the second quarter of 2026.
During a press conference to discuss Adnoc Gas’ Q2 2026 results, Peter Van Driel, the company’s chief financial officer, said: “At the moment, we have progressed to 85% of supply being reinstated, so the balance will be reinstated between now and the first half of 2027.
“If I look at the cost impact, we are still firming up our estimates. There are uncertainties around the pricing of certain items that we need to install as part of the final reinstatement.
“If we look at the key driver for our results in the second half, the 85% reinstatement of supply is definitely important. We’re encouraged by the fact that the 85% was delivered ahead of schedule,” Van Driel told journalists.
Fatema Al-Nuaimi, Adnoc Gas’ CEO and board member, said: “If I may add one point: it might be 85%, but in reality, today we are supplying 100% of our customers’ requirements locally.”
She added: “On exports, of course, we try our best to satisfy requirements and work closely with customers. But in terms of gas supply to the UAE, we are at 100%.”
Role of robotics and AI
Responding to a question about the deployment of robotics and artificial intelligence (AI) to carry out damage assessment and repair work at the Habshan gas processing facility, Al-Nuaimi said: “One of the technical challenges in restoring the facilities quickly was that we had to inspect a significant part of our assets – some 600 kilometres of piping of different sizes across the facilities.
“If we had done this in the conventional way, we would have spent around 100 additional days putting up scaffolding and sending people to conduct manual and visual inspections.”
The CEO continued: “Instead, we used robotics supported by AI-driven software, which enabled us to shorten the inspection and response time and carry out repairs faster.
“It was not just about time; it was also about safety. It spared us from sending our people into critical areas that might not yet have been safe.”
She added: “We also used robotics in responding to fires and accessing certain parts of the assets.
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Dewa receives eight bids for 132kV cable works11 August 2026
Eight companies have submitted bids for a contract to supply, install, test and commission 132kV cable works serving multiple substations across Dubai.
The tender was issued by Dubai Electricity & Water Authority (Dewa) in April.
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Dewa has been accelerating investment in Dubai’s electricity transmission network to meet rising electricity demand. In July, the utility said that its investments in transmission projects had exceeded AED10bn ($2.7bn).
Dewa is currently building 65 new 132kV substations and one 400kV substation. It plans to issue tenders for more than 30 additional 132kV substations over the next three years, alongside plans to extend 340 kilometres of underground transmission cables and construct two 400kV substations.
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Adnoc Gas to move prudently on Bab gas cap project10 August 2026
Adnoc Gas, the natural gas processing business of Abu Dhabi National Oil Company (Adnoc Group), has said it is treading cautiously towards a final investment decision (FID) on its estimated $8bn Bab gas cap development project.
The project aims to build a gas processing plant in the Bab area, about 170 kilometres from Abu Dhabi city, along with associated pipeline networks and ancillary units, to process up to 1.85 billion cubic feet a day (cf/d) of additional raw gas once its parent company starts production from the Bab gas caps.
“We are at an early stage when it comes to engagement with the market on Bab gas cap. At this stage, we are not in a position to discuss any of the technical or commercial aspects of the Bab gas cap project,” Fatema Al-Nuaimi, Adnoc Gas CEO, said in response to a question from MEED during a press conference on 10 August.
Adnoc Gas has divided the engineering, procurement and construction (EPC) scope of work on the Bab gas cap development project into four main packages:
- EPC package 1 – Main Bab gas cap plant
- EPC package 2 – Early civil works
- EPC package 3 – Pipelines
- EPC package 4 – Non-process facilities and associated works package
Adnoc Gas issued the tender for the main Bab gas cap plant on 25 June and set an initial deadline of 17 July for contractors to submit technical bids. The company then extended the technical bid submission deadline by four months until 16 November, MEED recently reported.
Peter Van Driel, chief financial officer of Adnoc Gas, said: “There are two parts to this. You have an upstream decision and an Adnoc Gas decision.
“Upstream [Adnoc Group] has started to develop the Bab gas cap reservoir. At Adnoc Gas, we have a funnel of opportunities. Today, we announced the FID on phases two and three of the Rich Gas Development project,” Van Driel said.
“As part of future opportunities, we may invest in infrastructure specifically for the Bab gas cap project, and that is a pending decision,” he added.
“We have focused our decision-making on phases two and three of the Rich Gas Development project. With all of these decisions, we do a very thorough assessment. We are not in a hurry to make these decisions. We want to ensure we have the right feed composition, competitive landscape and demand.
“[Gas] demand in the UAE remains strong. Electricity demand, for example, grows by approximately 3% every year, and we also see a very robust demand profile for gas in export markets,” he told journalists on the call.
Bab Gas Cap project tendering
As part of its upstream production growth targets for 2030, Adnoc Group is working to extract gas from four underdeveloped gas cap reservoirs at the Bab onshore field – Thammama A, Thammama B, Thammama F and Thammama H. The Thammama A, B and H reservoirs are estimated to collectively produce 1.45 billion cubic feet a day (cf/d) of gas, while output from the Thammama F gas cap is expected to reach 396 million cf/d.
Existing trains at the Habshan processing complex in Abu Dhabi will be unable to handle the new gas volumes. Adnoc Gas is therefore required to build new facilities to process up to 1.85 billion cf/d of additional raw gas when its parent company starts production from the Bab gas caps.
Abu Dhabi Securities Exchange-listed Adnoc Gas issued an expression of interest (EoI) to contractors for the main EPC tendering process for the Bab gas cap plant on 10 February. The company set an initial EoI submission deadline of 17 February, which it later extended to 20 February. Contractors submitted responses by that date, MEED reported.
Following completion of the prequalification phase, contractors that expressed interest formed the following teams to compete in the main contract tendering round, according to sources:
- Larsen & Toubro Energy Hydrocarbon (India) + Samsung E&A (South Korea)
- Saipem (Italy) + NMDC Energy (UAE)
- Technip Energies (France) + JGC Corporation (Japan) + Sinopec (China)
- Tecnimont (Italy) + China Petroleum Engineering and Construction Corporation (CPECC)
The other three packages are also in the main contract tendering stages, sources have said. Separately, another Adnoc Group subsidiary, Adnoc Onshore, is preparing to issue the main tender for a project involving the tie-in of gas-producing and injection wells at the gas cap reservoirs of Abu Dhabi’s onshore Bab field, which forms part of the wider integrated Bab gas cap development programme.
Prior to issuing the EoIs for the Bab gas cap development project packages, Adnoc Gas completed an early engagement process with contractors in September and October last year, as MEED previously reported.
In December last year, Adnoc Gas awarded the front-end engineering and design (feed) works for the Bab gas cap development project – which will increase its gas processing capacity by about 20% – to Australia-based consultancy Worley. The feed contract covers more than 1.2 million man-hours, making it the largest engineering job awarded by Adnoc Gas to date.
Bab Gas Cap concession
In addition to Adnoc Gas overseeing the main EPC tendering exercise for the gas processing plant, Abu Dhabi’s Supreme Council for Financial and Economic Affairs (SCFEA) awarded concession agreements in June for the development and production of the Bab gas cap reserve in the emirate.
Adnoc will hold the majority 60% participating interest in the concession. The remaining stakes will be held by France’s TotalEnergies (10%), the UK’s BP (10%), China National Petroleum Corporation (CNPC) International (8%), Japan Oil Development Company (Jodco) Onshore (5%), China ZhenHua Oil (4%) and Korea GS E&P (3%).
According to SCFEA, the Bab gas cap development and production concession represents the largest gas cap development project of its kind globally, the Abu Dhabi Media Office said in a report.
A gas cap refers to the free natural gas that sits above an underlying oil reservoir — in this case, the giant Bab onshore oil field in Abu Dhabi.
The project, operated by Adnoc Onshore, is expected to have a production capacity of approximately 1.5 billion cf/d of natural gas, equivalent to about 15% of Adnoc Gas’ total operational gas processing capacity.
“This underscores the strategic significance of the project, which is expected to contribute to the UAE’s gas self-sufficiency, support the continued development of the country’s petrochemicals sector and advance Adnoc’s plans to expand its liquefied natural gas export capacity,” the Abu Dhabi Media Office said in its report.
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