Monthly briefing: 20 key developments in the region

25 October 2022

By MEED staff

Opec and its allies cut oil output

Saipem wins $4.5bn North Field offshore gas contract

Qatar to inaugurate 800MW solar farm

Lebanon and Israel agree maritime border deal

Aramco launches SME stimulator programme

Region to be third-largest hydrogen source by 2050

Egypt ready to supply natural gas to Lebanon

> Riyadh makes debt announcements

Neom hydrogen project expected to close by year-end

Abu Dhabi transfers ownership of Etihad Airways to ADQ

Mipco secures $4bn to refinance Abu Dhabi plant


Opec+ to slash production from November to keep prices high

The Opec+ alliance of oil producers has decided to reduce oil production by 2 million barrels a day (b/d) from November to further shore up crude prices, which have fluctuated amid fears that a global recession could curb oil demand. 

The decision, which was led by Saudi Arabia and Russia, was taken at a meeting of the group in Austria on 5 October. 

The move represents a major reversal in production policy for Opec+, which slashed output by a record 10 million b/d in early 2020 when demand plummeted as a result of the Covid-19 pandemic. Since then, the group has gradually unwound those cuts. Read more

 Tight oil market increases unease for stakeholders

The 33rd Opec and non-Opec ministerial meeting on 5 October. Credit: Opec


Saudi Arabia and UAE condemn US warning of ‘consequences’

Saudi Arabia and the UAE have rejected as baseless accusations that the Opec+ decision to reduce oil production from November was politically motivated against the US.

Riyadh has insisted decisions by Opec and its allies were taken “purely on economic considerations”, and said its economic advice had been to resist calls to delay the production cut. 

The UAE issued a statement calling upon the US to refrain from “politicisation” of the Opec+ decision. US President Joe Biden had previously warned that there would be “consequences” for Saudi Arabia and the Opec+ members for their decision to cut oil output.


World leaders to gather for meeting on climate change

Leaders from almost 200 countries will meet in Sharm el-Sheikh, Egypt, on 6-18 November for the UN’s 27th Conference of the Parties (Cop 27) climate change summit. 

Egypt’s International Cooperation Minister, Rania al-Mashat, has previously said that the focus of Cop 27 should be moving from “pledges to implementation”. The conference aims to deliver action on issues critical to tackling the climate emergency, from reducing greenhouse gas emissions, building resilience and adapting to the impacts of climate change, to delivering on the commitments to finance climate action in developing countries.


Region could lead global steel decarbonisation efforts

As the global steel industry considers switching to direct reduced iron (DRI) production, the Middle East and North Africa (Mena) region is primed to start producing carbon-neutral steel, according to a report by the Institute for Energy Economics & Financial Analysis. 

“The Mena region can lead the world if it shifts promptly to renewables and applies green hydrogen in its steel sector,” says Soroush Basirat, the author of the report. 

“The region’s steel sector is dominated by direct reduced iron-electric arc furnace technology, which releases lower emissions than the … coal-fuelled blast furnace and basic oxygen furnace process used in 71 per cent of global crude steel production in 2021.” 

The Mena region produced just 3 per cent of global crude steel last  year, but accounted for nearly 46 per cent of the world’s DRI production. 

Basirat adds: “Mena has an established supply of DR-grade iron ore and its iron ore pelletising plants are among the world’s largest.”


Riyadh announces government spending increase in 2022-24

Saudi Arabia has announced increases in government spending in 2022-24 of more than 18 per cent, which is close to SR175bn ($47bn) or 4 to 4.5 per cent of GDP. 

The rise in spending targets points to smaller fiscal surpluses in the coming years, according to Moody’s Investors Service. 

Increased spending could contribute to reducing the kingdom’s economic reliance on hydrocarbons, provided the spending is successfully deployed to advance government-sponsored diversification projects.

Saudi Arabia’s finances and ambition align


Prime minister-designate vows to act against corruption

Iraq’s prime minister-designate Mohammed Shia al-Sudani has pledged to take action against corruption after authorities announced that ID3.7tn ($2.5bn) had been embezzled from the General Tax Authority’s trust account held by a branch of Rafidain Bank. 

The Iraqi Integrity Commission has said it is opening an investigation into the theft 

On 13 October, Iraq’s parliament elected Abdul Latif Rashid as the country’s new president. He then tasked Al-Sudani with forming a new government to end a year of political gridlock. 

Al-Sudani faces a challenge in the coming weeks as he attempts to appoint a new cabinet of ministers. Members of the Iraqi political bloc led by Shiite cleric Moqtada al-Sadr have said that they will not join the new government.


Houthi rebels attack oil terminal in southern Yemen

Iran-backed Houthi rebels have claimed responsibility for an attack on a cargo ship at an oil terminal in the south of the country on 21 October. The group said the attack by explosives-laden drones was meant to prevent pro-government forces from using the Al-Dhabba terminal for oil exports. 

The incident occurred in Ash-Shihr in the Hadramawt governorate, and targeted the Marshall Islands-flagged tanker Nissos Kea. The Greek owners of the tanker said it was undamaged. 

The internationally recognised government of Yemen said that its forces had intercepted armed drones launched against the Al-Dhabba oil terminal. 

UN special envoy for Yemen, Hans Grundberg, called the attack a “deeply worrying military escalation”. The Yemeni government sent a letter to the UN Security Council regarding the “threat to disrupt international maritime navigation and target ships and oil infrastructures”. 

The attack was the first military action announced by the Houthis since a truce between Yemen’s warring sides expired on 2 October.


Lebanon and Israel reach maritime border deal

Lebanon and Israel have forged a deal to end a long-running maritime border dispute in the gas-rich Mediterranean Sea. Lebanon’s deputy speaker Elias Bou Saab said that an agreement had been reached that satisfies both sides. 

It is hoped that the new deal will resolve the two countries’ dispute over a swathe of territory in the Mediterranean Sea in an area where Lebanon aims to explore for natural gas, and near waters where Israel has already found commercially viable quantities of hydrocarbons. Read more


Region faces green hydrogen production challenges

GCC governments including Oman, Saudi Arabia and the UAE are developing zero-carbon green hydrogen and low-carbon blue hydrogen schemes. However, achieving large-scale production, especially of green hydrogen, will be challenging in the coming years, according to Moody’s Investors Service. 

While both green and blue hydrogen will play a role in reducing the global carbon footprint, only green hydrogen has the potential to reduce the reliance of GCC countries on hydrocarbons, but this will take several years, Moody’s says. 

In the short to medium term, GCC countries’ access to cheap domestic natural gas, their carbon capture and storage expertise, and the limited availability of infrastructure make blue hydrogen production a more viable option than the more expensive and challenging production of green hydrogen.

Region to be third-largest hydrogen source by 2050
MEED Editorial
Related Articles
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    2 June 2023

    Contractors have submitted bids for the next phase of the Duba port expansion at Oxagon industrial city.

    The bidders are Belgium’s Deme with Greece’s Archirodon; Van Oord of the Netherlands with South Korea’s Hyundai Engineering & Construction; a Belgian joint venture of Jan de Nul and Besix; Netherlands-based Boskalis with France’s Soletanche Bachy; South Korea’s Daewoo; and China Harbour Engineering Company.

    The tender for the project’s second phase follows the award of a contract to deliver the first phase of the port expansion. A team of Boskalis, Besix and the local Modern Building Leaders (MBL) was awarded that estimated SR3bn ($800m) contract in mid-January.

    The scope of the Duba port expansion package includes excavation and dredging, revetments for channel widening, demolition, container terminal quay expansion and earthworks, in addition to the development of a flexible quay, a roll-on/roll-off (RoRo) berth and quay walls to a marine services berth and a coast guard facility.

    Jacobs is the main design consultant, with Moffatt & Nichol, IGO and Trent as the main sub-consultants.

    Contractors are preparing to submit bids in June for a contract to build tunnels connecting the offshore elements of the Oxagon industrial city at Neom to the mainland.

    The design-and-build contract involves digging a 6.5-metre-diameter tunnel using a tunnel boring machine (TBM) under the sea that will link the Neom Connector with the offshore elements of Oxagon port. It will house utilities including water pipelines, fibre optic cables and electricity cables.

    Crown Prince Mohammed bin Salman launched Oxagon in late 2021. It will include onshore elements as well as floating structures offshore. Construction works on the 48 square-kilometre, eight-sided industrial city have already started.

    An expanded Duba port is a critical component of Oxagon and the broader Neom development, as it will allow greater volumes of materials to be imported for the project. With an expected investment value of $500bn, Neom is the largest programme of construction work in the world.
    Colin Foreman
  • Egypt makes steady progress on Assiut refinery

    2 June 2023

    Egypt is making steady progress on the $2bn hydrocracking complex package that forms part of the wider Assuit oil refinery upgrade project, according to industry sources.

    Assiut Oil Refining Company (ASORC), a subsidiary of state-owned Egyptian General Petroleum Corporation (EGPC), is the project operator.

    “Work on the main units is continuing with no significant issues,” said one source.

    During 2021, the project faced disruption due to issues related to the Covid-19 pandemic.

    In 2023, many projects in Egypt’s oil and gas sector have been disrupted by currency issues due to the declining value of the Egyptian pound.

    Most of the projects that the currency issues have significantly impacted have been in their early stages, with the problems related to the procurement of materials and equipment.

    France’s Technip Energies is the main contractor performing engineering, procurement and construction (EPC) works on the Assiut hydrocracking complex, as part of a $2bn contract it was awarded by ASORC in February 2020.

    In April 2021, Switzerland-based Burckhardt Compression announced being selected by Technip Energies as the gas compressor supplier for the hydrocracker package.

    ASORC held a kick-off meeting for the project in September 2020.

    Egyptian contractors Enppi and Petrojet are supporting Technip Energies on the project. Enppi has undertaken the engineering work, while Petrojet is carrying out construction work.

    In 2021, contractors completed the construction of a $450m high-octane gasoline complex in the Assiut governorate as part of the broader $3.8bn Assuit oil refinery upgrade project.

    Assiut refinery

    The Assiut hydrocracking complex will be one of Egypt’s major strategic refineries, and will help meet growing local demand for cleaner products.

    The project will also become the largest oil refining facility to be implemented in Upper Egypt so far.

    Once completed, the project will transform lower-value petroleum by-products, such as mazut, into cleaner, higher-value products.

    It is expected to have an output of about 2.8 million tonnes a year of Euro-5 diesel, in addition to other petroleum products.
    Wil Crisp
  • Mawani implements $950m of Saudi port projects

    2 June 2023

    Saudi Ports Authority (Mawani) is implementing a series of projects over the coming 18 months as part of its efforts to improve and expand infrastructure at ports and increase their utilisation rates.

    The programme, worth about SR3.5bn ($950m), comprises just over 150 projects, of which 48 are strategic in nature, 90 infrastructure-focused and 14 targeting security enhancements.

    The most significant projects are:

    At Jeddah Islamic Port

    • A four-year contract to build a new road, interchanges and flyovers to link Gate 9 with the Al-Khumrah integrated logistics park.
    • Deepening over three years of the north basin approach channel to 14 metres and the construction of a bull nose dike

    At Ras al-Khair Port

    • Increasing the draft depth of berths 11 and 12 to 16 metres
    • A three-year job to widen and dredge the approach channel from 300 metres to 500 metres and deepen it by 3 metres to 19 metres

    Other key investments include installing integrated security systems at Jeddah Islamic Port and King Abdulaziz Port in Dammam and constructing a new 40MVA substation at King Fahd Port in Yanbu.

    The contracts are expected to be tendered and awarded by the end of 2024.

    Mawani’s planned investment comes on the back of several major contracts awarded over the past 12 months, including an agreement with DP World to set up the Al-Khumrah logistics park, the reconstruction and expansion of the first and second container terminals at King Abdulaziz Port, and the upgrade of berth infrastructure and draft depths at Jeddah Islamic Port and King Fahd Port.
    Edward James
  • Dubai unveils new masterplan for Palm Jebel Ali

    1 June 2023

    Dubai has released details of the new masterplan for Palm Jebel Ali, an artificial island located south of Jebel Ali Freezone.

    Double the size of Palm Jumeirah, Palm Jebel Ali will have 110 kilometres of shoreline and extensive green spaces. The development will feature over 80 hotels and resorts, along with a diverse range of entertainment and leisure facilities.

    Strategic masterplan

    The unveiling of the masterplan aligns with Dubai's commitment to doubling the size of its economy by 2033, as outlined in the Dubai Economic Agenda.

    The project, approved by Sheikh Mohammed bin Rashid al-Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, includes seven connected islands, catering to approximately 35,000 families. The development also emphasises sustainability, with 30 per cent of public facilities powered by renewable energy.


    MEED reported in January that local developer Nakheel had approached contractors to complete the reclamation works for Palm Jebel Ali.

    As with Palm Jumeirah, it is estimated that it could take around 20 years for Palm Jebel Ali to reach its full development potential. Nakheel has previously secured AED17bn ($4.6bn) in funding to expedite the development of various projects, including the Dubai Islands and other waterfront schemes.

    The upcoming dredging contract for Palm Jebel Ali is anticipated to involve 5-6 million cubic metres of material, contributing to the completion of the man-made offshore island.

    While reclamation work for Palm Jebel Ali is mostly finished, the project was put on hold in 2009. Nakheel had made some progress with infrastructure development, including the construction of bridges on the island by Samsung C+T.
    Colin Foreman
  • Swedish firm to deliver apartments for Neom

    1 June 2023

    Swedish modular home manufacturer SIBS has been awarded a contract to deliver 2,174 apartments for Neom.

    The engineered equipment supply contract involves SIBS constructing 35 buildings within Neom’s primary staff accommodation and office cluster.

    The apartments will cater to professionals involved in the planning, engineering and construction of Neom. The entire project is expected to be delivered and commissioned by the third quarter of 2024.

    The $500bn Neom development in northwestern Saudi Arabia is the region’s largest construction project and employs thousands of staff.

    Elements of the project that have been officially launched so far are The Line, Oxagon, Trojena and Sindalah. There are also plans for an international airport and a coastal strip of hotels known as the Gulf of Aqaba.
    Colin Foreman