Monthly briefing: 22 key developments in the region

28 September 2022

By Indrajit Sen


Opec+ agrees minor production increase

King appoints crown prince as Saudi prime minister

Lebanon parliament approves $1.2bn draft budget

Iraq court rules against national oil company

Libya oil production continues to grow

President approves Egypt's Olympic plans

> Dubai prepares hydrogen strategy

GCC central banks raise interest rates

UK and GCC hold ministerial meeting at the UN


OIL

Oil producers will raise output by 100,000b/d in October

The Opec+ alliance of oil producers decided in September that it would increase oil production by just 100,000 barrels a day (b/d) in October to support crude prices, which have fluctuated in recent weeks amid fears that a global economic recession will curb demand for oil. 

Opec+ members also increased overall oil production by 100,000b/d in September. 

The alliance agreed to increase its July and August crude production by about 50 per cent to 648,000b/d, fully restoring the 5.8 million b/d output that the group had cut at the peak of the Covid-19 pandemic. Read more


IRAN

Deadly protests follow woman’s death in custody

Thirty-five people have been killed in protests in Iran following the death of Mahsa Amini in police custody on 16 September.

Protests have been reported in 31 provinces.

The 22-year-old Amini had been detained for breaking headscarf rules and was reportedly beaten with batons.

Officials said she suffered heart failure and Interior Minister Ahmad Vahidi has stated that she was not beaten. 

President Ebrahim Raisi pledged to crack down on the unrest on 24 September.

The official Islamic Republic News Agency reported on 25 September that there had been large-scale demonstrations to condemn the protests.



21 September: Iranian demonstrators take to the streets of Tehran during a protest for Mahsa Amini, days after she died in police custody. Credit: AFP via Getty Images


SALIK IPO

Dubai toll operator raises over $1bn from oversubscribed stock listing

Dubai toll operator Salik raised $1.017bn from its initial public offering (IPO) on the Dubai Financial Market, as part of a series of IPOs of state enterprises aimed at boosting the size of the emirate's capital market.

The IPO was more than 49 times oversubscribed across all tranches, with total gross demand at $50.2bn.

The company had set its offering price at AED2 ($0.54) a share, giving it a valuation of more than $4bn.

The emirate's government sold more than 1.867 billion shares in the company, or 24.9 per cent, up from the previously announced 1.5 billion shares, equivalent to 20 per cent.


ARAB PEACE

Saudi Arabia, Arab League and EU hold meeting in New York

Saudi Foreign Affairs Minister Prince Faisal bin Farhan al-Saud and Arab League secretary-general Ahmed Aboul Gheit attended a meeting of the Arab Peace Initiative Committee and its sponsors in the EU. The meeting took place at the UN General Assembly in New York. 

The Arab Peace Initiative, which Saudi Arabia launched in 2002, is a proposal to end the Arab-Israeli conflict. The members of the Arab Peace Initiative Committee are Jordan, Egypt, Bahrain, Tunisia, Algeria, Saudi Arabia, Sudan, Iraq, Palestine, Qatar, Lebanon, Morocco and Yemen. The initiative is sponsored by Spain, Sweden and France.


GCC

Two years of high oil prices set to improve regional outlook

Rating agency Moody’s Investors Service has said that elevated oil prices during the next two years will lead to a significant improvement in the fiscal and external positions of GCC sovereigns, partly reversing the sharp deterioration in their balance sheets since 2015. 

Improvements in creditworthiness will hinge on the extent to which regional governments utilise the windfall to address constraints posed by their exposure to cyclical oil price and demand volatility, and by longer-term carbon transition risks, Moody’s said.

The agency expects oil prices to average about $105 a barrel in 2022 and $95 a barrel in 2023. As a result, most hydrocarbon-exporting countries in the GCC will run fiscal and current account surpluses, allowing governments to pay down debts, rebuild fiscal reserves and accumulate foreign-currency buffers.


GULF BANKS

Regional banks are returning to pre-pandemic form

After a strong first half, ratings agency S&P Global expects that earnings for most GCC banks will almost reach pre-pandemic levels by the end of this year amid high oil prices and rising interest rates.

In the second half of 2022, S&P forecasts further strengthening of regional banks’ interest margins and a manageable rise in cost of risk amid lingering effects from the Covid-19 pandemic via loans that benefited from support measures and were then restructured. Combined, these factors will be a net positive for banks’ earnings.


SAUDI ARABIA

Saudi infrastructure and property projects top $1.1tn

The aggregate value of property and infrastructure projects since the launch of Saudi Arabia’s National Transformation Plan in 2016 has crossed $1.1tn as the kingdom continues to diversify its economy, according to real estate consultancy Knight Frank. 

The $500bn Neom city development is the biggest of 15 major projects in Saudi Arabia that are currently at various phases of construction. The kingdom plans to have more than 555,000 residential units, 275,000 hotel rooms, 4.3 million square metres (sq m) of retail and 6.1 million sq m of new office space by 2030. 

The country is also developing several large-scale tourism projects as it seeks to increase the economic contribution of the sector from 3 per cent of GDP to 10 per cent by the end of this decade.


JERUSALEM

UK prime minister considers relocating British embassy

UK Prime Minister Liz Truss is considering moving the British embassy in Tel Aviv to Jerusalem. 

Truss spoke about a possible move to the contested city during a meeting with Israeli Prime Minister Yair Lapid on the sidelines of the UN General Assembly in New York in September. 

Despite Israel having designated Jerusalem as its capital, Britain has long maintained its embassy in Tel Aviv. 

When he was president of the US, Donald Trump took the controversial decision to relocate the American embassy to Jerusalem in May 2018. 

Both Israelis and Palestinians claim the city as their capital.


SAUDI ARABIA

First Saudi woman to be sent to space in a crewed mission

Saudi Arabia plans to send a woman into space for the first time as part of its new mission programme. 

A crew will be launched next year that will include the first Saudi female pilot and astronaut. 

The kingdom’s astronaut programme aims to produce qualified Saudi citizens who will take part in short- and long-term space flights, as well as participate in scientific experiments, international research and future space-related missions. 

The new programme comes under the umbrella of Saudi Vision 2030 and will fall under the National Space Strategy, the details of which will be announced in the coming months.


FIFA WORLD CUP

Qatar to shut borders to non-World Cup ticket holders

Entry to Qatar will be restricted from 1 November to citizens, residents and holders of the World Cup Hayya card, the tournament’s organising committee has announced. 

The suspension of visits by people not attending Fifa World Cup matches will continue until 23 December, five days after the final match takes place in Doha. 

The restrictions apply to all air, land and sea borders into Qatar. 

Football fans in possession of a match ticket for the World Cup must also apply for a Hayya entry permit – a pre-approved digital visa linked to a passport that offers free public transport around the country. 

The Hayya card allows entry into Qatar until 23 January 2023. 

Qatari citizens and residents, GCC citizens holding a Qatari identification card, holders of work entry permits and personal visas, and approved humanitarian cases will be exempt from the restrictions.


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MEED Editorial
Related Articles
  • SWCC receives bids for four desalination plants

    21 May 2024

    Saudi Arabia's main producer of desalinated water, Saline Water Conversion Company (SWCC), has received bids for four seawater reverse osmosis (SWRO) desalination plants with a total combined capacity of around 2 million cubic metres a day (cm/d)

    According to an industry source, bids were submitted on 14 May for the Yanbu SWRO project, which has a baseline capacity of 300,000 cm/d.

    Bids were submitted five days later for three SWRO facilities. The tendered projects and their water desalination capacities are:

    • Shuaiba 6 SWRO: 545,000 (cm/d)
    • Ras Al Khair SWRO: 600,000 cm/d
    • Jubail SWRO: 600,000 cm/d

    The four contracts are being procured using an engineering, procurement and construction (EPC) model, in contrast to the SWRO facilities being procured on a public-private partnership (PPP) basis by the state offtaker, Saudi Water Partnership Company (SWPC).

    SWCC has tendered the contract to build the Shuaiba 6 SWRO before.

    It was most recently tendered in 2022, with a team comprising the local firms Wetico and Alfanar, and Italy's Fisia Italimpianti submitting bids for the contract on 26 March.

    SWCC is the world's largest producer of desalinated water with a capacity of at least 6.6 million cm/d. Plants utilising older and energy-intensive techniques such as multi-stage flash technology (MSF) account for the majority of its current capacity.

    According to MEED Projects data, SWCC has awarded several SWRO plants in the past few years, including:

    • Ras Al Khair production system expansion: 200,000 cm/d
    • Jubail SWRO plant: 1,000,000 cm/d
    • Shuqaiq 1 SWRO plant: 400,000 cm/d.
    https://image.digitalinsightresearch.in/uploads/NewsArticle/11796584/main.gif
    Jennifer Aguinaldo
  • Ambitious projects rebrand engineering

    20 May 2024

     

    Over the past two decades, the Middle East has undergone a significant transformation driven by rapid urbanisation, economic diversification and geopolitical dynamics. The region has emerged as a global hub for trade, investment and innovation, with infrastructure playing a central role in facilitating this growth.

    According to Pierre Santoni, president of Europe, Middle East and Africa for Parsons Corporation, ongoing infrastructure investment has created a market that continues to offer strong growth opportunities for the construction industry.

    “Parsons is one of the oldest firms operating in the Middle East, which is a growing and well-funded market, with a team that is executing at a high level and our company has continued to make investments to drive growth in the business,” he says.

    “We had an outstanding fourth quarter and full year in 2023 with record results for total revenue, organic revenue growth, adjusted Ebitda and operating cash flow, as well as major contract awards in countries such as Saudi Arabia, the UAE and Qatar.”

    Changing focus

    The region’s transformation has led to an adjustment in priorities as pressure on existing infrastructure mounts, he notes.

    In the UAE, the focus in the early 2000s was primarily on developing landmarks and megaprojects that showcased the region’s ambition and prosperity. This era saw the construction of iconic structures such as the Palm Jumeirah, Burj Khalifa and, more recently, Etihad Rail, symbolising the country’s aggressive development plans.

    Over recent years, there has been a shift towards more sustainable and resilient infrastructure development, with the UAE government prioritising investments in transportation, utilities and smart city initiatives to enhance residents' quality of life and improve mobility and infrastructure.

    “The demographic trends, including rapid population growth and urbanisation, are placing strain on existing infrastructure networks, necessitating investments in expansion and modernisation,” says Santoni.

    Robust infrastructure is required to support the regional government’s economic diversification efforts, which are driving investment and growth in sectors such as tourism, technology and renewable energy. This includes the development of new highways, ports and transportation systems to facilitate trade and tourism.

    “The UAE has outlined a stable investment programme that includes the development of large transportation and construction schemes,” says Santoni. “We are working with the Abu Dhabi government on Plan Capital 2040 and it promises tremendous growth opportunities for Parsons.”

    Dubai also offers opportunities for growth due to the property market boom and the government’s plans for new infrastructure projects. 

    “Government spending in Dubai has accelerated post-Covid. There is a renewed optimism in the market through large-scale infrastructure projects and major real estate schemes,” Santoni adds.

    “Parsons is working closely with some of the major real estate developers in Dubai, such as Emaar and Dubai Properties.”

    Santoni says that although the market has a strong pipeline of upcoming projects, there will also be a focus on improving the infrastructure that already exists.

    “There is a lot of focus on improving the existing infrastructure; hence, we have added operations and maintenance services into our portfolio.”

    Beyond the UAE

    The UAE is just part of Parsons’ work in the GCC. It also has a significant presence elsewhere in the GCC, including Saudi Arabia and Qatar. The company has been operating in Saudi Arabia for over 65 years and is working on a wide range of major programmes in the country, including The Line at Neom, Riyadh Sports Boulevard, King Salman International Park and Diriyah Gate, among others.

    Santoni says, “Saudi Arabia is the fastest growing market globally and is a key market for us. The Vision 2030 projects are a driving force for much of our business in the kingdom and we expect robust growth in coming years.”

    “We are investing significantly in enhancing our engineering capabilities catering to the Saudi market,” he adds.

    The firm has also played a key role in delivering major infrastructure development schemes in Qatar, including for the 2022 World Cup. After a strong decade during the build-up to the event, Parsons worked on several other major schemes in the country, such as the Doha Metro, Qatar Rail, Seef Lusail, Hamad International airport expansion and Pearl Qatar.

    Santoni expects Qatar’s growth to be more reserved over the next few years as the country develops a new long-term strategic development plan.

    Attracting talent

    With so many projects proceeding, the challenge for engineering companies such as Parsons is attracting talent.

    “We have done a lot over the years to make Parsons an employer of choice for Saudi and UAE nationals, and we’re making significant investments in training and retention programmes to continue offering outstanding career opportunities,” says Santoni.

    Construction now has to compete with other industries such as technology and IT, which are often considered more exciting places to work. 

    Santoni says that this may change in the future as the world realises that there is an infrastructure gap that needs bridging with new and exciting projects, especially in the Middle East region. 

    “Many people have left the industry over the past few decades, but with the planned infrastructure projects, engineering is starting to look cool again.”

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    Yasir Iqbal
  • UAE forms EV joint venture

    20 May 2024

    Two government entities in the UAE have formed a company, UAEV, to develop electric vehicle (EV) charging infrastructure across the country.

    The joint venture aims to provide fast and affordable charging infrastructure, said Sharif Salim Al Olama, undersecretary for energy and petroleum affairs at the of Energy & Infrastructure Ministry.

    Al Olama is chairman of the newly formed joint venture.

    Etihad Water & Electricity (Etihad WE), the partner for the joint venture, provides utility services in the UAE's northern emirates.

    Etihad WE CEO Yousif Ahmed Al Ali is a board member of UAEV.

    "Our intention is for the first UAEV charging points to be operational this year," said Al Olama during the launch of the company at the ongoing Electric Vehicle Innovation Summit in Abu Dhabi.

    MEED understands the company aims to install 100 EV chargers across the UAE by the end of the year, starting in the Northern Emirates of Ajman, Ras Al Khaimah, Umm Al Quwain, Fujairah and Sharjah.

    UAEV also plans to invest in similar infrastructure in Dubai and Abu Dhabi.

    It expects to roll out 1,000 charging stations by 2030.

    The company aims to set up several tiers of EV charging stations.

    The initial tier caters to locations such as mosques and supermarkets, while another set of chargers will be installed in parking areas and on streets to ensure that drivers can top up their batteries whenever necessary.

    UAEV also aims to build what it calls "EV hubs", catering to cities and larger communities with wider services.

    UAEV will use fast and ultra-fast charging solutions to accelerate EV adoption. "We will provide advanced charging options to make EV ownership more appealing," said Al Ali.

    The initial phase of the infrastructure rollout will cater to passenger vehicles.

    Plans could extend the services to commercial vehicles and maritime fleets, as well as potentially providing hydrogen fuel to trucks and other types of fleet.

    Al Olama confirmed that discussions are under way to unify EV charging tariffs between the emirates.

    "This partnership is part of a clear mandate to deliver green mobility. There is a great potential and need from end-users," Al Olama said. "It is also an important step to help meet the UAE net-zero target by 2050."


    MEED's April 2024 special report on the UAE includes:

    > COMMENT: UAE rides high on non-oil boom
    > GVT & ECONOMY: Non-oil activity underpins UAE economy

    > BANKING: UAE banks seize the moment
    > UPSTREAM: Adnoc oil and gas project spending sees steep uptick
    > DOWNSTREAM: UAE builds its downstream and chemical sectors

    > POWER: UAE marks successful power project deliveries
    > WATER: Dubai tunnels project dominates UAE pipeline
    > DUBAI CONSTRUCTION: Dubai real estate boosts construction sector

    > ABU DHABI CONSTRUCTION: Abu Dhabi makes major construction investments

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11792353/main4504.jpg
    Jennifer Aguinaldo
  • WTTCO conducts Ras Mohaisen pipeline study

    20 May 2024

     

    State-backed Water Transmission & Technologies Company (WTTCO) is undertaking a feasibility study for the preferred procurement model and project structure for the contract to build or develop Saudi Arabia's water transmission pipeline project linking Ras Mohaisen, Al Baha and Mecca.

    The responsibility to procure the project has been transferred from Saudi Water Partnership Company (SWPC), which planned to implement the project on a build, own, operate and transfer (BOOT) basis, to WTTCO.

    The final procurement model for the scheme will be decided once the feasibility project is completed, according to a source close to the project.

    The 300-kilometre water transmission scheme linking Ras Mohaisen, Al Baha and Mecca will have the capacity to transmit up to 400,000 cubic metres a day (cm/d) of water.

    In February 2022, SWPC prequalified the following 13 companies for the contract to develop the project:

    • Abdul Aziz Al Ajlan Sons Company for Commercial & Real Estate Investment (local)
    • Abu Dhabi National Energy Company (Taqa, UAE)
    • Al Bawani Water & Power (local)
    • Al Yamama Company (local)
    • China Gezhouba Group Overseas Investment Company (China)
    • China Harbour Engineering Company
    • Cobra Instalaciones y Servicios (Spain)
    • Gulf Investment Corporation (Kuwait)
    • Marubeni Corporation (Japan)
    • Mutlaq Al Ghowairi Company (local)
    • Mowah Company (local)
    • Utico (UAE)
    • Vision International Invest Company (local)

    The project aligns with the kingdom's National Water Strategy 2030, which aims to reduce the water demand-supply gap and have desalinated water account for 90% of the national urban supply to reduce reliance on non-renewable ground sources.

    The transaction advisory team for the first four independent water transmission pipeline projects in Saudi Arabia, which previously included the Ras Mohaisen project, comprised India's Synergy Consulting as financial adviser and the local Amer Al Amr and Germany's Fichtner Consulting as legal and technical advisers, respectively.


    MEED's April 2024 special report on Saudi Arabia includes:

    > GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
    > BANKING: Saudi lenders gear up for corporate growth
    > UPSTREAM: Aramco spending drawdown to jolt oil projects
    > DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector

    > POWER: Riyadh to sustain power spending
    > WATER: Growth inevitable for the Saudi water sector
    > CONSTRUCTION: Saudi gigaprojects propel construction sector
    > TRANSPORT: Saudi Arabia’s transport sector offers prospects

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11791400/main.jpg
    Jennifer Aguinaldo
  • UAE plans nationwide EV charging network

    20 May 2024

    The UAE plans to increase electric vehicle (EV) adoption through the installation of a robust charging network linking the seven emirates.

    "The government is collaborating with private sector partners to make this plan a reality," said Sharif Salim Al Olama, undersecretary for energy and petroleum affairs at the Energy & Infrastructure Ministry, at the ongoing Electric Vehicle Innovation Summit in Abu Dhabi.

    There is also a plan to install EV chargers at the UAE's border with Saudi Arabia. “We aim to increase the scale and adoption by raising EV share [of cars on the UAE road] to 50% by 2050,” Al Olama said.

    “Achieving this target requires investment in infrastructure, collaboration with all stakeholders in the supply chain, and adopting and promoting innovation.”

    The government executive highlighted that greener mobility is crucial to the UAE's net-zero carbon emissions target by 2050.

    "Our all-inclusive decarbonisation drive includes the adoption and promotion of green mobility, with transport being one of the biggest global greenhouse gas emitters," said Al Olama.

    Photo: Lucid car model on display at Evis 2024

    Related read: Electric vehicles have a long way to go


    MEED's April 2024 special report on the UAE includes:

    > COMMENT: UAE rides high on non-oil boom
    > GVT & ECONOMY: Non-oil activity underpins UAE economy

    > BANKING: UAE banks seize the moment
    > UPSTREAM: Adnoc oil and gas project spending sees steep uptick
    > DOWNSTREAM: UAE builds its downstream and chemical sectors

    > POWER: UAE marks successful power project deliveries
    > WATER: Dubai tunnels project dominates UAE pipeline
    > DUBAI CONSTRUCTION: Dubai real estate boosts construction sector

    > ABU DHABI CONSTRUCTION: Abu Dhabi makes major construction investments

    https://image.digitalinsightresearch.in/uploads/NewsArticle/11791023/main.jpg
    Jennifer Aguinaldo