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Neom cancels $1.5bn desalination plant project

17 May 2024

 

The joint development agreement (JDA) for a project to develop a zero liquid discharge plant in Saudi Arabia's Neom has expired and has not been renewed, leading to the cancellation of the project, sources familiar with the scheme tell MEED.

A consortium of Neom subsidiary Enowa, Japan’s Itochu and France’s Veolia signed a JDA for the scheme in December 2022, approximately six months after they signed a memorandum of understanding to develop the renewable-energy powered advanced seawater reverse osmosis project in Oxagon, Neom’s industrial cluster.

The scope of the JDA covers the first phase of the project with a desalination plant that can produce 500,000 cubic metres a day (cm/d) of desalinated water by 2030.  

MEED understands, however, that the overall plan for the proposed facility was to deliver up to 2 million cm/d of desalinated water to Neom, equivalent to about 30% of the gigaproject's expected total water demand once complete.

The entire facility was understood to require a total investment of $1.5bn-$2bn.

The developer team initially indicated that the target commercial operation date for the project's first phasewas 2025. 

In a statement sent to MEED, Enowa said Neom's water requirements have evolved over the last year "leading us to adopt a stepwise approach to expanding capacity".

It continued: "As a result, we've decided to discontinue our joint development agreement (JDA) for this project. This decision was made after open communication and extensive discussions to ensure mutual understanding and commitment.

"Our dedication to delivering sustainable and innovative solutions remains unchanged, and we value our collaboration with international partners as we adjust our approach to best serve Neom's long-term goals."

Advanced technology

In addition to using 100% renewable energy, the proposed state-of-the-art desalination plant intended to use advanced membrane technology to produce separate brine streams, enabling the production of brine-derived products to be developed and monetised downstream.

The plan involved converting brine, the main waste output of desalination, into industrial materials to be used locally or exported internationally.

At the time, Enowa said brine generated from the desalination plant would be treated to feed industries utilising high-purity industrial salt, bromine, boron, potassium, gypsum, magnesium and rare metal feedstocks.

Neom appointed Japan’s Sumitomo Mitsui Banking Corporation as financial adviser for the project. UK-based DLA Piper  was the legal adviser and Canada’s WSP was the technical adviser.

Correction: The initial version of this story has been amended. The cancelled JDA covers a plant with a capacity of 500,000 cm/d by 2030. 

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

 

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Jennifer Aguinaldo

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