Qatar revives its role as regional mediator
24 December 2023
In the closing months of 2023, Qatar definitively revived its reputation as a regional mediator by acting as intermediary in the negotiation of the temporary ceasefire between Israel and Hamas – bringing the Gulf nation full circle to the status it enjoyed prior to the 2017 diplomatic fallout in the Gulf.
The recent intercession by Doha builds on the long-standing self-positioning by the Gulf state as a neutral ground and place for dialogue in the region. It is also a product of the country’s coy strategic avoidance of publicly aligning itself with the US, Russia or China – at least in any way likely to stir criticism.
The start of Qatar’s journey to its current state of fierce political independence began in the 1990s and continued in the following decade, when Doha first began to cut its teeth in the conflict resolution arena.
Between 2008 and 2012, Qatar mediated peace or ceasefire deals in Lebanon (2008) – between the Lebanese government and Hezbollah – in Yemen (2010), in Darfur (2011) and in Gaza (2012).
In 2013, more than a decade after the US invasion of Afghanistan, Qatar allowed the Taliban to open an office in Doha – a move that would later pave the way for a role in arranging talks with the US ahead of the latter’s 2020 ceasefire with the Taliban and 2021 withdrawal from Afghanistan.
Qatar’s diplomatic and political credentials nevertheless took a hit during the 2017 diplomatic crisis in the Gulf – though even in this, Doha demonstrated agility and adroitness in its statecraft by quickly pivoting its relations and trade to the other regional powers: Turkiye and Iran.
Doha’s re-seizing of the initiative during the 2023 Israel–Hamas war follows a pattern not dissimilar to its role in US–Taliban talks, leveraging the presence of Hamas political representation in the country as part of a long-standing culturing of relations on both sides of the conflict.
Economic clout
Qatar’s geopolitical position and its broad latitude in picking and choosing its external relationships is rooted in its secure economic position, with its revenues pegged not to the vicissitudes of the oil price, but the market for gas – the fuel that is the darling of energy transition strategies from East to West.
The unremitting demand for Qatari gas has ensured double-digit current account and fiscal surpluses for the past two years and these are expected to continue for the foreseeable future.
This demand is also supporting ongoing investment in Qatar’s energy infrastructure, as shown by the May 2023 award of the $10bn engineering, procurement and construction contract for two new liquefied natural gas (LNG) trains on the North Field South project – following on from the similar $13bn LNG train award in February 2021 for the North Field expansion scheme.
Qatar’s exports are meanwhile predominated by long-term gas supply contracts that ensure that the revenue Doha receives is predictable, resilient to price fluctuations and highly immune to political disruption. Even in times of diplomatic tension, energy exports and imports are the least likely thing to be affected – since action on the part of energy importers would equally impact their own energy security.
A business-like approach is very much the overarching schema by which Doha’s non-committal politics are maintained. At the same time, Qatar’s cautious non-alignment with world powers has equally been no deterrent to developing strong bilateral ties with key poles of global influence such as the US.
Qatar’s geopolitical position and its broad latitude in picking and choosing its external relationships is rooted in its secure economic position
According to the US-Qatar Business Council, the US is Qatar’s single-largest foreign direct investor, with more than 850 US companies operating in the country.
This is in addition to Qatar’s hosting of Al-Udeid Air Base – the largest US military installation in the Middle East and an instrumental component of US power projection in the Gulf. The facility is also, in turn, a significant safeguard and security guarantor for Qatar.
New opportunities
There is also a certain intersection between Qatar’s non-committal politics and its commitment to sports – an ostensibly apolitical arena of soft power engagement. While the culmination of the Fifa World Cup Qatar 2022 is now in the past, the country is looking ahead to the 2030 Asian Games, among other events. In 2023 alone, Qatar played host to 14 major international sports events, and more than 80 events in total.
Doha will also be guided, as it heads towards the 2030 games, by the Qatar National Vision, which aims to transform the country into an advanced economy by the end of the decade.
In 2020, the government passed a new public-private partnership law and in 2021 allowed full foreign ownership of companies – both key spokes of a fresh foreign direct investment push by the country.
Doha’s energy ambitions also extend beyond gas. Qatar is pushing ahead with investment into the hydrogen industry with a view of capturing a share of the prospective global hydrogen market.
In 2022, QatarEnergy set in motion plans to build the world’s largest blue ammonia plant. Doha sees that in its future, just as in its present, the country’s positioning as a provider of the world’s energy of choice will also hold the key to its economic and political independence in the decades to come.
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This development follows the introduction of an addendum to the tender after companies submitted their best and final offers (bafos) for the contract to build the 1,200MW Gayal wind farm project in June, a source close to the project tells MEED.
MEED reported on 9 July that Neom is progressing towards awarding the engineering, procurement and construction (EPC) contract to the selected bidder following receipt of the bafos.
Enowa received the initial bids for the contract on 4 March.
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The project will have an estimated plot area of 164 square kilometres. The project duration is 31 months from the start of construction.
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Enowa received bids for another renewable energy project, the 800MW Shiqri solar farm, in March. The client is conducting commercial clarifications for the solar project, MEED reported in May.
Neom aims to be powered 100% by renewable energy by 2030.
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Wabag confirms $317m Saudi water deal
6 September 2024
India-headquartered VA Tech Wabag has confirmed winning a contract to build a 300 cubic-metres-a-day (cm/d) seawater reverse osmosis (SWRO) plant project in Yanbu, Saudi Arabia.
The value of the contract for the Yanbu 5 SWRO plant is $317m, the Bombay Stock Exchange-listed company said in a statement on 6 September.
The engineering, procurement, construction and commissioning contract covers the design, engineering, supply, construction and commissioning of the desalination plant.
According to Wabag, the plant will operate using dual media filters followed by a two-pass reverse osmosis process and re-mineralisation to produce clean potable water, which will be further distributed by Saudi Water Authority (SWA).
The plant is located on the west coast of Saudi Arabia, south of the Red Sea-facing Yanbu Al-Bahr, and is scheduled to be completed within 30 months of the contract award.
MEED reported in July that Wabag submitted a lower bid for the contract.
Saudi Arabia's main producer of desalinated water, SWA – formerly Saline Water Conversion Company (SWCC) – received two bids in May for the contract to build the Yanbu 5 SWRO project.
The other bidder is understood to comprise a local contractor team and an overseas-based partner.
The bid evaluation process is ongoing for a second project, the Shuaiba 6 SWRO plant, which has a capacity of 545,000 cm/d.
Two other projects, the Jubail and Ras Al-Khair SWRO projects, are in the bidding stage. They will each have the capacity to treat 600,000 cm/d of seawater.
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Chinese companies win 95% of all Iraqi energy projects
6 September 2024
Commentary
Wil Crisp
Oil & gas reporterCompanies headquartered in China have won 95% of all major project contracts awarded in Iraq’s oil, gas, chemicals and power sectors so far this year, as they increase their dominance in the market.
A total of $12.1bn in energy project contracts were won by Chinese companies during the first eight months of 2024, according to data gathered by regional project tracker MEED Projects.
The only major award so far this year that was not won by a company or partnership that was 100% Chinese, was the contract to rehabilitate the Baiji 2 gas-fired power station, which is estimated to be worth $1.3bn by MEED Projects.
This contract was awarded to a consortium of Beijing-headquartered China State Construction Engineering Corporation (CSCEC) and German technology conglomerate Siemens.
Commenting on the figures, one industry source said: “China has been a dominant force in Iraq’s energy sector for a long time and this is only increasing as time passes.
“The huge presence that China has in the country’s energy sector is a source of concern for Iraq’s leadership, which doesn’t want to cede control of so many important infrastructure projects to companies from any single country.”
“The problem is, other countries are reluctant to take on the risks of doing business in Iraq and at the same offer the competitive prices that Chinese contractors can offer.”
The biggest energy project contract won by a Chinese contractor so far this year is the agreement for the development of the Al-Faw Investment Refinery project.
The client on the project, state-owned Southern Refineries Company, signed a contract with CSCEC in May this year.
The refinery will have a capacity of 300,000 barrels a day and will produce oil derivatives for both domestic and international markets.
The project will be carried out in two stages. The first phase will involve refining operations, while the second will involve constructing a petrochemicals complex with a capacity of 3 million tonnes a year.
The wider project also includes the construction of a 2,000MW power plant and the establishment of the Al-Faw Academy for Refinery Technology, to train 5,000 Iraqi workers that will eventually work at the facility.
Hualu, a subsidiary of China National Chemical Engineering Company (CNCEC), signed a preliminary principles agreement for the project in December 2021.
At the time, Iraq’s Oil Ministry said that the project would have an investment value of $7bn-$8bn.
MEED Projects has estimated that the contract value of the deal signed with CSCEC in May for the refinery project is about $4bn.
Other energy project contracts won by Chinese companies during the first eight months of this year included the contract for the Artawi 1,000MW photovoltaic solar power plant in Basra.
This contract, estimated to be worth $1bn, was awarded to China Energy Engineering International Group.
Chengdu-based DongFang Electric Corporation was awarded the main contract for a project to convert the Baghdad South power plant into a combined-cycle gas turbine power plant.
The project is estimated to be worth $85m and will increase the capacity of the power plant by 125MW-625MW.
Also this year, a subsidiary of PetroChina, the listed arm of state-owned China National Petroleum Corporation, signed an agreement to develop Iraq’s Nahr Bin Umar onshore gas field.
The subsidiary, PetroChina Halfaya, was awarded the build-own-operate-transfer contract, which is estimated to be worth about $400m.
Iraq’s Oil Ministry said that the field will have an initial output capacity of 150 million cubic feet a day.
The project is expected to be completed within 36 months and will include the construction of gas-gathering facilities, storage tanks and pipeline networks to supply gas to power stations.
Strong performance
Chinese contractors also performed well in Iraq’s energy sector in terms of the value of contract awards in 2023.
Last year, Chinese contractors won $2.3bn in Iraqi energy sector contracts, almost half of the $4.8bn that was awarded.
Looking at the data for 2023 and the first eight months of 2024 together, Chinese companies won $14.5bn in contracts, 82% of the $17.6bn in energy project contracts awarded over the period.
The second closest competitors were companies from Germany, which won just over $1bn in contracts, 6% of all awards.
Iraqi companies were third, winning $816m in contracts, according to the data compiled by MEED Projects.
Contracts were also won by companies from Italy, the Netherlands and Turkiye.
Iraq is currently in the midst of a push to try and increase the volume of work being carried out by US companies in the country’s energy sector.
Earlier this month, Iraq announced that it was planning to offer about 10 gas exploration blocks to international companies in a new licensing round that will be launched during a visit to the US by Iraqi Oil Minister Hayan Abdel-Ghani.
Abdel-Ghani said that he will be specifically targeting US companies in the upcoming round.
Earlier this year, the US international oil and gas company ExxonMobil completed its exit from Iraq’s West Qurna-1 oil field, handing over operatorship to PetroChina.
Exxon’s plan to exit the West Qurna-1 oil field was first announced in April 2021, when Iraq’s Oil Ministry said the US-based oil company was considering selling its 32.7% stake.
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Region plugs in to electric future
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Colin Foreman
EditorRead the September 2024 issue of MEED Business Review
Saudi Arabia is well known as one of the world’s largest oil exporters. What is less known is that the kingdom is also one of the world’s most significant consumers of oil.
According to the US-based Energy Information Agency (EIA), Saudi Arabia consumed 3.65 million barrels a day (b/d) in 2022, making it the fifth-largest consumer globally, with a 4% share of the global total.
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Anyone who has experienced Riyadh’s traffic congestion in recent years will attest to the fact that Saudi Arabia has a lot of cars.
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Overhauling infrastructure in existing urban areas is complicated and costly, but the region’s governments have demonstrated a clear commitment to making EVs work. Initial success is within reach as the region plays catch up with other geographies that have shown higher EV ownership rates are achievable.
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Must-read sections in the September 2024 issue of MEED Business Review include:
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Analysis of the outlook for the downstream sector
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> Region advances LNG projects with pace> SAUDI GIGAPROJECTS: Communication gaps hinder Saudi gigaprojects
> INTERVIEW: Legacy building at Diriyah
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> LEADERSHIP: Navigating the impact of digital currencies on forex markets
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> COMMENT: Kuwait’s prospects take positive turn
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> ECONOMY: Fiscal deficit pushes Kuwait towards reforms
> BANKING: Kuwaiti banks hunt for growth
> OIL & GAS: Kuwait oil project activity doubles
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> CONSTRUCTION: Kuwait construction sector turns corner> MEED COMMENTS:
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> Finance deals reflect China’s role in delivering Vision 2030
> Harris-Walz portents shift in US policy on Gaza
> Aramco increases spending despite drop in profits> GULF PROJECTS INDEX: UAE leads slight dip in market
> JULY 2024 CONTRACTS: Saudi Arabia boosts regional total again
> ECONOMIC DATA: Data drives regional projects
> OPINION: The beginning of the end
> BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts
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PIF and Hyundai award car plant construction deal
5 September 2024
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Saudi Arabia's sovereign wealth vehicle, the Public Investment Fund (PIF), and South Korea's Hyundai Motor Company have awarded the contract to build a vehicle manufacturing plant in Saudi Arabia.
According to media reports, the firms awarded an estimated $248m contract to Seoul-headquartered Hyundai Engineering & Contracting.
Construction of the plant is expected to start in 2024, and vehicle production in 2026.
The facility will have a production capacity of 50,000 vehicles a year, including both conventional vehicles and electric vehicles (EVs).
MEED reported in November last year that Hyundai Motor Company had appointed Seoul-headquartered Heerim Architects as the design consultant for its vehicle manufacturing plant in Saudi Arabia.
PIF and Hyundai Motor Company signed a joint venture agreement to set up a vehicle manufacturing plant in the country in October last year.
The PIF will hold a 70% share in the joint venture, with Hyundai holding the remaining 30% stake. The total investment for the project is estimated to be about $500m.
In December 2022, Saudi Arabia's Industry & Mineral Resources Ministry signed a memorandum of understanding with Hyundai Motor Company to establish a car production plant in the kingdom.
The PIF is keen to invest in the kingdom's automotive sector. Last year, it launched the National Automotive & Mobility Investment Company (Tasaru Mobility Investments) to develop the local supply chain capabilities for the automotive and mobility industry in Saudi Arabia.
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