News
  • Abu Dhabi to quit gas-fired generation by 2050 Administrator

    23 February 2024

    Abu Dhabi-based state utility Emirates Water & Electricity Company (Ewec) expects to progressively reduce gas-fired generation with the aim of eliminating its use in 2050.

    However, the company added that it continues to see a crucial role in the short- and medium-term for gas generation.

    The summary of Ewec’s latest Statement of Future Capacity Requirements (SFCR) covering the years 2024 to 2037 was issued earlier this week.

    The annual SFCR provides recommendations for future power generation and water desalination capacities in Abu Dhabi based on a modelling approach that considers Ewec’s sustainability targets as well as various macroeconomic inputs.

    “Gas will increasingly be used as a transition fuel that will enable the integration of large amounts of renewable energy into the system,” the annual SFCR said.

    The base case forecast indicates that an approximately equal share of new combined cycle gas turbine (CCGT) and open cycle gas turbine (OCGT), totalling a recommended  5.1GW,  delivers the least cost to the Abu Dhabi electricity system, it added.

    The Abu Dhabi government has set a target to achieve 60 per cent clean energy, from renewables and nuclear, by 2035.

    It also expects demand for both power and water to increase by an average of 5 per cent annually until the end of the forecast period, due to underlying economic growth and electrification of other sectors such as transportation and industry to support decarbonisation.

    The latest SFCR’s recommendations include:

    • Development of 1.5GW of solar capacity by 2027 following the completion of the Al Ajban solar independent power project (IPP) in 2026
    • Development of 400MW of battery energy storage with a one-hour depth of storage for the provision of grid stability by 2026
    • 5.1GW of thermal capacity is required to support the integration of renewable energy projects into the system. This will comprise 2.6GW of low-cost OCGT to be available by 2027 and 2.5GW of CCGT to be available by 2028.
    • Procurement of at least 380,000 cubic metres a day or 62MIGD of reverse osmosis capacity by 2029

    The recommendations and demand growth forecast are understood to have considered the capacities that are currently under construction.

    “The planning recommendation to proceed with the immediate development in 2023 of each of these battery, solar PV and gas generation projects reflects the varying times to implement and achieve commercial operation for these different technologies,” the SFCR stated.

     

     

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  • Mergers soar in global mining sector Administrator

    23 February 2024

     

    This month's Agenda also includesSaudi Arabia transforms mining sector


    There was a surge in mergers and acquisition (M&A) activity in the global mining sector in 2023, extending a period of consolidation in the industry that began in the previous decade.

    The total value of M&A deals in the industry increased by 75% compared to the previous year, to reach $121bn, according to a report by GlobalData. The number of M&A transactions grew 5% year-on-year to 1,526, while the number of mega deals – which are defined as deals with a transaction value of $1bn or more – stood at 16.

    The Asia-Pacific region, excluding China, recorded the highest M&A deal value, surpassing North America as the leading region. Despite this, North America maintained its leadership position in terms of deal volume.

    GlobalData attributes the increase in M&A activity to companies seeking to position themselves favourably amid disruptive threats in the industry.

    Major deals

    The year’s biggest mining M&A deal was recorded in December, when Japanese steelmaker Nippon Steel announced its $14.98bn takeover of Pittsburgh-based United States Steel.

    In November, Swiss commodities giant Glencore announced it will acquire a majority 77% stake in Elk Valley Resources, the steelmaking coal business of Canadian miner Teck Resources. The transaction is valued at $6.93bn, making it the second-biggest deal of 2023.

    Nippon Steel Corporation will acquire a 20% stake in Elk Valley Resources, while South Korea’s Posco will take 3%.

    Within months of being established, Saudi Arabia’s Manara Minerals entered into a transaction in July with Brazilian mining major Vale to become a 10% shareholder in its $26bn subsidiary, Vale Base Metals. 

    Manara Minerals teamed up with investment firm Engine No 1, which took a 3% stake in Vale Base Metals. The $3.4bn transaction was the third-biggest M&A deal in 2023.

    Manara Minerals was formed in January 2023, when Saudi Arabian Mining Company (Maaden) signed a joint-venture agreement with the kingdom’s Public Investment Fund (PIF) to establish a firm that would invest in mining assets globally. Maaden owns a 51% stake and the PIF holds the other 49% in the company.

    Manara Minerals aims to invest in iron ore, copper, nickel and lithium projects as a non-operating partner, taking minority equity positions.

    In another key deal, Australia’s MMG entered into a share purchase agreement to acquire the parent company of Botswana’s Khoemacau copper mine, with a deal value of $1.8bn.

    Prominent themes

    Among all mining commodities, gold continued to account for the largest share of M&A activity in 2023, in line with the trend observed in 2022, according to the GlobalData report. Last year, there were 375 gold asset-related deals, with a combined value of $49bn.

    The report identified energy transition as the most prominent theme driving M&A deal value in 2023. 

    The industry is facing headwinds from stricter regulatory, social and environmental requirements when it comes to obtaining licences to develop and operate mining operations. In response, the sector is embracing the shift to a green economy and net-zero emissions. 

    Most mining companies recognise the need to develop more environmentally friendly mineral exploration technologies to improve relations with local communities and advance mine development.

    The estimated $17bn-worth of energy transition-themed M&A transactions last year demonstrates this commitment to a cleaner, greener future by mining companies globally.

    The positive momentum of M&A activity is expected to continue into 2024. This year will likely once again see mergers of equals; major mining producers acquiring small producers to strengthen their near-term production profiles; and the strategic acquisition of high-quality, long-life development projects to bolster producers’ development pipelines.

    It is also expected that mining companies will continue to prioritise projects that can increase their exposure to critical minerals, including copper, nickel, cobalt and lithium deposits – all of which are an integral part of the global electrification transition that is under way.

    Saudi Arabia transforms mining sector

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    Indrajit Sen
  • Saudi Arabia transforms mining sector Administrator

    23 February 2024

     

    This month's Agenda also includes: Mergers soar in global mining sector


    Saudi Arabia’s metals and mining industry is playing a pivotal role in the country’s non-oil growth trajectory. 

    Commercial exploitation of the kingdom’s massive mineral resource base, most of which lies untapped, is a key component of Riyadh’s Vision 2030 socioeconomic transformation strategy.

    The kingdom took the first step towards realising the commercial potential of its mineral resources when it enacted a new mining investment law in 2021. Since the law came into effect, the Ministry of Industry & Mineral Resources (MIMR) has awarded more than 2,000 mining permits to local and foreign firms under its accelerated exploration initiative.

    Addressing the Future Minerals Forum (FMF) in Riyadh in early January, Bandar Alkhorayef, the kingdom’s industry and mineral resources minister, said Saudi Arabia’s natural resources are worth $2.5tn – an increase of more than 90% compared with the 2016 estimated level of mineral reserves.

    This near-doubling of its deposits of natural resources – which excludes fossil fuels and includes phosphate, gold and rare earths – is set to act as a stimulus to the kingdom’s nascent mining industry.

    Mineral exploration drive

    The MIMR is leading efforts to boost investments in the Saudi metals and mining sector, and Riyadh is providing impetus to the mineral exploration incentive programme with a cash injection of $182m.

    “This programme will de-risk investments in our exploration, to enable new commodities, greenfield projects and junior miners,” Alkhorayef told the FMF.

    To tap into overseas mining experience, the ministry signed four memorandums of understanding at the FMF.

    Deals involving cooperation in the field of mineral wealth were signed with Egypt’s Petroleum & Mineral Resources Ministry, Morocco’s Energy Transition & Sustainable Development Ministry and Congo’s Mines of the Democratic Republic Ministry. A separate agreement inked with Russia involves geology. 

    Alkhorayef also announced the MIMR’s fifth and sixth mining concession licensing rounds at the conference in Riyadh. The rounds will offer local and international miners access to 33 exploration sites this year.

    The ministry launched its last concession licensing round in August 2023, offering eight mining sites in the kingdom. Six of the sites are located in the Eastern Province – in Ghounan, Al Misnah, Al Samman, Ras Al Qaryah and the eastern and western zones of Salwa – and are understood to contain limestone ore, sand and other minerals.

    The other two sites are in Riyadh Province, in Al Armah and Hofayrat Nesaah. These sites are estimated to hold gravel and sand deposits, among other minerals.

    Prior to the August licensing round, the ministry announced in April that it had shortlisted 13 local and international companies for the exploration phase at the Muhaddad and Al Ridaniyah mining sites.

    The Muhaddad exploration site, located in Bisha within the Asir geological terrane, covers 139 square kilometres and includes copper, zinc and lead ore deposits. The Al Ridaniyah exploration site is in the Riyadh region within the Al Dawadmi geological terrane. It covers more than 75 sq km and includes deposits of zinc and silver ore.

    In January, the MIMR announced preferred bidders for another licensing round that it launched last April.

    A consortium of local firm Ajlan & Bros Mining Company and Hong Kong-based Norin Mining Company is the preferred bidder for the Bir Umq exploration site. The site is located in the city of Mahd Ad Dhahab, in western Saudi Arabia. Covering about 187 sq km, the site contains deposits of copper and zinc.

    As part of the licence awarded for this site, the winning consortium will invest over $29m in exploration activities. The consortium has also committed $4m for local community initiatives, including training and development programmes.

    A consortium of UK-headquartered Royal Road and local entity MSB Holding Company has been picked as the preferred bidder for the Jabal Sahabiyah exploration site. 

    The site is located in the Tathleeth region, in the south of the kingdom, and covers an area of 283 sq km. Jabal Sahabiyah holds mineral deposits of zinc, lead and copper. The selected consortium will invest more than $5m in exploration work and another $120,000 in community development.

    A consortium of Saudi Arabia-based Sumou Holding and Canada’s Kuya Silver has been selected for the Umm Hadid site and will invest more than $22m in exploration activities and about $800,000 in community development. Umm Hadid is located in the Afif region in central Saudi Arabia. Covering an area of 246 sq km, the site contains mineral deposits of silver, lead, copper and zinc.

    The near-doubling of its deposits of natural resources is set to act as a stimulus to the nascent mining industry

    Maaden steps up

    Saudi Arabian Mining Company (Maaden) is at the forefront of Riyadh’s campaign to develop and expand the kingdom’s metals and mining sector. By 2040, the company, which is majority owned by the Public Investment Fund (PIF), aims to build its upstream mining capabilities, gain exposure to future minerals and form partnerships with global mining companies.

    Last January, Maaden signed a joint-venture agreement with the PIF to establish a new company to invest in mining assets globally. Maaden owns a 51% stake and the PIF holds the other 49% in the company, known as Manara Minerals, which will have a capital allocation of $50m.

    Manara Minerals aims to invest in iron ore, copper, nickel and lithium projects as a non-operating partner, taking minority equity positions. The firm’s first overseas investment was a deal in July to become a 10% shareholder in Brazilian mining major Vale’s $26bn subsidiary, Vale Base Metals.

    In terms of metals production, Maaden announced in mid-January that its subsidiary Maaden Gold & Base Metals Company (MGBM) had started commercial production of gold from the first phase of the Mansourah-Massarah gold project.

    MGBM operates six gold mines, with the Mansourah-Massarah mine being one of its concession areas. In June 2021, the Maaden subsidiary awarded an estimated $880m contract for the first phase of the Mansourah-Massarah gold mine to a consortium of India’s Larsen & Toubro and Finland-based Metso Outotec. The award of that engineering, procurement and construction (EPC) contract represents the biggest investment in gold mining in Saudi Arabia to date.

    In August last year, MGBM also awarded an EPC contract for the second phase of the Mansourah-Massarah gold mine project, worth $28m, to a consortium of Riyadh-based Darkstone and Australia-headquartered ATC Williams. The contract involves installing tailings storage facilities and wastewater management systems.

    Maaden exploration push

    On the mineral exploration front, Maaden signed an agreement with US-based Ivanhoe Electric in July 2023 to undertake exploration for high-demand minerals in the Arabian Shield zone in Saudi Arabia. As part of the $130m deal, the partners are to survey an area of 48,500 sq km in the Arabian Shield, starting in September.

    About the size of Switzerland, the Arabian Shield region is understood to be rich in reserves of minerals such as copper, nickel, gold, silver and possibly lithium.

    Maaden has had success in its exploration drive. In late December, it announced the discovery of significant gold resource potential extending along a 100km strike from its Mansourah-Massarah gold mine. This is the first find from the company’s exploration programme, which was launched in 2022 with the aim of building Maaden’s production pipeline.

    Exploration around Mansourah-Massarah has focused on identifying potential deposits of a similar scale and with similar geology. Encouraging drill results from several sites on Uruq South, along a 100km stretch south of Mansourah-Massarah, uncovered similar geological characteristics and chemistry to the gold deposit. These results include high-grade drill intercepts found 400 metres away from and under Mansourah-Massarah, with several high-grade intercepts.

    In addition, Maaden has continued the expansion of its exploration footprint at the Jabal Ghadarah and Bir Tawilah prospects located 25km north of Mansourah-Massarah, where the company is converting an inferred resource of 1.5 million ounces to indicated and measured status.

    In combination, these positive drilling results have identified a 125km strike with significant potential to become a major gold belt in Saudi Arabia. The near-mine drilling results around Mansourah-Massarah indicate that the resource is open both at depth and along the strike, offering significant potential to expand resources at the mine and possibly to extend the mine life with underground development.

    Mansourah-Massarah had stated gold resources of almost 7 million ounces as of the end of 2023, and a nameplate production capacity of 250,000 ounces a year.

    Positive drilling results have identified a 125km strike with the potential to become a major gold belt in Saudi Arabia  

    Maaden technology investments

    To extend the role of technology in Saudi Arabia’s mining sector, Maaden signed a master agreement with Germany’s Thyssenkrupp Uhde at the FMF. The deal covers the development of engineering and licensing of a calcination plant for phosphogypsum processing.

    The purpose of the proposed plant, which is to be located at Maaden’s Ras Al Khair site, is to recycle phosphogypsum and enable the capture of carbon dioxide (CO2) emissions. The joint research and development will be carried out together with Thyssenkrupp Polysius and Metso Outotec.

    Also at the FMF, Maaden and US firm GlassPoint announced plans to develop a solar steam technology. The first stage of project development will have the capacity to supply 9 tonnes of steam an hour to begin the decarbonisation of Maaden’s aluminium supply chain, in what is expected to be the world’s largest industrial solar thermal project.

    The technology will combine the direct generation of heat and storage to provide a continuous base load of steam to Maaden’s alumina refinery at Ras Al Khair. The initial capacity will be about 1% of the larger project, which is slated to save more than 12 million British thermal units of energy annually and reduce CO2 emissions by 600,000 tonnes a year.

    Maaden and digital reality firm Hexagon also partnered at the FMF to launch a "digital mine".

    “Hexagon’s life-of-mine technology solutions are being successfully deployed at the Mansourah-Massarah mine, combining sensor, software and autonomous technologies to enhance efficiency, productivity, quality and safety across the mine’s operations,” the companies said.

    Mergers soar in global mining sector


    MEED's October 2023 special report on Saudi Arabia includes: 

    > COMMENT: Riyadh reshapes its global role
    > POLITICS: Saudi Arabia looks both east and west
    > SPORTSaudi Arabia’s football vision goes global
    > ECONOMY: Riyadh prioritises stability over headline growth
    BANKSSaudi banks track more modest growth path
    > UPSTREAMAramco focuses on upstream capacity building

    > DOWNSTREAMSaudi chemical and downstream projects in motion
    > POWERRiyadh rides power projects surge
    > WATERSaudi water projects momentum holds steady
    > GIGAPROJECTSGigaproject activity enters full swing
    > TRANSPORTInfrastructure projects support Riyadh’s logistics ambitions
    > JEDDAH TOWERJeddah developer restarts world’s tallest tower

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    Indrajit Sen
  • Data centre activity soars in Saudi Arabia Administrator

    23 February 2024

    Saudi Arabia is experiencing a major uptick in the construction of data centre assets across the country.

    Despite the preference for data centres to be inconspicuous due to security concerns, it is not uncommon to see certain construction sites or completed facilities marked clearly as such when one navigates the capital city, Riyadh.

    Data sovereignty regulations as well as the widespread use of electronic commerce and social media particularly by young Saudis are driving the data centre construction boom, notes a Riyadh-based expert.

    Government agencies, banks, and family-owned conglomerates, in addition to local and international data centre developers and operators, have either started constructing or are planning to start the construction of data centre facilities across Saudi Arabia. 

    The value of known data centre projects pipeline in the kingdom falls under $1bn, according to regional projects tracking service MEED Projects. While this value corresponds to just one utility-scale renewable energy plant or a minor upgrade of an oil production facility in Saudi Arabia, future plans point to a major expansion of such facilities, which underpin the kingdom's digital hub and artificial intelligence (AI) strategies.

    For instance, the government announced in 2021 a plan to build a network of large-scale data centres that will require investments of up to $18bn by 2030.  At the time, the kingdom's Communications & Information Technology Ministry (MCIT) tapped local firms Gulf Data Hub, Al-Moammar Information Systems and Saudi FAS Holding as its initial partners for the scheme. 

    The following year, Saudi-headquartered Quantum Switch Tamasuk (QST)  unveiled plans to design and operate data centre projects with a cumulative total capacity of 300MW for the MCIT  by 2026. The project will comprise six locations across Riyadh, Dammam, Jeddah and Neom, with a reported budget of at least $2bn.

    Foreign investments have started pouring in to accommodate the rising capacity demand as well as the kingdom's ambition to become a digital hub.

    Dubai developer Damac Properties-owned Edgnex is constructing a data centre, which will have a minimum capacity of 20MW, at Industrial City 2. 

    In October last year, South Korea’s second-largest telecoms company, KT, in collaboration with Hyundai Engineering & Construction (Hyundai E&C) and the local telecoms group STC, signed a memorandum of understanding (MoU) to construct internet data centres (IDC) and smart cities in the kingdom. 

    Similarly, the UAE-based cloud and data service provider Khazna Data Centres also plans to build data centres in Saudi Arabia as it executes its overseas expansion plans. 

    In May last year, sovereign vehicle, the Public Investment Fund (PIF), teamed up with US-based infrastructure investor and asset manager DigitalBridge to develop data centres and related digital infrastructure in Saudi Arabia and across the GCC states.

    Telecoms service provider Zain is also expected to build a new data centre with some support from the kingdom's SR5tn ($1.35tn) Shareek private sector investment programme.

    Crucially, US-headquartered IT and cloud services giants Microsoft and Oracle pledged at the annual Riyadh tech conference, Leap, last year, to invest a total of $9bn in the kingdom. This will go into the construction of multiple data centres to form a so-called cloud region catering to Saudi Arabia and the wider Middle East region.

    Similarly, Chinese tech firm Huawei has pledged to invest $400m to build cloud services in the kingdom.

    "The demand is there that's why we are focusing on these projects," said the Riyadh-based construction expert, who also acknowledges that the depreciation rate for data centres is higher compared to real estate assets due to the high obsolescence of technology and the need to replace data centre components frequently.

    Digital hub

    A growth in the number of subsea cable landing sites in the kingdom is occurring in parallel with the substantial growth in data centre facilities and capacity.

    A 45,000-kilometre subsea cable network connecting Africa, Asia and Europe, 2Africa, reached two of its four landing sites in Saudi Arabia in May 2023. The landing sites are in Jeddah and Yanbu.  The cable is expected to reach the third landing site in Duba late last year and the fourth site in Al-Khobar in 2024.

    Once completed, 2Africa will connect Saudi Arabia to 33 countries, bringing the kingdom closer to its goal of becoming a digital hub.

    The stakes are high for the kingdom, which has simultaneously launched plans to industrialise its economy, decarbonise its industries, increase localisation and reach net-zero carbon emissions by 2060.

    While constructing energy-intensive data centres – which globally account for 1% of energy-related greenhouse gas emissions –  may seem counter-intuitive to these objectives, the rapid advancements in cooling and other data centre components, as well as the potential deployment of clean energy to power them, are expected to ease these assets' environmental impact.

     

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    Jennifer Aguinaldo
  • US firm wins Al Kahfah solar tracker package Administrator

    23 February 2024

    Riyadh-headquartered Acwa Power and India's Larsen & Toubro (L&T) have selected the US-headquartered Nextracker to provide solar trackers for the Al Kahfah solar photovoltaic (PV) power plant in Saudi Arabia.

    The project is one of three utility-scale solar projects being jointly developed by Acwa Power and its partner, Water & Electricity Holding Company (Badeel). as part of the kingdom's National Renewable Energy Programme (NREP).

    The US solar tracking manufacturer will supply its all-terrain NX Horizon-XTR product for the project located in the kingdom's Central Province.  

    The area the solar plant will occupy underpinned the choice to deploy Nextracker's smart solar tracker systems for the Al Kahfah project.

    The location is dominated by a hilly, hard-soil land surface that would otherwise typically require a combination of explosives and grading machines to flatten.

    Nextracker’s all-terrain solar tracker system can conform to the natural terrain to reduce the need for costly land grading while significantly reducing environmental impact, Acwa Power and L&T said.

    The project is understood to be the largest deployment of Nextracker's NX Horizon-XTR solar tracking technology in a single order.

    Nextracker founder and chief executive Dan Shugar said the project bolsters the Saudi government's leadership in energy transition and the dominance of solar technology in driving the transition to renewables in the region.

    L&T is understood to be the project's engineering, procurement and construction contractor.

    PIF solar projects

    Acwa Power and Badeel signed the power-purchase agreements with Saudi Power Procurement Company to develop and operate the three projects in May last year.

    In addition to the Al Kahfah solar project, the developer team will also develop the 2,000MW Al Rass and 1,125MMW Saad 2 solar PV projects.

    The projects are estimated to cost a combined SR12.8bn ($3.4bn).

    The projects are expected to reach financial close after they have satisfied the conditions precedent for senior loans drawdown, as a recent Acwa Power bourse filing has indicated.

    The banks that agreed to provide senior debt financing of SR8.6bn ($2.3bn) for the three projects include:

    • Banque Saudi Fransi (local)
    • HSBC (UK)
    • Mizuho Bank (Japan)
    • Riyad Bank (local)
    • Saudi Awwal Bank (local)
    • Saudi National Bank (local)
    • Standard Chartered Bank (UK)

    The financing duration is 27.75 years. The project debt financing amount is non-recourse to Acwa Power, which owns a 50.1% equity in the three projects.

    Its partner, the Public Investment Fund (PIF) subsidiary Badeel, owns the remaining 49.9% equity in the projects.

    The three projects take the number of solar PV contracts awarded by the PIF under the kingdom’s NREP to five.

    It awarded contracts for the development of the 1,500MW Sudair solar PV in 2021 and the 2,060MW Shuaibah 2 solar PV in 2022.

    Badeel is a wholly owned subsidiary of the PIF, which is mandated to develop 70% of the NREP’s target capacity through the kingdom's Price Discovery Scheme.

    The PIF also owns a 44% stake in Acwa Power.

    Neither SPPC nor Acwa Power has disclosed the levelised electricity cost for the latest three schemes.

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    Jennifer Aguinaldo
  • Middle East and Africa grows global hydrogen stake Administrator

    22 February 2024

    The Middle East and Africa (MEA) region is emerging as a key player within the global hydrogen market despite holding just an 11% share of current global active capacity.

    According to a new GlobalData report, the MEA region has a substantial number of large-scale low-carbon hydrogen projects in the pipeline that will boost its positioning within the global hydrogen market.

    The report notes that African countries such as South Africa, Egypt, Mauritania and Morocco aim to capitalise on their vast renewable resources to competitively produce green hydrogen both for domestic use as well as to serve markets experiencing a surge in demand, such as Europe.

    In the Middle East, the approach to low-carbon hydrogen is more blended, with companies investing in both blue and green hydrogen.

    Source: GlobalData Analysis, Global Hydrogen Service

    The report notes that in African countries, transportation is the key focus demand sector, accounting for up to 6 million tonnes per annum (mtpa) of capacity across 65 production facilities by 2030.

    Other projects, particularly those situated strategically in marine port locations, are also gearing up to produce low-carbon fuels for the maritime sector such as South Africa’s Boegoebaai green hydrogen cluster.

    In the Middle Eastern context, projects are focusing on ammonia as an end-use sector for low-carbon hydrogen, with this demand sector potentially accounting for up to 49% of active and upcoming hydrogen capacity.

    Ammonia is a valuable end-product for fertilisers, plastics and cleaning products as well as a transport and storage medium for hydrogen.

    The report adds: “Although the MEA region’s ammonia demand is forecast to remain relatively stable up to 2030, this focus within upcoming hydrogen production capacity indicates the region’s intention to capitalise on increasing demand for low-carbon ammonia in other markets such as Europe and Asia.”

    The GlobalData report includes other key observations such as the need to strengthen national strategies, roadmaps and incentives to pave the way for hydrogen technology investments and deployment within the different sectors in which it can be used.

    “Numerous countries across the Middle East and Africa are yet to launch these initiatives and so the region’s signals to industry need to be stronger still,” the report says.

    There is a heavy emphasis on partnerships within MEA’s regional hydrogen market, with this form of deal accounting for over 70% of total deal activity between January 2022 and February 2024.

    According to the report, this trend indicates how companies operating in the MEA region are bidding to capture a greater share of the global hydrogen market through various offtake agreements.

    It adds: “The partnerships trend also extends to international strategic alliances, with European institutions and member states being particularly  active in securing agreements with emerging hydrogen-producing countries in Africa.” 

    There are around 70 planned green hydrogen projects planned across the Middle East and North Africa (Mena) region, according to MEED data.

    The projects are concentrated mainly in Egypt, Oman, the UAE, Morocco and Saudi Arabia.

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    Jennifer Aguinaldo
  • Market snapshot of Mena construction Administrator

    22 February 2024

    Key points: 

    > HISTORICAL CONTRACTS: On average, $92.5bn has been awarded each year in the past decade on construction and transport contracts

    > TOP CONTRACTORS: Leading contractor Alec was awarded the contract for the Al Marjan integrated resort in the UAE’s Ras Al Khaimah last year

    > FUTURE OUTLOOK: Saudi Arabia’s market is expected to be 64% bigger than the UAE’s

    > LONGER-TERM PROJECTS: Saudi Arabia’s gigaprojects dominate the future pipeline, led by Neom

    > TOP FUTURE CLIENTS: The Public Investment Fund's King Salman International airport in Riyadh leads

    Register for MEED's guest programme 

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    MEED Editorial
  • Egypt faces political and economic trials Administrator

    22 February 2024

    Commentary
    John Bambridge
    Analysis editor

    Egypt finds itself both at the centre of a regional conflagration of conflict and in an increasingly difficult fiscal position – challenges that are requiring Cairo to think carefully about its every move.

    Since October, the war in Gaza has compounded the perils on Egypt’s borders, with the protracted civil strife in Libya to the west and the fierce fighting in the Sudanese civil war to the south. 

    The latest conflict has robbed Egypt of its last remaining quiescent land border and triggered strikes by the Houthis on shipping in the Red Sea that have in turn dramatically impacted the revenue from the passage of traffic through the Suez Canal. It has also pushed the Egyptian government into a complex geopolitical standoff with Israel.

    Domestically, President Abdel Fattah El Sisi’s administration is wrestling with a deepening fiscal crisis driven by a decade of extravagant spending on infrastructure projects across the country. Public debt now stands at around 90% of GDP, and debt servicing has been increasingly eating into the budget in recent years, even as revenues have wavered amid repeated knocks to global trade and travel.

    High inflation due to the rising cost of imports has led to chronic weakness in the Egyptian pound that has it bound for a further devaluation – to join three other devaluations in the past three years, alongside El Sisi’s seminal devaluation back in 2016. A further correction in the exchange rate by the central bank is also one of the terms that the IMF is pushing for in the final negotiations over the reforms expected in exchange for fresh financing.

    The financial package being worked out with the IMF nevertheless represents a lifeline for Cairo, which otherwise could be struggling to pay its bills as $8bn-worth of loans come due over the next four years, on top of the country’s other burgeoning capital and operational costs.

    Beyond the border, the situation in Gaza is threatening to spill over onto Egyptian soil – a development that would metastasise a humanitarian catastrophe that is currently only partly Cairo’s problem into one that is wholly its problem. Israeli politicians have repeatedly voiced a desire to forcibly displace the Gazan population into Egypt, and several leaked reports have revealed their attempts to convince Cairo to acquiesce to the same – an unappealing and politically precarious prospect for El Sisi.

    El Sisi’s claim to political legitimacy, beyond Egypt’s questionable electoral process, has been built on the promise of security, great works and economic progress. Under the present circumstances, convincingly delivering that trifecta looks set to be an increasingly tricky prospect.

     


      MEED’s March 2024 special report on Egypt also includes:

    Cairo beset by regional geopolitical storm
    More pain for more gain for Egypt
    Egypt oil and gas project activity declines
    Familiar realities threaten Egypt’s energy hub ambitions
    Egypt’s desalination projects inch forward
    > Infrastructure carries Egypt construction

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    John Bambridge
  • Middle East contract awards: January 2024 Administrator

    22 February 2024

     

    The region kicked the new year off with $30.5bn of contract awards, which is the biggest value ever recorded in the first month of the year since MEED began tracking contract awards in January 2014. 

    Six countries in the region recorded contract award values above $1bn, led by Saudi Arabia with $11bn. The oil sector saw the biggest value of deals signed at $8.1bn followed by the construction industry with $7.4bn.

    Saudi Arabia

    The biggest contract awarded in Saudi Arabia in January stems from the Neom gigaproject. Italian contractor WeBuild secured an estimated SR20bn ($5bn) contract to build dams that will create an artificial lake at the heart of the Trojena mountain resort, which is due to host the Asian Winter Games in 2029.

    In December 2023, the value of work already awarded at Neom was only a fraction of the hundreds of billions of dollars-worth of expected contracts that have yet to be inked. About $21bn of contracts have been tendered, while the majority of projects have entered the design stage.

    UAE

    The UAE recorded the second-biggest value of deals let in January, with $7.9bn of awards. The largest deal signed was a $2.4bn contract awarded by Abu Dhabi National Oil Company (Adnoc) to Egyptian contractor Engineering for Petroleum & Process Industries (Enppi) to build a west-to-east pipeline to transport crude oil produced in Abu Dhabi to the UAE’s northern emirate of Fujairah.

    Download the Middle East contracts awarded for January 2024
    Qatar

    Qatar saw the third-largest value of deals signed in January at $5.1bn, spurred by four awards worth a total of $6bn for engineering, procurement and construction (EPC) works on the Ruya project, which aims to increase oil production from the Al Shaheen offshore oil field by about 100,000 barrels a day (b/d).

    The winner of the biggest package, valued at $2.1bn, was a consortium of the US’ McDermott and Qingdao McDermott Wuchuan Offshore Engineering Company.

    Following the conclusion of the Fifa World Cup 2022, the expectation now is that Qatar will resume its development plans and start awarding major contracts.

    There are currently several strategic projects in the country’s pipeline that are expected to provide renewed impetus to the construction and transportation market and present opportunities to contractors in the short term.

    Egypt

    Egypt saw $1.98bn of deals signed in January, with the largest comprising two chemicals contracts worth a total of $2bn. The contracts are for phase three of a nitrogen fertiliser and phosphate industrial complex project in Egypt’s Ain Sokhna region and were won by a team of Petrojet and Ballestra and a team of Petrojet and Wuhan Engineering.

    Oman

    Oman, meanwhile, recorded $1.96bn of awards in January, the biggest an $800m contract for the Marsa liquefied natural gas (LNG) terminal. French energy major TotalEnergies selected Technip Energies to build the LNG bunkering and export terminal in Oman’s northern city of Sohar. 

    Kuwait

    Kuwait saw $450m of contracts signed in January, most of which was due to a $442m deal let by the Electricity & Water Ministry for the rehabilitation of the Al Zour South power and water distillation station. 

    Algeria

    Algeria rounded out the list of countries that recorded more than $1bn in contract signings in January, with $1.2bn of deals signed. The country saw 1GW of solar photovoltaic contracts awarded during the month by state-owned Algerian Renewable Energies Company (Shaems). Algeria expects the solar projects to generate $3.2bn-$3.6bn in investment.

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    Iraq

    Iraq recorded $605m of deals inked in January, with the biggest a $400m contract awarded by the Oil Ministry to Petrochina for the Nahr Bin Omar gas utilisation project.

    Tunisia

    Tunisia recorded a contract award value of $200m off the back of a single deal – a design-and-build contract for the construction of a 2.1-kilometre viaduct linking Tunis and Bizerte, let by the Equipment, Housing & Land Planning Ministry to China’s Sichuan Road & Bridge Group. The European Investment Bank and African Development Bank are co-financing the project.

    Jordan

    Jordan saw $137m of deals signed in January, the largest an $80m contract inked by the country’s water authority for package one of a project to construct sewer networks, pumping stations and force mains in areas of Karak. 

    Kuwait

    Kuwait recorded $127m of awards in the first month of the year, the largest a $42m contract awarded by the Electricity, Water & Renewable Energy Ministry to South Korea’s Taihan Electric Wire Company for the supply and installation of 400kV overhead lines running from Khairan to Wafra and Sulaibiya. 

    Bahrain

    Bahrain, meanwhile, saw a single $69m deal signed in January, let by the Electricity & Water Authority to TBEA Shandong Luneng Taishan Cable Company for the construction of a 400kV grid substation and 220kV subsystem in Jasra. 

    Libya

    Libya also recorded a single contract award for the month – a $64m deal signed by the Libyan Administration of Roads & Bridges with Egypt’s The Arab Contractors for the reconstruction of two bridges in the city of Derna.

    For more up-to-date information on the region’s largest projects, go to MEED Projects, which tracks trillions of dollars-worth of schemes.

    MEED Projects is a subscriber-only service that provides comprehensive, up-to-date and accurate project information. It monitors industry and business development opportunities through market data tailored to your needs.

    Be the first to know about new projects; we provide the data so you can win the business. If you would like to see a demo of MEED Projects, or just want to find out more, register your details online or call +971 (0) 4 818 0200.

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    Sneha Abraham
  • Saudi tourism numbers cross 100 million Administrator

    22 February 2024

    Saudi Arabia has confirmed that it met its target for the tourism sector by welcoming 100 million tourists in 2023.

    The landmark announcement was made by Tourism Minister Ahmed Bin Aqeel Al Khateeb at the Private Sector Forum held by the Public Investment Fund (PIF) in Riyadh in early February. 

    The kingdom has outperformed expectations. When tourism e-visas were first launched in the country in September 2019, the aim of Riyadh’s National Tourism Strategy was for the kingdom to receive 100 million visits a year by 2030, compared to about 41 million at the time. 

    Al Khateeb also revealed that the tourist numbers comprise 77 million domestic and 27 million international visitors, generating revenues of SR100bn ($27bn) for the kingdom. 

    Saudi Arabia wants more growth, with the minister outlining future tourism plans that include increasing tourist numbers to 150 million by the year 2030, with a split of 80 million domestic and 70 million international tourists. 

    The minister also disclosed Saudi Arabia’s investment in human capital within the tourism sector. Over 100,000 young people received training in 2023, with 15,000 of them attending premier institutes globally to prepare for careers in tourism. 

    This initiative is part of a broader commitment to enhancing the sector’s workforce capabilities and is supported by the Human Resources Development Fund’s efforts to improve salary structures. 

    Al Khateeb also emphasised the importance of fostering a conducive environment for investment in tourism. 

    He pointed to the establishment of the Tourism Development Fund, which has already financed more than 50 projects with a total investment of SR35bn. Over the past year, it has signed several deals and agreements with hotel investors and operators such as Hyatt, Radisson Hotel Group and Minor Hotels for the development of new properties in the kingdom.

    Al Khateeb pointed to the establishment of the Tourism Development Fund, which has already financed more than 50 projects with a total investment of SR35bn

    Hotel pipeline

    Saudi Arabia’s tourism strategy is supported by a robust pipeline of hotel developments. While some of these are being developed by pure private sector developers, the majority are being built by the PIF subsidiaries that are leading the development of major projects across the kingdom, including the five official gigaprojects. 

    Over the past two months, there has been a raft of hotel projects launched in the kingdom, most notably for the Gulf of Aqaba development at Neom. They include Zardun, which will be a 4 square- kilometre tourism destination featuring three luxury boutique hotels comprising 100 rooms and suites. 

    In November, Neom also launched Siranna, a 65-key hotel in the Gulf of Aqaba.

    Other hotel projects are at the tendering stage. For example, Saudi Arabia’s Destinations Development Company, a wholly-owned subsidiary of the PIF, has issued a tender for the main contract to build the Monolith resort in the Al Ula region, and the Mohammed Bin Salman Foundation (Misk Foundation) has invited companies to bid for a contract to construct an Indigo-branded hotel and serviced apartments at Prince Mohammed Bin Salman Nonprofit City in Riyadh.

    According to regional projects tracker MEED Projects, there are $67bn-worth of hotel schemes in the kingdom at various stages of development. There are projects estimated to be worth $11bn in the study phase and $27bn-worth of projects under construction. 

    For construction contract awards, the hotel sector’s performance has been mixed. The past five years have been pivotal, with a total of $8.6bn in contracts awarded, the bulk of which came in the past two years. 

    After a lull between 2018 and 2021, there was a spike in 2022, with $3.8bn-worth of contract awards as development accelerated on key projects in the kingdom, such as The Red Sea Project, which includes a wide range of hotel properties. 

    In 2023, there were $2bn-worth of hotel construction contract awards, as the kingdom maintained a high level of investment in the sector, albeit at a lower level than in 2022. For 2024, by early February there had been $168m-worth of hotel construction contract awards.

    Welcoming guests

    The first hotels at Saudi Arabia’s gigaprojects, which aim to transform the kingdom’s economy by developing sectors such as tourism, have opened for business. 

    In October last year, Red Sea Global, which is developing The Red Sea Project and Amaala, welcomed guests to the Six Senses Southern Dunes, the first hotel to open at the destination.

    Other gigaprojects with significant hotel components include Neom, the cultural and historical destination of Diriyah, and Qiddiya entertainment city. 

    Hotels also form a critical part of the development of Al Ula; the holy cities of Mecca and Medina, which receive the majority of the kingdom’s religious tourists; and other destinations including Jeddah and regions such as Asir. 

     

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    Colin Foreman