The region’s most ambitious causeway projects

8 February 2023

 

The submission of feedback questionnaires and meetings with contractors for the planned second causeway connecting Saudi Arabia and Bahrain is the latest sign of potential progress on one of the region’s largest infrastructure projects.

Causeways have a chequered history in the region. The first causeway connecting Saudi Arabia and Bahrain was completed during the 1980s, and since then, it has had a transformative impact on the Bahraini economy. 

The project’s success has inspired other causeways. But while these schemes remain ambitions for many in the region, construction progress has been limited. The hope is that a successful second causeway linking Saudi Arabia and Bahrain will foster the delivery of other longstanding causeway plans.

These are the most ambitious causeway schemes that the region has planned:

 Second Saudi Arabia-Bahrain causeway

The second causeway between Saudi Arabia and Bahrain is the most likely to proceed. Planned by the King Fahd Causeway Authority, the $3.5bn project, which has been called the King Hamad Causeway project, is moving towards construction.

In 2021, senior government officials in Bahrain told MEED that the project was progressing towards tendering as financial studies had been completed.

The project was included in Bahrain’s $30bn Strategic Projects Plan that was announced later in 2021. As well as the causeway, the plan includes building new urban areas on five reclaimed islands to increase the country’s total land area by 60 per cent. It also comprises plans for a new airport.

The second causeway involves building a 25-kilometre road and rail crossing linking Saudi Arabia and Bahrain. It will follow the same alignment as the existing King Fahd Causeway.

It has been earmarked for delivery on a public-private partnership (PPP) basis. The King Fahd Causeway Authority appointed a consortium to provide transaction advisory services in late 2019.

The $8.9m consultancy agreement was signed with a consortium of Netherlands-headquartered KPMG, US-based Aecom and UK-based CMS. The team was tasked with working on developing the financing model, the required engineering specifications and design, as well as helping with the assessment and selection of the project’s developers.

Canada-based SNC Lavalin and UK-based consultancy firm PwC conducted the project due diligence study in 2017.

The existing King Fahd Causeway is operating at capacity. About 11.5 million cars cross the causeway every year, and the growth has been 6 per cent per annum over the past 10 years.

 Qatar-Bahrain causeway

There have also been suggestions that the proposed causeway bridging Bahrain and Qatar may be revived. In March 2022, Manama called for work to restart on the causeway joining the two countries.

“We in the Kingdom of Bahrain renew the call for the start of bilateral talks between the two sides in accordance with the mechanisms agreed upon in the Al-Ula statement,” said Bahrain’s undersecretary for land transportation and post in an official statement published by the official Bahrain News Agency.

The estimated $4bn Qatar-Bahrain causeway project was put on hold and the contracting consortium demobilised in 2010.

A joint venture of state-owned developer Qatari Diar Real Estate Investment Company and French contractor Vinci Construction Grand Projets led the consortium. The other consortium members were Germany’s Hochtief, Athens-based Consolidated Contractors Company (CCC), Dredging International from Belgium and the local Middle East Dredging Company (Medco).

The planned 40km bridge includes a four-lane motor crossing scheduled for completion in 2013 and two railway lines forming part of the GCC rail network.

The project also comprises 22km of bridges and viaducts, 18km of embankments and two 400-metre cable-stayed bridges. The causeway connects Ras Ashairij on the west coast of Qatar to Askar on the east coast of Bahrain.

The project was also known as the Friendship Bridge and was to be jointly funded by the Qatari and Bahraini governments, which intended to recover some of the construction costs by implementing a toll system on the bridge.

The crossing would cut the journey time between the two countries, which currently involves a detour through Saudi Arabia, from five hours to just 30 minutes.

 Saudi Arabia-Egypt causeway

The prospects for the causeway connecting the $500bn Neom project in Saudi Arabia and Egypt’s Sinai Peninsula across the Straits of Tiran improved last year after US President Joe Biden’s visit to Saudi Arabia.

After the visit, a joint communique issued by Washington and Riyadh referred to the development of Tiran Island.

“President Biden welcomed the arrangements by Saudi Arabia to remove the Multinational Force & Observers (MFO) from the Island of Tiran, including the removal of US troops there as part of the MFO mission, while preserving and continuing all existing commitments and procedures in the area,” it said. 

“This area of the Red Sea will now be developed for tourism and economic purposes, contributing to a more secure, peaceful and prosperous region.” 

The US-Egyptian-Israeli-backed MFO was founded in 1981 to oversee the terms of the 1978 Camp David Accords, which included the full Israeli withdrawal from the Sinai Peninsula.

In 2016, Egypt and Saudi Arabia agreed during a state visit to Cairo by King Salman bin Abdulaziz al-Saud to develop a causeway linking the two countries across the Red Sea. 

The agreement was made as part of a broader deal that would also involve Egypt ceding the sovereignty of the two Tiran islands to Saudi Arabia.

While details of the proposed crossing were never revealed at the time, it was understood to be a revival of a $4bn project announced in 2011. That scheme involved building a 32km crossing stretching over the Straits of Tiran from Ras Humaid in Tabuk, in the northern region of Saudi Arabia, to Ras Nasrani, close to the Egyptian resort of Sharm el-Sheikh.

Plans to link Saudi Arabia and Egypt are far from new. The development of a causeway was first mooted as far back as 1988. However, the idea has received additional focus in recent years following the launch of the Neom development in northwestern Saudi Arabia, which includes Ras Humaid. Part of the Neom scheme, the 170km-long linear city known as The Line, will extend from the promontory inland to the city of Tabuk.

UK-based Arup was reported to have been selected in 2019 for the next stage of the feasibility study for the causeway. 

Saudi Arabia was understood to be considering using a public-private partnership (PPP) model for the scheme, similar to other transport projects planned in and around the kingdom.

 Yemen-Djibouti causeway

A 28.5km causeway was planned to connect Yemen and Djibouti before the scheme was put on hold in 2010 until the governments of both countries signed the framework agreement for the project. The civil war in Yemen means it is unlikely the scheme will make any progress soon.

The estimated $20bn first phase involved building the link between the Yemeni mainland to the island of Perim in the Red Sea. Phase two would have then connected Perim with Djibouti.

The wider project also involves building two cities at each end of the link. The total investment required to construct the cities and the bridge is $200bn.

Dubai-based Al-Noor Holding Investment Company was developing the project.

In 2009, the company said it expected to award a build-operate-transfer contract for the first phase of the bridge and that three companies had expressed interest in funding and building the road and rail link. Denmark’s Cowi prepared the preliminary design for the crossing.

 UAE-Qatar causeway

In 2005, Abu Dhabi and Doha were reported to have been setting up a joint company to oversee the implementation of the proposed UAE/Qatar causeway.

The 40km causeway was expected to start near Sila in Abu Dhabi emirate and extend to the south of Doha.

The estimated $13bn crossing would have significantly cut journey times. At present, traffic between Qatar and the UAE has to pass through 125km of Saudi Arabian territory.

The scheme stalled shortly afterwards. Problems included difficulties with the route, which ran through Saudi Arabian territorial waters.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10571464/main.jpg
Colin Foreman
Related Articles
  • Neom requests revised Gayal wind proposals

    6 September 2024

     

    Neom’s energy, water and hydrogen subsidiary Enowa has requested that the final bidders submit updated proposals for a contract to build a 1,200MW wind farm catering to the gigaproject in Saudi Arabia.

    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.

    It is understood that PowerChina and Egyptian contractor Orascom are among the firms invited to bid for the Gayal wind farm EPC contract.

    The wind farm project site is approximately 35 kilometres northwest of the former town of Gayal.

    The project will have an estimated plot area of 164 square kilometres. The project duration is 31 months from the start of construction.

    The scope of work for the EPC contractors bidding for the scheme includes the design, supply and installation of wind turbine generators and foundations, three 380kV substations and control systems, meteorological towers, site roads, hard stands, crane pads and associated infrastructure.

    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.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12465111/main0411.jpg
    Jennifer Aguinaldo
  • 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.

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

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

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12464222/main3634.gif
    Jennifer Aguinaldo
  • Chinese companies win 95% of all Iraqi energy projects

    6 September 2024

    Commentary
    Wil Crisp
    Oil & gas reporter

    Companies 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.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12460160/main3355.jpg
    Wil Crisp
  • Region plugs in to electric future

    5 September 2024

    Commentary
    Colin Foreman
    Editor

    Read 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. 

    Much of Saudi Arabia’s oil consumption comes from the power sector, although this is changing as Riyadh embarks on an ambitious renewable energy programme. Another major contributor is combustion engines in automobiles. 

    Anyone who has experienced Riyadh’s traffic congestion in recent years will attest to the fact that Saudi Arabia has a lot of cars. 

    In the coming years, the plan is for the cars on Saudi Arabia’s streets to be electric rather than gasoline-powered.  

    This aim is supported by key initiatives involving establishing electric vehicle (EV) assembly plants in the kingdom and plants that will produce key components, most notably batteries.  

    For Saudi Arabia’s efforts and similar endeavours across the region to be successful, other factors will also need to be considered. Shifting from gasoline to electric will require upgrading infrastructure with charging points installed at service stations and in residential areas. 

    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. 

    Looking further ahead, if the region can successfully shift to EVs, it will prove that even the most oil-dependent economies can embrace change and lead the charge towards a cleaner and greener future.


    Must-read sections in the September 2024 issue of MEED Business Review include:

    AGENDA: 
    GCC ponders electric future
    Region on the cusp of EV production boom

    > CURRENT AFFAIRS:
    Outlook uncertain for Iraq gas expansion project
    Security concerns threaten outlook for Libyan oil sector

    INDUSTRY REPORT:
    Analysis of the outlook for the downstream sector
    > Global LNG demand set for steady growth
    Region advances LNG projects with pace

    > SAUDI GIGAPROJECTS: Communication gaps hinder Saudi gigaprojects

    > INTERVIEW: Legacy building at Diriyah

    > SAUDI STADIUMS: Top 15 Saudi stadium projects

    LEADERSHIP: Navigating the impact of digital currencies on forex markets

    > KUWAIT MARKET REPORT: 

    > COMMENT: Kuwait’s prospects take positive turn
    > GOVERNMENT: Kuwait navigates unchartered political territory
    > ECONOMY: Fiscal deficit pushes Kuwait towards reforms
    > BANKING: Kuwaiti banks hunt for growth 
    > OIL & GAS: 
    Kuwait oil project activity doubles
    > POWER & WATER: Kuwait utilities battle uncertainty
    > CONSTRUCTION: Kuwait construction sector turns corner

    MEED COMMENTS: 
    > Saudi World Cup bid bucks global trend for sporting events
    > 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

    > OPINIONThe beginning of the end

    BUSINESS OUTLOOK: Finance, oil and gas, construction, power and water contracts

    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/12460011/main.gif
    Colin Foreman
  • PIF and Hyundai award car plant construction deal

    5 September 2024

    Register for MEED's 14-day trial access 

    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.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/12457629/main.gif
    Yasir Iqbal