meed-logo

line1 line2 line3
SIGN IN / REGISTER

The way forward for the region’s energy transition

12 December 2022

Published in partnership with

Whichever way one looks at it, the world faces a climate emergency. In its most recent multi-agency report published in September, the World Meteorological Organisation (WMO) warns that there is an almost one in two chance that the annual mean temperature in at least one of the next five years will be 1.5°C higher than the 1850-1900 pre-industrial average. 

This figure is important because it would breach the maximum temperature rise set by countries under the terms of the 2015 Paris Agreement and underlines the lack of progress in reducing harmful emissions. 

“Floods, droughts, heatwaves, extreme storms and wildfires are going from bad to worse, breaking records with alarming frequency,” said UN secretary-general Antonio Guterres in the report.

“Heatwaves in Europe. Colossal floods in Pakistan. Prolonged and severe droughts in China, the Horn of Africa and the United States. There is nothing natural about the new scale of these disasters. They are the price of humanity’s fossil fuel addiction.”

There are multiple ways to reduce global greenhouse gas emissions, with a common thread among them being using technology as a solution. 

Whether by making gas turbines more efficient, producing new low-carbon or carbon-free fuels such as hydrogen, increasing renewable energy output, or ensuring homes, towns and cities are ‘smarter’ in their use of electricity, technological innovation presents a means for countries to lower their carbon outputs. 

All [the reports] stressed we are not on track to keep climate change below 2 degrees, or even keep the 1.5 degree target within reach. More work needs to be done

Mohamed Nasr, Egypt's lead negotiator at Cop27

Scale of the problem

In the series of six articles MEED has published in association with Siemens Energy, we have explored the chief challenges the Middle East and Africa regions are facing in the fight against global warming and some of the opportunities and potential solutions to overcome them.

The first hurdle is recognising the scale of the climate challenge. The Siemens Energy Middle East & Africa Energy Week in June highlighted the disconnect between the perception of progress and reality, even among industry professionals. 

When asked to quantify CO2 reductions in their country today and what they will be in 2030 compared to 2005, Energy Week participants estimated that total emissions had fallen by 23 per cent on average over the past 17 years. Only one-third correctly answered that emissions had not only failed to fall, but had actually risen by 50 per cent over the same period. 

“All [of the reports] stressed that we are not on track to keep climate change below 2 degrees, or even keep the 1.5 degrees target within reach. More work needs to be done,” emphasised Mohamed Nasr, director of the Environment & Sustainable Development Department at Egypt’s Foreign Affairs Ministry and lead negotiator for Egypt at Cop27 during the event.

The harsh reality of the situation has underscored the pressing need for more rapid action among countries in the region. For the wealthier oil-exporting nations of the Middle East, much of the emphasis over the past 18 months has been placed on developing a green hydrogen industry to produce cleaner fuels. This is reflected by the more than 50 new green hydrogen projects announced in the GCC and North Africa over the past 18 months, which have an estimated investment value of more than $150bn. 

On the other hand, the priority for many countries in sub-Saharan Africa is very different as they battle the energy trilemma of extending affordable and reliable electricity provision to their populations. Spending billions of dollars on greenfield hydrogen developments and their associated infrastructure is not an option for many. Instead, the focus has generally been on smaller, off-grid renewable energy capacity to resolve the trilemma.

Working in tandem

Regardless of the approach adopted, the private sector recognises that companies need to work more collaboratively in the drive toward net zero. A case in point is the newly formed Alliance for Industry Decarbonization.

Announced in early September by the International Renewable Energy Agency (IRENA) and Siemens Energy, the alliance has already grown nearly threefold from the original 13 international energy and industrial members. 

The new industry grouping aims to achieve country-specific net-zero goals faster by encouraging action to decarbonise industrial value chains and enhance the understanding of renewables-based solutions and their adoption by industry. 

The alliance met for the first time at Cop27, where its members played a prominent role in discussions and thought leadership. Ultimately governments recognise that without corporates worldwide investing in clean energy projects and technology, there is little hope that targets will be achieved.

The intergovernmental summit ended on 20 November with a historic accord on setting up a fund to help compensate poorer nations for the economic and social destruction caused by climate change. 

But while the agreement, a culmination of some 30 years of negotiations between developed economies and developing nations, was a major step in the right direction, there remains a lot more that needs to be done to avoid an environmental catastrophe, such as setting legally-binding emission reduction targets, for example. 

The good news is that technologies and know-how are increasingly available to solve many of these challenges.

What is now needed is the political will and collaboration among nations and companies to work together to overcome our greatest threat. 

In the words of Siemens Energy president and CEO Christian Bruch: “The energy transition is the biggest investment programme since the dawn of industrialisation. If governments, business and society work together, energy transition is a massive opportunity. There is no excuse for waiting any longer.” 

Related reads:

Click here to visit Siemens Energy 
https://image.digitalinsightresearch.in/uploads/NewsArticle/10426502/main.gif
MEED Editorial

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • EY bids low for Al-Dur 3 consultancy

    31 May 2023

    UK-based consultancy Ernst & Young has submitted the lowest bid for the consultancy contract for Bahrain’s next independent water and power producer (IWPP) scheme Al-Dur 3.

    It offered BD681,689 ($1.8m) for the contract to provide advisory services to the client for the project.

    The other bidding team, headed by KPMG Fakhro, offered BD758,072 for the contract.

    Bahrain’s Electricity & Water Authority (EWA) opened the technical bids for the consultancy contract in September 2022, as MEED reported.

    The Al-Dur 3 IWPP is expected to consist of a combined-cycle gas turbine plant with a capacity of 1,500MW-1,800MW and a seawater desalination plant with a capacity of approximately 50 million imperial gallons a day (MIGD).

    The power generation and water desalination plants are expected to produce early power and water in the summer of 2027, with full commercial operation in summer 2028.

    Al-Dur 3 will be Bahrain’s fourth independent utility scheme. 

    Al-Dur 2

    An earlier project, the Al-Dur 2 IWPP,  started full operations in June last year.

    EWA selected a team led by Saudi-based utilities developer Acwa Power to develop the project in 2018.

    The power generation plant is equipped with combined-cycle gas turbines and has a design capacity of 1,500MW.

    The desalination plant uses seawater reverse osmosis technology and can treat up to 227,000 cubic metres of water a day.

    The special project vehicle, Haya Power & Desalination Company, comprises Acwa Power, which maintains a 60 per cent share, Japan’s Mitsui with a 30 per cent holding and the local Almoayyed Contracting Group with a 10 per cent stake.

    A consortium of China’s Sepco 3, Power China and France’s Sidem was selected as the project’s engineering, procurement and construction contractor, while Acwa Power subsidiary Noma is the operation and maintenance contractor.

    The latest available figures show that Bahrain hit a peak capacity of 3,418MW in September 2018 against available system generation availability of 4,158MW.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10899780/main.gif
    Jennifer Aguinaldo
  • Leading Mena banks give little ground in 2023

    30 May 2023

     

    The past year has seen significant upheavals in the ranking of the Middle East and North Africa (Mena) region’s largest listed banks due to a combination of market conditions, mergers, acquisitions and new listings, according to the 2023 MEED Top 100 companies list.

    Weakening international investor sentiment amid higher interest rates, and concerns over the collapse of several US and Swiss banks, has perhaps been the most prominent factor in their performance.

    In a trend largely independent of actual performance, which regional banks have generally improved in the 2022-23 fiscal year – both in terms of gross revenue and the bottom line – many banks have found their market values reduced, with banks in the MEED Top 100 companies list shedding more than $85bn in value.

    Regional ranking

    Despite this, Al-Rajhi Bank and Saudi National Bank, although temporarily diminished in overall market capitalisation, remain the top two banks in the region by value, as they were in 2022. 

    In third place now is QNB, having just edged ahead of First Abu Dhabi Bank in value terms. Fifth place is occupied by Kuwait Finance House, which has risen significantly in value over the past year through its full acquisition of Ahli United Bank in a share swap transaction, displacing Riyad Bank.

    National Bank of Kuwait, Emirates NBD, Saudi Awwal Bank (formerly Saudi British Bank) and Alinma Bank remain in the same relative positions as last year.

    Outside of the top 10 regional banks, two improvers have been Abu Dhabi Islamic Bank and Mashreq Bank, both of which have seen their market capitalisation rise by about $2.5bn. In the case of Abu Dhabi Islamic Bank, its performance rose after reporting a 55 per cent rise in profits in 2022 and a further 43 per cent rise in profits in the first quarter of 2023.

    Mashreq Bank meanwhile announced a 270 per cent leap in its 2022 profits to $1bn, and a further 163 per cent surge in profits in the first quarter of 2023. Both banks have overtaken numerous peers in terms of equity market value.

    Qatar’s Dukhan bank joined the MEED Top 100 for the first time as a newly listed bank, having joined the Qatar Stock Exchange with a direct listing in February 2023. 

    Several major regional banks fell short of the list, the bar for which rose significantly in 2023 to a market capitalisation of $3.7bn.

    Middle East equities hold largely steady

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10897113/main.gif
    John Bambridge
  • Middle East equities hold largely steady

    30 May 2023

     

    The value of the top listed firms in the Middle East and North Africa (Mena) region held largely steady during the 2022-23 financial year as international investor sentiment wavered over the state of the global economy.

    Viewed through the lens of the MEED Top 100, an annual ranking of the largest Mena-listed companies, the market capitalisation of the top 100 companies stands at $3.83tn, having edged up by a slight 1.6 per cent from the $3.77tn in MEED’s 2022 listing.

    This almost static scenario contrasts with buoyant growth the previous year, when the region’s top stocks leapt in value by 23.4 per cent from only slightly above the $3bn mark amid higher oil prices and post-Covid growth optimism.

    The relative stability of the list also belies some significant downward sliding in the value of oil and gas companies, amid lower oil price projections, and banks, amid higher interest rates and the global banking concerns following the crises at several US and Swiss institutions. The value of Saudi Aramco alone, which accounts for about 55 per cent of the list’s total value, dipped by more than $200bn.

    Growth areas

    The value loss has been balanced by growth in other areas, including telecommunications and real estate – the latter having been particularly supported by a strong recovery in the UAE property market. New entries have also been added to the list following a spree of high-value initial public offerings (IPOs) in 2022 and 2023.

    Notwithstanding the overweighted presence of Saudi Aramco, the banking sector remains the largest contributor to the list, with 34 entities worth a combined $553bn. 

    There are also 16 utilities and telecoms companies worth a combined $369bn; 12 other oil and gas companies besides Saudi Aramco, worth a combined $234bn; and 21 companies in other areas of industry, including manufacturing, construction and logistics, worth a combined $206bn. 

    There are also 10 companies involved in services such as healthcare, retail and technology provision, worth $86bn, and six holding companies making up $270bn. The latter are led by Abu Dhabi’s International Holding Company (IHC), which is valued at $234bn after several years of value growth.

    IPO activity

    The Mena region had an exceptionally strong 2022 for IPOs, with regional stock exchanges seeing a total of 51 listings raise $22bn, close to a quarter of the $90bn raised on equity markets worldwide, according to a report by EY. Overall, it was 143 per cent more listings and 179 per cent more value than in 2021.

    While global IPO activity experienced a decline in both volume and value compared to the previous year, the Mena region remained strong. Both the UAE and Saudi Arabia stand out in terms of the number and value of their recent listings.

    Abu Dhabi had two record-breaking IPOs, first with Borouge in June 2022, in an offering that raised $2bn, and then with Adnoc Gas in March 2023, which raised $2.5bn. 

    Saudi Arabia also went on a listing spree in the fourth quarter of 2022, with seven IPOs on the Saudi Stock Exchange (Tadawul) raising $4.7bn in proceeds. The largest came from Saudi Aramco Base Oil Company (Luberef), which raised $1.3bn. The Tadawul saw its first dual listing, with the UAE’s Americana Restaurants listing on both the Saudi and Abu Dhabi exchanges in December in an IPO that raised $1.8bn.

    The 2023 MEED Top 100 list also incorporates the September 2022 listing of Dubai’s road toll system Salik on the Dubai Financial Market, which raised $1bn; the November 2022 listing of Saudi utility company Marafiq, which secured $897m; the November 2022 listing of Dubai’s Empower, which garnered $724m; and the March 2023 listing of Abu Dhabi’s Presight AI, which brought in $496m.

    The region has largely retained its IPO momentum heading into 2023, with the first quarter seeing 10 new listings raising a total of $3.4bn. Despite a 33 per cent drop in the number of IPOs and a 14 per cent decrease in value compared to the first quarter of 2022, the region outperformed the global market, which saw a 61 per cent drop in IPO volume to 299 IPOs for the quarter, raising $21.5bn.

    Uncertainties over the global economic outlook nevertheless continue to weigh on the markets in 2023, and the GDP forecasts for the Mena region are generally lower than in 2022. Despite these brakes on activity, there is optimism for an ongoing pipeline of large government-backed and private IPOs.

    Major upcoming IPOs include the offering of 15 per cent of the shares of Adnoc Logistics & Services through an IPO on the Abu Dhabi stock exchange, scheduled for June 1. 

    The listing of Abu Dhabi’s Emirates Global Aluminium is also still on the cards, as is the potential listing of Saudi Arabia’s First Mills on the Tadawul. Abu Dhabi-based Lulu Group is also considering a dual listing in Abu Dhabi and Saudi Arabia.

     

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10896832/main.gif
    John Bambridge
  • Contractors prepare Oxagon tunnelling bids

    30 May 2023

     

    Contractors are preparing to submit bids in June for a contract to build tunnels connecting the offshore elements of the Oxagon industrial city at Neom to the mainland.

    The design-and-build contract involves digging a 6.5-metre-diameter tunnel using a tunnel boring machine (TBM) under the sea that will link the Neom Connector with the offshore elements of Oxagon port. It will house utilities including water pipelines, fibre optic cables and electricity cables.

    Prospective bidders for the contract include:

    • Abuljadayel Company (local)
    • Bessac (France)
    • Binladin Contracting (local)
    • Daewoo (South Korea)
    • Dogus (Turkey)
    • Hassan Allam (Egypt)
    • Petrojet (Egypt)
    • Saudi Pan Kingdom Company (Sapac)
    • Shanghai Tunnel Engineering Company (China)
    • Soletanche Bachy (France)

    Crown Prince Mohammed bin Salman launched Oxagon in late 2021. It will include onshore elements as well as floating structures offshore. Construction works on the 48 square-kilometre, eight-sided industrial city have already started.

    Port construction

    Work is also under way for the industrial city’s port, with Neom tendering a contract to complete the next phase of the Duba port expansion at Oxagon industrial city.

    The prospective bidders are Belgium’s Deme with Greece’s Archirodon; Van Oord of the Netherlands with South Korea’s Hyundai Engineering & Construction; a Belgian joint venture of Jan de Nul and Besix; Netherlands-based Boskalis with France’s Soletanche Bachy; and China Harbour Engineering Company.

    The tender for the project’s second phase follows the award of a contract to deliver the first phase of the port expansion. A team of Boskalis, Besix and the local Modern Building Leaders (MBL) was awarded that estimated SR3bn ($800m) contract in mid-January.

    The scope of the Duba port expansion package includes excavation and dredging, revetments for channel widening, demolition, container terminal quay expansion and earthworks, in addition to the development of a flexible quay, a roll-on/roll-off (RoRo) berth and quay walls to a marine services berth and a coast guard facility.

    Jacobs is the main design consultant with Moffatt & Nichol, IGO and Trent as the main subconsultants.

    Port operations

    Several crane and container equipment contracts have been awarded to Saudi Liebherr Company and Shanghai Zhenhua Heavy Industries Company (ZPMC).

    Saudi Liebherr was awarded contracts for 10 mobile harbour cranes for SR200m.

    ZPMC has been awarded contracts for 10 ship-to-shore gantry cranes, 30 electric rubber-tiered gantry cranes and six automated rail-mounted gantry cranes for over SR1bn. ZPMC will work with Siemens Europe to deliver the automation components. 

    An expanded Duba port is a critical component of Oxagon and the broader Neom development, as it will allow greater volumes of materials to be imported for the project. With an expected investment value of $500bn, Neom is the largest programme of construction work in the world.

    Neom says the first container terminal will be operational by the beginning of 2025.

    The management of Duba port was transferred from national maritime regulator Mawani to Neom in 2022.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10895791/main.jpeg
    Colin Foreman
  • Dewa commissions Lusaily reservoir

    30 May 2023

    Dubai Electricity & Water Authority (Dewa) has announced that it has commissioned the third phase of its water reservoirs in the Lusaily area.

    The project has a storage capacity of 60 million imperial gallons (MIG) and investments totalling AED157.4m ($42.9m).

    Dewa says the project supports its efforts to enhance water security and keep pace with the increase in demand.

    “We continue to strengthen our robust state-of-the-art infrastructure and adopt innovation and the latest tools for anticipating the future,” says Saeed Mohammed al-Tayer, managing director and CEO of Dewa.

    “This supports the Dubai Integrated Water Resource Management Strategy 2030 and the UAE Water Security Strategy 2036. Our sound scientific planning has helped us keep pace with the growing demand for water in Dubai, according to the highest international standards.

    “In 1992, Dewa’s production capacity of desalinated water was 65 million imperial gallons a day (MIGD). Today it has increased to 490MIGD,” he adds.

    Dewa also confirmed its plans to commission other reservoirs in Dubai this year.

    “In addition to the water reservoir in Lusaily, we are working on three other reservoir projects in Nakhali, Hassyan and Hatta. These are expected to be completed this year and next year. With the completion of these projects, the storage capacity will increase from 881MIG currently to 1,151MIG of desalinated water,” says Al-Tayer.

    The local Ghantoot Gulf Contracting was awarded the contract to build the third phase of the Lusaily reservoir in 2018.

    Ghantoot was also working on another major Dewa project. However, in October 2022 Dewa said it had terminated its contract with the consortium Ghantoot Transport & General Contracting and Ghantoot Gulf Contracting on its Al-Sheraa headquarters building project in Dubai.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/10895790/main.gif
    Colin Foreman