Utilities Middle East - Sept 2010 by ITP Business Publishing

Middle East

ESSENTIAL INSIGHTS FOR MIDDLE EAST WATER, GAS AND ELECTRICITY PROFESSIONALS

September 2010

• Vol 4. Issue 9

Licensed by Dubai Media City

WATER WAYS

Transmission systems in the Middle East

GCC POWER PLAY

Should regional power providers be chasing peak loads?

y re b d twa e p el sof h is ted n ig stica s de phi t lan ly so p er sing w Po crea in

HARBOURING AMBITIONS Khalifa Port Industrial Zone uncovered

BAHRAIN SNAPSHOT Island Kingdom’s utilities under the microscope

BUSHEHR REACTOR LAUNCHES IRAN INTO THE NUCLEAR GAME Analysis: The regime’s ambitious enrichment plans have provoked stern suspicion BusinessPublication Publication An An ITPITP Business

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CONTENTS

September 2010 Vol 4. Issue 9

Power generation in the GCC is chasing peak loads.

2 COMMENT Whatever the solution to power shortages, it comes at a price.

4 REGIONAL UPDATE A round-up of some of the biggest headlines in the region.

10 WEB PAGE Highlights of the rich content at www.utilities-me.com.

12 NEWS ANALYSIS Florian Neuhof examines Iran’s fledgling nuclear power project.

Iran is not about to abandon its nuclear ambitions.

The Khalifa Port and Industrial Zone underlines Abu Dhabi’s grand economic ambitions.

12 34

17 SECTOR ANALYSIS How will GCC governments deal with rising peak power demand? How to position your firm in the power generation market.

23 WATER TRANSMISSION Water transmission systems in the region are expanding rapidly.

26 PLANT DESIGN Design software makes powerplants cheaper to built and run.

31 ELECTRICAL TESTING Testing and diagnostics of T&D equipment is no longer neglected.

34 HARBOUR VISIONS Plant design requires sophisticated IT.

Electrical testing and diagnostics in the Middle East.

SITE VISIT: Khalifa Port Industrial Zone’s utilities infrastructure.

39 PEOPLE METER Peter Neuschaefer from Waagner Biro Gulf talks sustainability.

42 PROJECTS & TENDERS The latest projects and tenders.

46 DATES FOR YOUR DIARY Conference & Exhibition digest.

31 www.utilities-me.com

47 BAHRAIN SNAPSHOT Whats going on in Bahrain’s power and water sector?

September 2010

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Utilities Middle East 1

COMMENT Middle East

The price of power

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Tackling the region’s power shortages comes at a cost GETTY IMAGES

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Iran is paying a heavy political and economic price for its first nuclear power plant.

o nuclear power has come to the region at last. Once the fuelling of the Bushehr reactor is complete this month, the 1,000MW plant is ready to contribute to Iran’s electricity grid. While experts say that there is little danger that the reactor will serve the hardline regime in their (assumed) quest for a nuclear arsenal, neighbouring countries and Western powers are still concerned, given Iran’s history of covert operations to acquire weapons components. Fuelling this concern is Iran’s refusal to halt its uranium enrichment programme. The mullahs claim that the programme is for a peaceful purpose, and point to their ambitious plans: 20,000MW to be generated from nuclear power by 2025. Ambition is a good thing, but not when it borders on megalomania. Having maneuvered itself into diplomatic isolation, Iran is struggling both for funds and technical expertise. A second Bushehr is unlikely in the coming decades. With its insistence on the enrichment programme, the regime opens itself up for the inevitable question: Why enrich, if not for military purposes? “They haven’t been able to answer that question favourably,” comments Sam Ciszuk from IHS Global Insight. This sort of intent is not expected from other Middle Eastern countries, and Saudi Arabia and Kuwait are some of those exploring the option of following Abu Dhabi’s example of building nuclear reactors sans the international fallout. But even if pursued with undoubtedly clean intentions, nuclear is no easy answer to the power

shortage in the region. For one thing, a surge of demand would lead to a shortage of skilled manpower, a scarce resource in the region at any rate. On the back of demand for nuclear power elsewhere in the world, construction cost would rise. “The market has turned from a buyer’s into a seller’s market,” says Holger Rogner, section head at the UN’s International Atomic Energy Agency. While nuclear might still be a worthwhile option to pursue, decision makers would do well to think for alternative ways to solve their power problems. Power outages, the most noticeable symptom of a stretched supply, are the result of generation capacity being outstripped by peak loads. In the summer months, utilities ﬁnd it hard to cope with rising demand, especially in the daytime heat. Are we just chasing peak loads, asks Abhay Bhargava from consultancy Frost & Sullivan. Would it not be wiser to entice industry, and households, to consume less during peak hours? The innovative use of tariffs could so reduce the need to build ever more generation capacity. This would still entail investment, as the electricity grid would have to be upgraded, and smart metering would become essential. But it would be a more energy efﬁcient solution, and pave the way for the mass use of renewables. One thing is for sure: Whatever the solution, there will be a price for it.

Florian Neuhof, Editor Email: ﬂorian.neuhof@itp.com

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REGIONAL UPDATE

Bidders slash price for Rabigh Doosan’s proposal remains cheapest as Alstom and Hyundai also lower offers South Korea’s Doosan Heavy Industries & Construction has cut by US$559.9 million a proposal it made for the construction of a 2,400MW power plant in Saudi Arabia, an industry source told the Reuters newswire. The plant, in Rabigh on the western coast of Saudi Arabia, would have capacity of 2,400 to 2,800MW, some 12-14 percent of the 20,000MW the SEC plans to add through 2018, at an estimated total cost of $80 billion. Doosan remains the lowest bidder to build the plant for state controlled Saudi Electricity Co. Doosan revised its bid to $3.38 billion from $3.94 billion. The other two bidders, Hyundai Heavy Industries (HHI) and France’s Alstom have also revised their bids to $3.70 billion and $3.83 billion respectively, the source said. A Doosan official, who declined to be named, confirmed his company was the lowest bidder for the project. He added a decision on the project was likely to be taken late in August or early September. Hyundai Heavy confirmed it made

and that the company expected a decision to be taken in the coming weeks. He declined to comment on the level of Alstom’s offer. Bidding for the plant had closed on December 15. The bids were below SEC’s cost projections. An SEC executive had estimated the cost of the plant to be at around $4 billion, down from an initial estimate of around $5 billion. In April this year, Saudi Electricity secured a $4 billion soft loan from the government. The bulk of the loan will ﬁnance the construction of the plant in Rabigh where the giant King Abdullah Economic City is under construction. The Rabigh power plant is expected to be completed in the summer of 2014.

The SEC is benefitting from revised bids for Rabigh.

a revised offer but declined to conﬁrm the prices. A spokesman for Alstom said no decision had been made yet

20,000MW Increase in power consumption in 2009.

DEWA increases power and water KAFD district cooling contract production in the first half of 2010 goes to Tabreed and SNC Lavalin The Dubai Electricty and Water Authority (Dewa) added two gas turbines and two desalination units to the Station M power and water plant during the ﬁrst half of the year, according to Dewa CEO Saeed Mohammed Al Tayer. The gas turbines raise the capacity of the plant by 400MW and 35 million gallons per day. An auxiliary boiler has also been added. Dewa will incease the capacity of the plant during the second half of the year by

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the same amount by adding a further two gas turbines and a pair of desalination units, as well as four auxiliary boilers, said Al Tayer. “Dewa’s projects are going ahead according to a ﬂexible strategic plan taking into consideration the different factors that may inﬂuence the demand on its services, especially the peak load of electricity which increased this year to reach 9.6 percent compared with that peak load recorded in 2009,” he added.

September 2010

A consortium comprising of Saudi Tabreed and SNC Lavalin are to supply district cooling to the ofﬁce towers in the King Abdullah Financial District in Saudi Arabia’s capital Riyadh.. With a total of 100,000 tonnes of refrigeration, it will be the largest of district cooling project in the Kingdom to date. The consortium will design and build the district cooling facilities, as well as operate the system for ten years.

The project will be implemented in two phases. The first 50,000 tonnes be commissioned in the first quarter in 2011, while the second phase will be commissioned in the first quarter in 2012. The contract has been awarded by the Rayadah investment company” (RIC), the developer of King Abdullah Financial District. Saudi Tabreed is a closed joint stock company majority-owned by ACWA Holdings and Tabreed. www.arabianbusiness.com

REGIONAL UPDATE

HIGHLIGHTS

Tabreed’s Q2 earnings growth fails to impress

95 PERCENT OF NETWORKS LINKED TO SAUDI GRID

Recapitalisation and share dilution undermine confidence The share price of the National Central Cooling Company (Tabreed) failed to respond to the news of strong increases in Q2 revenue and net income, as a recapitalisation scheme and the prospect of share dilution dampened investor appetite. Net income of the Abu Dhabibased district cooling company rose to AED40.3 million, more than double the figure posted a year earlier. Revenue increased by 35 percent to AED247.7 million. Tabreed attributed the strong performance to a growth in the core business of providing chilled water, resulting from more cooling plants coming online and an increased customer base. In the second quarter, Tabreed added four plants to its fleet, bringing the total to 44, 10 more than a year earlier. Installed cooling capacity rose to 449,625 (gross) TR, from 352,100 TR a year ago. “Our strategy has been to focus on the core business of chilled water, and these robust first half results reflect growth in the Company’s chilled water business and improved operational efficiencies,” said Sujit Parhar, Tabreed’s CEO.But profits were also boosted by the revaluation of a convertible sukuk, which added a non-cash, non-operational gains of AED7.1 million to the profit margin. Without these gains, net profits for first six months of 2010 would have been up a mere 3 percent year on year, not the current 83 percent.

SHARE REDUCTION

ment charges in Q1, Tabreed is currently undergoing a restructuring programme. The company had to write down assets to the tune of AED1.16 billion, and had to take up a $354 million bailout loan from Abu Dhabi’s state investment vehicle Mubadala. Tabreed recently announced that the board approved a reduction of outstanding shares that would boost the share price above 1 dirham on the Dubai Financial Exchange, enabling it to carry out a rights issue in future. Under this plan, capital can be reduced by 80 percent, which amounts to AED790 million, or 970 million shares. This 5:1 conversion would leave existing shareholder ownership proportions intact, and lead to a share price of around AED1.90, estimates the brokerage EFG Hermes. “Completing our recapitalisation program will give Tabreed the right balance sheet for growth, and today’s announcement towards the capital reduction is an important step in this process,” said Khaled Al Qubaisi, managing director at Tabreed.

MUTED RESPONSE Yet the stock market remained largely unimpressed by the growth ﬁgures.

Shares on the Dubai Financial Exchange, closed at AED0.357 on August 10, the day the earnings were announced, only marginally higher than a day earlier, and well below the high of AED1.16 the shares were traded at in mid-October 2009. “Given the severity of the impairment charges that the company announced at the beginning of the year and the subsequent recapitalisation proposed by the company, we believe that there is signiﬁcant downside risk to the equity value of Tabreed,” wrote Abid Riaz, director at EFG Hermes, in a research note. The loan provided by Mubadala also poses risk for shareholder value, he said. “With Mubadala, the company’s largest shareholder, providing short-term funding of AED1.3 billion in exchange for long-term capital, we believe existing shareholders will be diluted further. In our mind, questions also remain as to the state of the business post the proposed recapitalisation, and therefore we remain sellers of the stock.” Tabreed currently owns and operates district cooling plants via wholly-owned joint-ventures and subsidiaries Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.

449,625 Tabreed’s installed cooling capacity by Q2 2010

The Saudi Electric Company has completed linking transmission lines in most of the Kingdom, Minister of Water and Electricity Abdullah Abdul Rahman AlHussayen said in a statement to the Saudi Press Agency on Friday. “About 95 percent of electricity supply networks have been connected to a single national grid,” said the minister.

UAE TO BECOME SOLAR POLYSILICON PRODUCER MBM Holdings, a Dubaibased investment firm, has announced it will build a US$400 million plant producing solar-grade polysilicon in the UAE. The plant will have a total capacity of 2,500 tonnes per annum of high-quality product and is expected to start production in early 2012. Polysilicon is the material used in solar panels. MBM has formed MBM Solar Holdings for the project, which will be developed jointly with ERC Private Limited Singapore.

JAPAN HELPS TUNESIA ON ROAD TO SUSTAINABILITY Japan and Tunisia have signed a memorandum of understanding (MoU) aimed at boosting cooperation in the field of renewable energy, reported the Ansamed website. The accord is expected to be implemented through a joint energy project in Borj Cedria and include the creation of an eco-village and an international centre promoting renewable energy.

After having been hit by impairwww.arabianbusiness.com

September 2010

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Utilities Middle East 5

REGIONAL UPDATE

Ras Girtas starts operations Phase I of largest Qatari independent power and water project complete. The ﬁrst phase of the multi-billion dollar Ras Girtas power and water plant in Ras Laffan Industrial City in Qatar has been completed, reports the Dow Jones newswire. The initial phase, Project C, has the capacity to generate 1,833MW of power. Once fully operational, the project will have a total capacity of 2,730 MW. With the completion of the ﬁrst phase, a total of eight gas turbines have become operational. The desalination units will start functioning from October 2010. The plant would be fully operational in April 2011. Saad Shareeda Al Kaabi, chairman of the Ras Girtas Power Company (RGPC) said the plant would be one of the key providers of desalinated water and power in the country. The plant, the latest and largest in the country, will be capable of providing 63 million gallons per day (MIGD) of potable water once the project becomes fully operational. Faisal Obeid Al Sidiqi, executive manager of RGPC claimed the country’s power generation capacity will double and water production will increase by more than 30 percent with the completion of the plant next year. The project work is progress-

The Ras Girtas IWPP will have an initial generation capacity of 1,833MW, rising to 2,730MW by 2011.

ing according to the original schedule, said Al Sidiqi. The US$3.8 billion plant has eight gas turbine generators, eight heat recovery steam generators, four steam turbine generators and 10 desalination units. Mitsui is the main contractor for the plant, which will give Qatar a total power generating capacity of 9,039 megawatts and a desalination capacity of more than 320 million gallons per day. The huge development of power generation and desalination capac-

ity is being done to ensure sufﬁcient power and water to meet an expected growth in demand and also for the possibility of exchanging power with the other GCC countries. The RGPC is jointly owned by the Qatar Electricity and Water Company (QEWC); a consortium of Japan’s Mitsui, France’s Suez Energy International and Qatar Petroleum. Mitsui was awarded the engineering, procurement and construction contract which it sub-contracted to Hyundai Engineering and

Construction Company of Korea, Mitsubishi Heavy Industry of Japan and Sidem of France. Qatar General Electricity and Water Corporation (Kahramaa), which would purchase power and water from the Ras Girtas plant, is the biggest partner of the project. Kahramaa, being the sole distributor of water and electricity in the country, is expected to distribute an additional 1,600 MW of power and 20 MIGD of water with the partial commissioning of the project.

Aggreko to raise dividend by 50 percent after H1 profit jump Aggreko, the world’s biggest provider of temporary power, on Wednesday said it would raise its interim and final dividend by 50 percent after posting a jump in first-half profit, bolstered by contracts for major global sporting events. The FTSE 100 firm said it would pay an interim dividend of 6.55p per share, after events such as the US Superbowl and FIFA World

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Cup, for which it provided 300 generators, generated £85m ($131m) in revenues in the first half for its local business arm. “Aggreko delivered another strong performance in the first half of 2010 with reported revenue increasing by 17 percent and reported trading profit increasing by 23 percent,” chairman Philip Rogerson said in a statement. “We believe that we will make further

September 2010

good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations. The FTSE 100 ﬁrm said it would pay an interim dividend of 6.55p per share, after events such as the US Superbowl and FIFA World Cup, for which it provided 300 generators, generated £85m ($131m) in revenues in the ﬁrst half for its local business arm.

“Aggreko delivered another strong performance in the ﬁrst half of 2010 with reported revenue increasing by 17 percent and reported trading proﬁt increasing by 23 percent,” chairman Philip Rogerson said in a statement. “We believe that we will make further good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations.” www.arabianbusiness.com

REGIONAL UPDATE

Gas shortage in Eastern GCC Summer peak load deprive industry of power, leading to lost revenue Companies in the east of the GCC have seen production suffer from the severe shortages in natural gas in the summer months. A widening gap between supply and demand for the resource have accounted for losses at Ras Al Khaimah Cement Company and Construction Materials Industries & Contracting in Oman. Ruurd S. Abma, chief operating ofﬁcer of RAK Gas, said much of the gas goes to the main power plants, creating a seasonal imbalance. “In the winter there is an oversupply as a lot less power is being used and we can narrow the gap between demand and supply. In the summer there is a shortage. The demand is always higher than the supply. It’s a complicated issue: cement companies are still running on gas though a few are operating on coal.” He adds: “We’d love to get our hands on more gas. In the winter we may buy in from other companies when they have a surplus, then in the summer we’re on our own, relying on our own supplies. A fall in natural gas supply was one of the reasons cited by RAK Cement in its ﬁnancial results for

Industry has been loosing money as gas shortages plagued the Eastern GCC this summer.

the ﬁrst half of this year, along with a decline in the building market. Mike Richardson, general manager, said this was mainly a summer issue. “This year it’s been

not too bad but we’ve still been affected for the last year which is why we kept that comment [in the company statement]. This summer we expected no gas.”

“The connection is to the substation and the companies are still trying to negotiate collectively for the price of connection,” he says. Richardson adds that there are ﬁnished towers in the emirate that are yet to be connected to an electrical supply. Some companies have managed to avoid the squeeze through their own resources. RAK Ceramics, the biggest company of its kind in the world, told Construction Week that it has seen no shortage of power as it owns its own plant. Other emirates are looking at alternatives. The cement factory for the Sharjah Cement & Industrial Development Co. – which produces sulphate-resistant and non-resistant Portland cement – runs on coal. RAK Gas, the state natural gas utility of Ras al Khaimah, says little can be done to address the shortage except an enhanced ability to gain supply. Construction Materials Industries & Contracting posted a net loss of OR34,474, compared with a net proﬁts of OR337,935 for the same six months last year - partly, it says, due to problems with fuel.

ACWA moves beyond Saudi with Oman IWPP purchase Saudi power company buys 58 percent stake in Barka 1 IWPP. ACWA Power International, a Saudi developer, owner and operator of power and water projects, on Monday announced its purchase of a majority stake of the Barka 1 independent water and power project (IWPP) in Oman had been given regulatory approval. The acquisition is part of the company’s strategy to expand beyond Saudi Arabia www.arabianbusiness.com

borders, ACWA said in a statement. ACWA is buying a 58 percent share from the AES Corporation, the IDB Infrastructure Fund and their subsidiaries. The remaining stake in Barka 1 is owned by Multitech LLC at 7 percent, while the other 35 percent is ﬂoated on the Muscat stock exchange. The deal had been agreed to last December, and had been awaiting regulatory approval.

Barka 1 is part of the ACWA’s growth strategy and ambition to expand internationally. “We are delighted to add this asset into our portfolio and to take the ﬁrst step beyond our home country,” said Paddy Padmanathan, ACWA’s CEO. “Barka 1 IWPP will be important to our ambitious but well deﬁned target of growing the asset base to 30,000 MW gross contracted capac-

ity of power and 5 million cubic meters per day of gross desalinated water by the year 2014,” he added. The Barka 1 IWPP has a capacity of 456MW and 91,000 cubic meters per day of desalinated water. Located 60 kilometres northwest of Muscat, the plant feeds into the North Oman grid. The sole offtaker of both power and water is the Oman Power & Water Procurement Company (OPWPC).

September 2010

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Utilities Middle East 7

REGIONAL UPDATE

SEC shares hit two year high Additional 30 percent increase predicted after tariff structure changes. The share price of the Saudi Electric Company (SEC) continued its ascent, hitting a 28 months-high in spite of reports it had award a US$60 million contract to boost network capacity in Riyadh. Shares of the monopoly provider of electricity closed at 14,15 Saudi riyals (SR) on Saturday, July 31, up 0.7 percent on the day, having risen from SR10,8 since June 5, when the company announced it would increase its tariffs for commercial, industrial and governmental users of electricity. Ahmed Al Qahtani, analyst at NBC Capital in Jeddah, said that the new tariff structure will increase full year 2011 revenue by SR 3.2 billion, and predicted a further increase in the share price. “The impact of the new tariffs will ﬁrst make itself felt in the third quarter. We believe that the share price will rise by another 30 percent in the next couple of months,” said Al Qahtani. The SEC faces investments in the power generation and transmission and distribution infrastructure of SR 300bn ($80 billion)

The SEC has seen its profits increase after it raised its tariffs for electricity.

until 2018, as demand for electricity in the Kingdom is rapidly expanding. But Qahtani believes that only a small amount of the extra revenue will be invested, with most of the funding being raised on the debt markets via sukus and and direct loans. “Most of the additional money will go straight into net proﬁt,” he said. In 2009, the SEC posted a full

year net proﬁt of 1,17 billion net proﬁt. The new tariff has increased rates by 9.6 percent for non-households, with private users still

paying 3.5 percent less than production cost, Reuters quoted Abdullah al-Shehry, governor of the Electricity and Co-generation Regulatory Authority at the time. The increase raises the average tariff for all users to SR0.137, up from SR0.125 previously, said the govenor. The SEC has signed a SR 223 million ($59.46 million) deal with a local contractor to boost the capacity of its network in Riyadh, the Jeddah-based Okaz daily reported. The deal involves connecting the news Hittin No. 9005 substation station to the electricity grid with a voltage of 132kv, the paper reports, citing Ali Al Barrak, chief executive of the utility which has a monopoly on electricity generation, transmission and distribution in the kingdom.

3.2 billion Predicted full year revenue in 2011, in Saudi Riyals Source: NBC Capital

Saudi Arabia is heading for green building regulation Saudi Arabia could have mandatory green building regulation by end of year. Green building regulation could become mandatory in Saudi Arabia by the end of 2010, as the government and the industry is working towards establishing a common standard, say people in the industry. “We should have binding regulation by the end of the year,” said said Ali Nazzal, sales and operations manager at ABB Smart Home and Intelligent Buildings Controls.

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The Ministry of Electricity is working with the Green Building Council and companies such as ABB and Siemens to establish a standardised system for energy and water savings in buildings, similar to the American LEED standard. Once this has been worked out, it will be made mandatory, thinks Nazzal. “In Saudi Arabia we have started to see how important energy efﬁciency is,” he adds. ABB have just won a contract to

September 2010

implement smart building technology in the 21-storey Waseel Tower in Riyadh, the first office tower to adopt energy efficient technology in the capital. The project will reduce power consumption and carbon emissions by 30 percent, says ABB. ABB’s KNX technology will allow both tenants and the building’s facilities management staff to control all the applications inside their offices, including lighting, heating, ventilating, and air conditioning, as well as room access and shading.

The system also detects the occupancy of each ofﬁce suite. The company has so far won three contracts in the Kingdom to apply its smart technology to this end: The Princess Noura University, the King Abdullah Financial District, and the Information Technology Communications Complex, all in Riyadh. With mandatory regulation in place, business for his line of business is going to be brisk in the Kingdom, believes Nazzal. www.arabianbusiness.com

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WEBPAGE

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The high-voltage direct-current transmission (HVDC) system in China’s rainy Yunnan province stretches over nearly 1,500 kilometers .

ONLINE NEWS

SPOT POLL

Kuwait concerned over safety of Iran’s nuclear plant Kuwait’s deputy premier and foreign minister stepped into the debate about Iran’s ﬁrst nuclear power plant by raising concerns about its safety.

Hezbollah calls for Lebanese nuclear power plant Hezbollah chief Hassan Nasrallah called on Lebanon to consider building a nuclear power plant in the energy-starved nation.

ADPC tendering utilities contracts for Khalifa Port Industrial Zone The ADPC, in charge of constructing the Khalifa Port and Industrial Zone (KPIZ), is in the process of procuring core utilities infrastructure contracts.

10 Utilities Middle East

1. Fuel transfer into Bushehr started 2. Bidders lower price for Rabigh power plant 3. SEC board approves $3.9bn for projects 4. KAFD district cooling contract awarded 5. Iran announced increased power generation 6. UAE and US sign co-operation agreement 7. ACWA moves beyond Saudi Arabia 8. Dewa mandates HSBC as IWPP advisor 9. Aggreko to raise dividend after proﬁt rise 10. Israel has eight days to hit Bushehr, Bolton

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September 2010

Are Iran’s nuclear ambitions a threat to stability in the region?

Yes 63% No 27% Don’t know 10 % www.utilities-me.com

NEWS ANALYSIS

A satelite image of the Bushehr nuclear reactor on the cost of the Persian Gulf.

Iran’s lonely walk down the nuclear path Iran’s insistence on continuing enrichment programme leaves international community guessing at the regime’s intent 12 Utilities Middle East

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September 2010

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NEWS ANALYSIS

Getty Images

“Iran has been suffering from power shortages for years now” Sam Ciszuk, IHS Global Insight

poses. In addition, Iran has signed a fuel repatriation agreement, which stipulates that spent uranium will be shipped back to Russia. With these precautions in place, Bushehr is unlikely to pose a signiﬁcant proliferation risk.

Getty Images

concerns of Western powers, and the US and Israel in particular, that Iran is pursuing a nuclear weapons programme. Only days before the commencement of the fuelling process, John Bolton, the former US envoy to the United Nations, seemed to implicitly endorse an Israeli air strike on the site, stating that without intervention, “Iran will achieve something that no other opponent of Israel, no other enemy of the United States in the Middle East really has and that is a functioning nuclear reactor.” In reality, the likelihood of an attack on Bushehr is remote, not only because there are more worthwhile targets to hit. The fuelling process is being observed by the UN’s International Atomic Energy Agency (IAEA), who will ensure that none of the fuel is being siphoned off for military pur-

national sanctions. The mullah’s will be loth to destabilise their rule by scrapping subsidies and are too entrenched in their international pariah status for the sanctions to be rescinded. “Iran has been suffering from power shortages for years now. They do sit on big gas resources, but they haven’t been able to develop them quickly enough to meet spiraling demand,” says Sam Ciszuk, an energy analyst at IHS Global Insight.

NUCLEAR RATIONALE Iran’s hardline regime has insisted all along that its nuclear programme is of an entirely peaceful nature. Skeptics might ﬁnd it hard to believe, but the rationale for nuclear energy is strong. The regime, far from universally accepted since it usurped power from the Shah Reza Pahlavi in 1979, has been generously subsidising basic commodities, which include power and water, to prop up the country’s ailing economy, undermined by the nepotism of the ruling elite and successive rounds of inter-

Ali Akbar Salehi, Iran’s nuclear chief.

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n August 21, amid nationwide celebrations, Russian engineers started loading fuel into the Bushehr plant, Iran’s controversial 1000MW nuclear power project located on the coast of the Persian Gulf. Once the required 80 tonnes of uranium fuel have been installed, Bushehr will come online this month, according to Iranian ofﬁcials. This moment has been long in the coming. Construction on the reactor was started in the 1975 by Siemens, who abandoned the project after the Shah’s rule was replaced by the Islamic Republic in 1979. Work on the plant was resumed by Russia in 1995. Bushehr has been at the centre of much controversy, based on the

Image captures the moment on August 21st the first nuclear fuel rod is loaded into Iran’s Bushehr reactor, 35 years after the project began.

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Utilities Middle East 13

NEWS ANALYSIS

CHERNOBYL-ON-SEA: IS BUSHEHR SAFE? Getty Images

The Chernobyl nuclear reactor after the meltdown

Only a few days after the fuel transfer was started in August, Kuwait became the first neighbouring country to voice the concerns held by many in the region: Does Iran possess the necessary expertise to prevent an accident at the Bushehr nuclear power plant? “We received Iranian assurances in addition to Russia assurances saying that the technology used in this station is sophisticated technology,” said deputy PM and foreign minister Sheik Mohammed Sabah Al-Sabah. “I will be worried because there is a nuclear station that is very close to me regardless of it being in Iran or any other location ... So we want to make sure that the technology used is of high level.” Bushehr, on the coast of the Persian Gulf, is within 400 kilometres of Saudi Arabia, Kuwait, Qatar and Bahrain. The concerns of Iran’s neighbours are not entirely without

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substance, thinks Sam Ciszuk, analyst at IHS Global Insight. “The Iranians operations don’t have the best reputation right now, they had a much better reputation a few decades ago, all has been deteriorating,” he says. “What happens if there is a kind of Chernobyl kind accident?” But Holger Rogner, section head at the UN’s International Atomic Energy Agency (IAEA), is less concerned. “In my opinion, the Russian’s are building safe nuclear reactors, which have been tried and tested elsewhere,” he says, pointing out that the plant had been nearing completion when Siemens abandoned the project in 1979, and that the subsequent additions have been state of the art. “The Russians have an interest in everything working out smoothly. They want to remain active on the export market, after all,” he adds.

September 2010

“The construction of one of these facilities will begin by the end of the year” Ali Akbar Salehi, Iran’s nuclear chief, on the enrichment programme

This means that despite sitting on the fourth largest reserves of oil, and the second largest reserves in natural gas, Iran is experiencing a shortage of feedstock. The problem is greatly exacerbated by the long standing sanctions imposed on the country, which have prevented the purchase of modern oil extraction equipment. Oil is the main source of revenue for the state. But many of the ﬁelds are old, and in the absence of modern equipment increasing amounts of gas are pumped into the ground to extract the oil, further depleting gas reserves. “Iran has come to a siture ation where they have to balance at their needs, they can’t meet all their th gas needs, and keeping the oil production high is necessary for the state. So trying to produce power by other means makes economical sense to them,” says Ciszuk.

is currently pursuing an enrichment programme at a site in Natanz. According to Salehi, another 10 such sites are in the pipeline, and “the construction of one of these facilities will begin by the end of the (current Iranian) year (to March 2011) or the start of next year.” A week later, Iran’s ﬁrebrand president Mahmoud Ahmadinejad signed the law that calls for continued enrichment of uranium to 20 percent level, reported the Iranian news agency IRNA. But the regime’s grand visions clash with its means. Having maneuvered itself even further into diplomatic isolation with its insistence on going ahead with the enrichment programme, Iran will be struggling to ﬁnd a country or a company willing to provide the necessary expertise. Even Russia, having honoured its agreement over Bushehr,

AMBITIOUS PLANS, S, LIMITED MEANS Encouraged by its success with Bushehr, the regime’s me’s nuclear programme is nothing g if not ambitious. Last month, Alaeddin eddin Boroujerdi, the head of the Iranian ranian parliament’s Commission on National Security and Foreign n Policy, told the state-run IRNA news agency that another 20 nuclear lear reactors are under construction. on. A total of 20.000MW are to be generated enerated from nuclear power by 2025.. To ensure a steady ady supply of fuel, Iran willl be expanding its uranium enrichment programme, according to Iran’s Nuclear Energy Organisation chief Ali Akbar Salehi. The regime

Sam Ciszuk, IHS Global Insight

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NEWS ANALYSIS

will not want to take up another such politically sensitive contract, believes Ciszuk. Furthermore, the growing interest in the nuclear energy, across the region and worldwide, means that energy companies are in no rush to embroil themselves in risky business, says Holger Rogner, section head at the IAEA: “The market has turned from being a buyers to being a sellers market. And even companies that are still looking for contracts will give preference to politically safe projects over establishing themselves in Iran.” It is equally questionable whether Iran possesses the funds necessary to pursue the expansion, given that the sanctions and state subsidies are shrinking state coffers.

The only other way to gain access to the necessary technology is to reverse engineer Bushehr. But this process is time consuming, as well as expensive. “Even if they have the money, reverse engineering would take a very long time. A second nuclear power plant within 15 to 20 years time looks very hard to achieve, let alone a 20 000MW generation capacity. That looks very unrealistic for a good few decades,” says Ciszuk.

WHY ENRICH? A sober assessment of Iran’s ability to expand on its nuclear energy capacities leads to the inevitable question: Why is the regime pushing ahead with its uranium enrichment programme when it will not

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Nuclear power generation capacity envisaged by Iran by 2030

be able to use the fuel for civilian use in nuclear reactors? “They haven’t been able to answer that question favourably,” says Ciszuk. By the time Iran is able to bring online another nuclear plant, the country will be host to a massive stockpile of enriched uranium. This has intensiﬁed suspicions about Iran’s true intentions. Once the uranium enriched to 20 percent levels, turning it into weapons grade is a fairly Getty Images

The Bushehr nuclear reactor will be coming online this month, according to Iranian officials.

20 000MW uncomplicated process, according to Ciszuk. This has heightened speculation that Iran is secretly pursuing a weapons programme, even though, as Rogner says, “a smoking gun has not been found yet”. Rogner understands the international concerns, but can also see the logic to the Iranian point of view: “The Iranians will be saying ‘We don’t even have access to spare parts for civilian purposes, so how can we expect to be conﬁdent in attaining the necessary fuel (for Bushehr)?’ That’s why they will want to be selfsufﬁcient at all costs. Economically this doesn’t make any sense, an enrichment plant only becomes viable at about 10 to 12 gigawatt of nuclear energy production capacity, but from an energy security point of view it does.” Nevertheless, as the enrichment programme continues, so does the threat of a military strike against Iran’s nuclear installations. While Bushehr is an unlikely target, Israel or the United States could be tempted to strike at the enrichment facility at Nantanz.

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Utilities Middle East 15

NEWS ANALYSIS

Ciszuk believes this possibility to be remote, however. “The US is clearly not keen on it. They are keeping the threat alive, in order to provide a stick when it comes to negotiations. But it’s a very tough thing to do and the fall out will be tremendous,” he says. Those considerations will also encourage the US to restrain its regional ally Israel, which feels distinctly uneasy about the prospect of a nuclear armed Iran. Yet, it is doubtful whether Israel even has the capabilities to hit a heavily defended site at such a great distance.

VICIOUS CIRCLE While a military strike thus seems doubtful, the fourth round of sanctions imposed on Iran by the United Nations in June are very real. One of the prime considerations of the sanctions was avoiding the mistakes of the UN sanctions against neighbouring Iraq in

“The market has turned from being a buyers market to being a sellers market” Holger Rogner, IAEA

the 1900s, which not only failed to destablise Saddam Hussein’s rule, but arguably strengthened his grip on power. Consequently, the sanctions are far more tailored, and are a thorn in side of the regime. “They are quite crippling but not in an immediate way, which I think makes a lot of people say the they aren’t working, “ says Ciszuk. “But they are crippling, because the oil and gas industry has very big problems to get hold of modern technologies, and the Iranian oil and gas sector is aging, they do need a lot of enhanced oil

Holger Rogner, section head, IAEA.

recovery techniques, which raise production from mature and declining oil ﬁelds.” As the provision of cheap energy to the population is the economic foundation for the regime to survive, and a rapprochement with the west seems incompatible with its beliefs, the sanctions in many ways strengthen the case for continuing to go down the nuclear route in the mullah’s eyes. “They are struggling to get enough gas onstream, and have to prioritise between sending it to power plants and using it for oil production. That is creating a vicious circle, and forces a rationale for nuclear power plants,” concludes Ciszuk. With the regime strengthened after crushing the reformist movement in the wake of last year’s contentious election, tensions in the region are unlikely to ease off any time soon.

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September 2010

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GCC POWER GENERATION

emand for electricity in the region is closely linked to the need to provide cooling to its inhabitants. In the hot summer months, electricity consumption spikes to a yearly high. Similarly, daytime use of energy far outstrips nighttime use, as air conditioners battle it out with the scorching heat. It is thus unsurprising that peak loads is a key consideration to anyone analysing the regional power sector. Abhay Bhargava, who is industry manager for energy and power systems at Frost & Sullivan, sees a constant struggle to keep power generation capacity ahead of peak demand. “Peak demand will be increasing until 2020, and you see megawatt generation trying to follow up,” he says. “The question that comes to mind: Whatever the government invests in generation, are they really just chasing peak loads? And is that the right way to handle your investments, or is there something else you can do? “ To underline his point, Bhargava points out that European and US power companies typically try and have a margin of around 25 percent between peak demand and installed capacity. In comparison, demand in Kuwait reached 99 percent of

Abhay Bhargava, industry manager at Frost & Sullivan.

POTENTIAL MITIGATORS TO AN IMPENDING PROBLEM • Supporting frameworks for public private partnerships (legal, regulatory etc.) • A revised approach to market pricing/ subsidising – tariffs that reflect higher pricing at peak loads • Interconnection with other region’s grids, e.g. Africa • Aim at building alternate infrastructure based on incremental profits that are attainable from hydrocarbons sold at market prices • Encourage grid connected renewables, e.g. Abu Dhabi’s recent move • Increasingly lobby and support for a move towards smart grids • Mandating energy efficiency measures at points of consumption and production Source: Frost & Sullivan

capacity in July. Saudi Arabia experienced blackouts this summer as peak demand exceeded capacity. In Sharjah, power outages have become a common feature in the summer, as the emirate is unable to secure sufﬁcient gas feedstock after a delivery arrangement with Iran failed to materialise. Sharjah serves as a good example for an overreliance on gas, a problem that is not going to go away any time soon. “Lets look to the future:

In 2020, were still talking about an excessive reliance on gas, and if you start looking at wind and other renewables that’s a really small percentage of the total,” says Bhargava. It is not that there have been no efforts made to diversify away from gas. Abu Dhabi has taken the lead on the nuclear front, with a four nuclear reactors coming online from 2017. Saudi Arabia, and Kuwait are amongst the other countries looking into the nuclear option.

POWER GENERATION BY TYPE 49.2% 31.6%

10.9% Steam turbine

ga gas turbine

6.6%

1.7% combined cycle

diesel

others

Finding solutions Faced w with an ever rising demand deman for electricity, GCC governments have to adapt their govern policies to ensure sufficient policie power generation.

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Utilities Middle East 17

GCC POWER GENERATION

GCC REGION: INSTALLED CAPACITY VS PEAK DEMAND 50 44.6

INSTALLED CAPACITY

40.9

PEAK DEMAND

30 23.6

16.3 12.6

10 5.3

KSA

UAE

Both countries have commissioned studies looking into the feasibility of nuclear power, and Kuwait has signed a Memorandum of Understanding (MoU) with France for

QATAR

10.5

4.5

4.0

KUWAIT

OMAN

cooperation in developing the nuclear sector. Yet nuclear is no easy ﬁx. One of the big hurdles is creating adequate regulation, something that

3.6

2.8

2.5

BAHRAIN

cannot be put into place overnight. “There are still a lot of regulatory constraints that impact the nuclear option, and it does take long to go down that path,” says Bhargava.

Furthermore, a rush to building up nuclear power capacity across the region could lead to shortages in the supply of fuel, and technical expertise, especially as the interest in this form of energy generation is not constrained to the GCC, but to the entire Middle East. “If everyone hops on the nuclear bandwagon, you are going to end up with higher than projected cost. This is important from an investment perspective, and also when comparing different fuels.” So far, there is little indication that enough is being done to train up a sufﬁcient base of skilled manpower, thinks Bhargava. Renewable power similarly making headway in the GCC, with Abu Dhabi once again taking the leading role. The UAE’s biggest emirate has pledged to produce seven percent of its energy needs from renewable sources by

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September 2010

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GCC POWER GENERATION

is the pressure on power providers to ramp up their installed capacity to meet the worst case scenario.

GCC INSTALLED GENERATION CAPACITY BY COUNTRY 47.6%

GRID SOLUTIONS

3.0%

SUBSIDISE RENEWABLES

5.2%

13.4% 5.7% 25.2% QATAR

KUWAIT

2020, and is engaged in a number of projects, ranging from building the world’s second largest concentrated solar power plant to initiating a programme for solar panels on the roof of private homes. Signiﬁcantly, Abu Dhabi is also implementing a form of feed-in tariff to accompany these efforts. Feed-in tariffs are common across the world, and are a quasi-subsidy encouraging the generation of power from renewables on a small and medium scale. To Bhargava, tariffs are the crux of the matter, and the key tool at the disposal of governments to solve their power conundrum. Currently, GCC utilities are selling electricity to households and industry at subsidised rates. Whereas in the US rates vary between US$0.06 and $0.11/KwH, Abu Dhabi sells its power for only $0.04/KwH. Saudi Arabia, which recently hiked its rates, is still selling at around $0.04-0.05/KwH. Rates like these encourage wasteful consumption, and increase the burden on power generation. Governments are hesitant to increase tariffs, fearing that this will make the nascent industries they are trying to foster. While sympathetic to such concerns, Bhargava points out that higher electricity costs have not made industry uncompetitive elsewhere. “Of course you want to make sure the industry is competitive, but the US still manages to pro-

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OMAN

BAHRAIN

duce at those rates and are not being pushed out of the global set up.” He believes that tariffs can be used to curb consumption at peak times, so bringing down the peak loads, without inhibiting economic growth. Companies should be able to adjust their production patterns to work around peak hours. “If you are capable enough to restructure your manufacturing activities, increasing consumption at times that are not peak load, you stand to beneﬁt as well. So the choice is still there. Its not monopolistic or dictatorial in that sense, and the tariffs will become competitive.” If the peak load can be reduced, so

Another problem with subsidising electricity is that the only way to sell at below production cost is to provide cheap feedstock. This represents a huge loss in proﬁt, as oil and gas that could fetch good money on the international markets are instead sold at a low price to domestic power producers. “You are actually selling it at below the market rate, the same gas that could be sold at $80 is now being sold at a 25 percent discount,” points out Bhargava. This practice continues unabated, with Saudi Arabia recently announced that it would increase its power generation based on crude oil. Instead of using their raw materials to produce cheap fossil fuel based energy, GCC countries should sell some of this feedstock abroad at the market price, and use the resulting proﬁts to invest heavily in renewables, says Bhargava. “People always ask how you can subsidsise the capital costs of renewables. All you need is a marginal shift to exporting some of the domestically committed hydro-

GCC member states have not been idle in terms of grid, with the GCC interconnection grid connecting the entire region by 2012. The grid is being built to prevent power outages by shifting power from one country to the next, and even laying the groundwork for a regional power market. While Bharava is enthusiastic about the grid, he does concede that GCC countries broadly have the same peak hours, limiting the opportunity to reduce the peak loads through the timely shift of power from country to country. There is, however, the possibility of extending the grid. Saudi Arabia and Egypt have been in talks about linking their grids with media reports predicting a tender for a US$1.5 billion project of this kind in January. Ambitious minds see the GCC linked with the EU and the Mediterranean countries, and the Desertec project, which aims to generate solar energy on a massive scale in Northern Africa. Whatever the solution to the region’s power problems, it will not be found without thinking outside the box.

PROJECTED GCC PEAK DEMAND AND GENERATION CAPACITY 200

1500

Peak Demand (GW)

Energy Generation (GWh) 160

160

1200

1100.0

120

900

115

370.0

400.0

650.0

600

Generation (‘000 GWh)

UAE

Demand (GW)

KSA

carbons for proﬁts to invest in new renewables projects. “

300

2009

2010

2015

2020

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Utilities Middle East 19

SECTOR ANALYSIS

Opportunity abounds Continued opportunities in the GCC power market calls for solid positioning of companies wishing to pursue these opportunities, writes AnnMarie Carbery Antoun, director at energy consultancy Contax Partners. Steam Turbines: The lack of gas availability is pushing power plants in Saudi Arabia to favour the use of steam turbines.

istorically, the power sector has been the largest of the energy sectors in the GCC, accounting for a 30 percent share of energy investment over the past four years. Collectively, the GCC countries produce around 273 billion kWh per year of electricity, largely from oil or gas fuelled power stations. Economic growth in the region, however, has strained the infrastructure of the world's largest oil exporters, and as a result power supplies remain tight. Certain countries in the GCC often experience power

THE CONTAX PARTNERS METHODOLOGY Over the past 25 years, Contax Partners has been developing a robust opportunity pipeline methodology to ensure that contractors, service providers and suppliers do not miss potential opportunities and are informed and positioned to target the right opportunities. Contax Partnersâ&#x20AC;&#x2122; optimised approach to opportunity management begins with the gathering of market intelligence on projects and the market as a whole and these key inputs are used to stock the opportunity pipeline For example, of the 45 GW of electricity generated in 2009 in Saudi Arabia, only 2 GW was generated from combined cycle (CC) gas turbine (GT) units. This intelligence supports the fact that in the upcoming five years many of the simple cycle gas turbines in the Kingdom (485 out of 549 units are simple cycle) have plans to be upgraded, thus placing a significant demand on certain pieces of equipment and related upgrade services in the country. This information allows Contax Partners to identify all the relevant projects that are impacted by this market insight, and that may reflect potential opportunities for a particular client.

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September 2010

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Utilities Middle East 21

SECTOR ANALYSIS

shortages and temporary blackouts due to tight supply margins. As power demands continue to rise with estimates suggesting that the annual growth in GCC power demand is around seven to 10 percent, some Gulf countries continue to take steps towards easing the power crunch. As such, the power sector continues to attract signiﬁcant investment in the GCC. In 2010, the power sector is forecast to capture 25 percent of total GCC energy capex spend for the year, and during the period 2010 – 2012, the power sector will account for 18 percent of GCC energy capex spend.

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SAUDI ARABIA: THE BIG SPENDER Saudi Arabia will be one of the main contributors to power project spend during this period, and a large percentage of the investment in the power sector in Saudi will be driven by Saudi Electricity Company (SEC), the main company responsible for Power Generation, Transmission & Distribution in the Kingdom. The investment requirements in the Saudi power sector are driven significantly by the expected rise in peak loads between now and 2019 (see figure 1). In 2009, SEC’s total existing generation capacity was wa around 45GW, compared to an expected peak load of between 43 and 44GW in 2010. margin between supply This tight m and dema demand further highlights the need ffor additional capacity over the ccoming years. the huge forecast expanWith th population growth in the sion in po over the coming years, GCC ov strategic emphasis placed the stra industrial diversification, on indu existing strain on utilithe ex ties across the GCC, and tie tthe subsequent continued investment into capacity additions in the region, it is clear tthat there will be an aabundance of opporttunities in the GCC

September 2010

SEC EXPECTED PEAK LOADS 2010-2019

TOTAL PEAK LOADS (GW)

Saudi Electricity Company’s (SEC) expected peak loads are set to increase from around 43 GW in 2010 to 68.5 GW by 2019 (Source: SEC)

power industry. In the west of Saudi Arabia, for example, there is a severe lack of gas availability, thus pushing power plant expansion there to favour the use of steam turbines, and placing a dependence on steam technology. Meanwhile, in combination with the dependence on steam technology, the huge reliance in the country on heavy fuel also places a signiﬁcant

dependence on the use of auxiliary boilers. These, plus many other examples, represent an extensive landscape of varied opportunities in the power sector in Saudi and other GCC countries for which contractors, service providers and suppliers to the power sector need to be well positioned if they are to capitalise on such opportunities.

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WATER TRANSMISSSION

Water ways Water transmission systems in the Middle East are expanding at a rapid pace, which means good business and not a few challenges for the companies responsible for designing and engineering them

ater not only sustains life, it also fuels growth. In a region experiencing rapid population growth as well as increasing urbanisation and industrialisation, business in building and upgrading water transmission system is brisk. The Middle East is thus a growth area for companies that model and design such systems. “The Middle East is extremely important to us, its one of the fastest growing, if not the fastest growing part of our water business,” says Richard Zambuni, global marketing director, geospatial, at Bentley. “And the reason the Middle East is so important is for a syndrome of issues: you’ve got very fast population growth, and the population is nearly all in densely populated cities. The infrastructure is being

SUDHIR KUMAR, ENGINEERING GROUP MANAGER AT MWH

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built, in most cases, it doesn’t preexist. Its being built now to service these growing populations.” On top of building new infrastructure comes the need to replace ageing existing water transmission systems. Small wonder then that Bentley have recorded impressive growth ﬁgures over the last four years, with compounded growth of around 25 percent in the Middle East and Africa.

“Recent development shows how important the regional market is to MWH” Sudhir Kumar, MWH

MWH, one of the other big players in wet infrastructure design and engineering, are similarly committed to the region. Last year, the company made the Middle East region one of its four distinct geographic business areas, alongside Europe, the Americas and Asia. “Recent development shows how important the regional market is to MWH,” says Sudhir Kumar, principal civil engineer and engineering group manager at MWH in Dubai.

DESALINATION TO DESTINATION One of the determining factors of water transmission in the region is the heavy reliance on desalination to produce potable water. This means that drinking water often has to travel long distances before it arrives at cities and developments located inland. Zambuni points out that most big cities in the region are either costal, or can otherwise be supplied by river water. Nevertheless, this does not apply for all major urban centres. Delivering desalinated water to places that are both far from the sea and high in elevation,

such as Al Ain, Riyadh and Harare is expensive, says Kumar. “After being desalinated at Jubail and Ras Alzaur in Saudi Arabia, water is pumped over 400 kilometers inland through a number of pipelines to the capital city of Riyadh making it one of the most expensive water supply schemes.” Long distance water conveyance necessitates careful planning, taking into account issues such as security of supply, water age, risk of contamination and water disinfection requirements. To this must be added higher capital, operation and maintenance costs.

AT A LOSS The key challenge for water distribution worldwide is minimising the amount of water lost in transit. While water loss might be associated with burst water mains ﬂooding roads by the general public, the real damage is done by small leaks and creaks in piping and joints. Losses can range from 10 percent to up to 60 percent. The reasons for this loss can be manifold. Materials are a common culprit, especially if age comes into play. “In older systems you’ve got things like cast iron pipes. Cast pipes typically fracture at some point, and they are subject to catastrophic fail-

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Utilities Middle East 23

WATER TRANSMISSSION

CASE STUDY

SOLVING BEIRUT’S WATER PROBLEMS MHW’s Sudhir Kumar writes about the Awali-Beirut Water Supply Scheme. In contrast to neighbouring countries to the south and east, Lebanon has adequate water resources but at presently lacks transmission systems in areas where it is most needed. The capital Beirut currently suffers from a severe water shortage, a situation anticipated even before the 1970’s conflict, and this project is intended to alleviate the situation by transferring water from the Awali River in South Lebanon to Beirut. The current potable water demand in Beirut is estimated at 780 million litres per day (MLD) with a predicted deficit of 368 MLD during the driest month (October) of an average year, a deficit of 368 MLD is predicted resulting in intermittent water supply in Beirut. The consultancy MWH has been engaged by the Council of Development and Reconstruction to update a feasibility study which was carried out in 1994 and to prepare tender documents for the scheme. This includes treatment and transmission of 520 MLD water in two phases with the possibility of expansion to 780 MLD. Phase I will treat and transmit only 260 MLD which will go some way in meeting the current deficit. Essential components of the scheme are: • Abstraction of water from the existing tunnel at Joun (south of Beirut) and delivery to the treatment plant at Ouardaniye via a four kilometres long, 2800mm diameter tunnel.

24 Utilities Middle East

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• Treatment to accepted potable water standards at Ouardaniye. • Transmission of treated water from Ouardaniye to the Khalde via a 22 kilometre long, 2800mm diameter tunnel • Transmission of treated water from Khalde tunnel to number of new reservoirs located in South Beirut via a 30 kilometre gravity main. The abstraction and delivery points are 35 kilometres apart. In between lies a highly varying topography characterised by hills and steep valleys. The two options explored were a water tunnel and coastal pipeline for the transmission of water from Joun to Khalde. After a detailed techno-economical analysis, the tunnel won out. The scheme makes use of gravity flow by taking advantage of available hydraulic head between extraction and delivery points. The preliminary cost estimate for Phase 1 (260 MLD) is US$350 million. The project works is divided into three contract packages covering 2800mm internal diameter x 26 kilometres of water tunnels in Package 1, 260 MLD Water Treatment Plant in Package 2 and 30 kilometres of water pipelines and service reservoirs under Package 3. MWH has already prepared the tender documents for Package 1 and 2, the prequalification procedure for both the packages is expected to start towards year end. The project will be completed in three years.

September 2010

ure more than plastic piping. Where you’ve got cast iron pumps and joints that have degraded over decades, that’s when you get the more serious problems,” explains Zambuni. In densely populated areas, this problem is exacerbated by the fact that utilities tend to pump water through the system at a higher pressure. This pressure then forces more water through leaks, increasing the water loss. “What you need to do is model the demand curves, model the pressure curves, make sure you’ve got the right sized pipes, valves, make sure the network is constructed in the right way to not stress it at any point. So the pressure you’re using in the network is as even as possible,” says Zambuni. What else can be done to keep water loss to a minimum? “The old saying ‘prevention is better than cure’ is equally applicable to water supply systems” says Kumar. “Proper planning, design and high quality construction is the first step in minimising water leaks and wastages.” “There are a number of factors, from planning and design to the operation and maintenance stage that affects the system efficiency,” he continues. “Correct hydraulic design parameters and suitable pipe material selection are some of the key parameters during planning and design stage that can severely affect the distribution system if not selected appropriately.” Equally, appropriate construction methodology and procedures are important. “Pipe bedding, soil compacting, pipe jointing, thrust restraints at bends, flexible joints near structures are some of the key features that require strict quality control during project execution to avoid premature failure of the network. We have witnessed a number of water networks that experienced multiple failures during commissioning due to poor construction,” says Kumar.

Zambuni believes that utilities in the Middle East have yet to recognise the importance of some of those aspects, with design and construction seen as more important than looking to optimize the operation of the system once its operational. “At the moment the focus is on building and designing good networks, and getting the infrastructure in the ground, and less on operational optimisiation, as there is in Europe and the US. That hasn’t come yet, but its just a matter of time.”

WASTEWATER – STAY BIG, GO SMALL? Given the cost of transmission systems, and the fact that human settlement in the Middle East can be sparse and intermittent, there have been calls for a greater decentralisation of wastewater plants. This would entail both a scaling down of

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WATER TRANSMISSION

RICHARD ZAMBUNI, BENTLEY

wastewater processing plants and of water transmission networks. Both options have their cost advantages. Large, centralised plants are low in production cost, yet high in transmission cost, while the opposite is true for decentralised plants. As the experts point out, a decision on the size of the plant should be taken on the basis of every individual case. “There is no ﬁt for all solutions and each case should be techno-econom-

ically evaluated considering key factors such as project catchments, topography, total demand, ground condition and other design requirements,” says Kumar. But centralisation is the better option in most cases, thinks Zambubi: “Plants are expensive to build and operate, typically you have relatively few wastewater plants because they are expensive pieces of kit to put together. So its still cheaper to have quite a lot of pumping than to have a lot of wastewater plants.” Zambuni points also to the increas-

ing trend towards green solutions, which is evident especially in power generation, where decentralised small-scale plants contribute to electricity production. Likewise, ecologically friendly wastewater treatment plants are starting to come to the market. He feels that the time is not right for those solutions from a cost perspective: “Water is different from other utilities, such as distributed power generation through biomass, for instance. With wastewater, the economics point to larger plants in smaller numbers still.”

“At the moment the focus is on building and designing good networks, and less on operational optimisation”

ECONOMICS STILL FAVOUR LARGE SCALE PLANTS AS OPPOSED TO DECENTRALISED WASTEWATER TREATMENT OPTIONS.

www.utilities-me.com

September 2010

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Utilities Middle East 25

DESIGN SOFTWARE

gn i s de ing e th n br f y o d ca n t i lex , an atio p om ation oper c he plic and t ce k du ion u red wor truct s elp ates cons h re itig of a w s, m ost t f So ces he c pro wn t do

26 Utilities Middle East

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September 2010

www.utilities-me.com

DESIGN SOFTWARE

ower plants are large and complex operations that require the cooperation of different engineering disciplines. As designers and engineers start putting together the various elements of the plant, ranging from the layout to the integration of instrumentation and controls, the design process is in a constant state of flux. One of the most significant benefits of software is that it helps to coordinate the various design threads in real time. “The problem is, that in general for power plants to be efficient they need to be large, and so therefore it becomes more of an integration issue for all the different disciplines that are involved in the design of a plant. Typically that will involve some architecture for the buildings, structural engineering and mechanical engineering for the equipment, as well as electrical engineering, control and instrumentation, and so on,” says Mark Biagi, solutions executive for power generation at Bentley. “Making sure all major plant components are designed and accounted for, and that each engineering group affected by those components has the most up-to-date information is one of the most important considerations,” says Keith Denton, vice president, global power industry at Intergraph. “Power plant designers spend much more time reacting to change and validating data than they do in creating the data in the first place. Software helps to reduce the negative impacts of those changes by notifying users earlier in the process so they can avoid purchasing incorrect components or producing incorrect drawings,” he adds. Ensuring that the vast amount of data needed for the construction of a plant is collected and distributed in the right way is crucial, agrees Mike Blalock, global industry director, energy and utilities, at IFS. “To succeed, a system must be imple-

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the projected cost. “It is crucial that EPC contractors can have confidence that the design can be constructed because, particularly in the Middle East, were you have contractors who are working to fixed price scenarios. They procure and construct the power plant for a fixed fee and if they get that wrong that could dramatically affect their profitability,” says Biagi.

CO-OPERATION IS KEY

SAVINGS FROM THE START

Reducing construction costs is especially important when the construction of a power plant is contracted out, as is often the case in the Middle East. Engineering, procurement and construction (EPC) companies need the certainty that a plant will be completed, and completed at

To achieve cost efficiency, collaboration between various stakeholders is important, thinks Guy Barlow, industry strategist at Oracle Primavera. And software can help achieve this cooperation. “Owner operators and engineering, procurement and construction companies are beginning to recognise the need for an integrated technology solution that enables all construction participants to focus on the project with full collaboration and visibility.” “The benefits of accurate information being available to all parties, both internal and external, of a dynamic repository of plant data are significant,” agrees Blalock. “These capabilities result in more effective and efficient operations across the entire plant lifecycle, whether it is in facilitating collaboration with contractors during construction, streamlining commissioning, facilitating licensing, improving

Software can also help to keep costs down during the construction phase, says Denton: “The construction phase is by far the largest initial cost of the plant, so by lowering construction costs the life cycle cost can also be improved.” Intergraph have devised the SmartPlant Construction programme, which helps construction planners and ﬁeld personnel make use of design data as soon as it is available. This enables immediate decision making when executing installation work and tweaking project schedules, and visualises potential problems and alternative actions.

Mike Blalock, IFS.

Keith Denton, Intergraph.

“The construction phase is by far the largest initial cost of the plant” Keith Denton, Intergraph

mented to support the setting of standards for data collection and for the collaboration of all stakeholders in the enterprise. This dynamic plant repository of data is critical to the overall success of the endeavour.”

September 2010

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Utilities Middle East 27

DESIGN SOFTWARE

effectiveness in O&M in operations, and so on.” Barlow points to integrated programme management (IPM) software, which streamlines design and construction. “It must not simply be another tool to reduce project risk, but be a vehicle for optimising the asset lifecycle management process in the planning, building, and operating phases of the capital asset,” he says. Using software during the design process can also help to reduce risks and lifecycle costs for power plants. “By employing software at this stage, power plants are able to identify common scheduling pitfalls that may result in misleading schedule or risk analysis results,” adds Barlow. He speaks of Enterprise Project Portfolio Management (EPPM), which gives an overview of the plant at the design stage and helps optimise resources and the supply chain. “EPPM solutions have the ability to reduce costs, manage changes, meet delivery dates and ultimately make better decisions, all by using real-time data once the plant is fully operational.” Reducing life cycle cost is particularly relevant

for power generation in this region. Public private partnerships are becoming increasingly common in the Middle East, and for the private companies involved, keeping life cycle down is vital. “The costs of any decision taken at the design stage are magniﬁed during the life cycle of a facility,” says Biagi.

SMOOTH OPERATING Software is, of course, also used to run power plants once they are in operation. The challenges faced by utilities are numerous, from rising regulatory pressures and consumer demand for lower prices, to a shortage in skilled workers and the need for cleaner forms of energy. “EPPM software enables power plants to create ‘what-if’ scenarios, allowing project stakeholders to see how even a slight contingency will affect the project and how different responses will have an impact on the budget and schedule. These solutions can also help optimise operational metrics and help ensure the right people are on the right project at the right time,” says Barlow. The importance of maintenance has never been greater, says Barlow, who assets that EPPM software

The construction costs of a power plant can be reduced by management software.

“The cost of any decisions taken at the design stage are magnified during the life cycle of a facility” Mark Biagi, Bentley

helps reduce shutdown and turnaround time by matching resources to the workload and increasing wrench time. “Millions of dollars and the success or failure of critical projects – like a refueling outage – are on the line every time a skilled craftsman lays a wrench on an important piece of machinery.”

NEW GROUND

Design software pulls together the various engineering disciplines, fostering co-operation.

www.utilities-me.com

As expected in a competitive market, companies are always looking to development their products. One of the latest developments is the inclusion of so-called ‘wizards’, says Intergraph’s Denton. While applications that relate data to the CAD drawings and models that are created have been established in other plant industries for around 20 years, one recent development to this technology is the inclusion of automation that helps engineers work more efﬁciently inside the actual design tools by leading them through the

various options and design considerations. This ensures that the design is done correctly up front and greatly reduces the amount of checking and editing done in later steps, says Denton. “Tools used designing today’s plants should have the ability to build in the ‘institutional knowledge’ of standard work processes that younger engineers can leverage inside the technology,” he adds. Earlier this year, Oracle brought to the market AutoVue 20.0. The AutoVue Enterprise Visualisation programme helps viewing, reviewing and collaborating on asset and engineering documents and information across a global enterprise. “The solution has helped thousands of users in engineering, maintenance and operations access and work with the technical information they need to support plant shutdowns, plant optimisation and routine maintenance activities,” says Barlow.

September 2010

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Utilities Middle East 29

Innovative Power System Testing Solutions Testing Solutions for Protection & Measurement Systems Relays, Meters, SCADA IEC 61850 Devices Transducers Power Quality Analyzers

Testing & Diagnostics Solutions for Transformers & Primary Assets Power Factor Moisture in Insulation Sweep Frequency Response Analysis Partial Discharge Advanced Transformer Diagnostics

Middle East Office: Bahrain | www.omicron.at | info.mideast@omicron.at

ELECTRICAL TESTING

Growing pains Testing and diagnostic providers are profiting from the rapid expansion of the power distribution and transmission sector, while having to deal with the consequences of growth

ith the power infrastructure in the Middle East expanding at a rapid pace, suppliers and service providers of electrical testing and diagnostics are confronted with a very particular market. “It is still a relatively young market in that much of the installed plant and machinery is less than 30 years old compared to Europe or North America, where it can be over 60 years old,” says Andy Hedgecock, Middle East manager at Omicron. “Therefore the need for testing and diagnostics has not been so high but of course that has rapidly changed over the past ten years.” On the other hand, the growth of the sector means that business

is brisk. “The he electrical power and industrial al infrastructure is expanding an n incredible rate and so now the latest atest testing methods are being applied plied along with new technologies. The combination of these two factors means that demand for electrical testing and diagnostics is exceptionally high in the Middle East,” says Hedgecock, who describes escribes the region as an important market forr Omicron, accounting nting for 12 percent nt of its worldwide ide business. “The Middle dle Eastern market ket differs to other her markets in the

NICK PARTON, MEGGER

PRODUCT FOCUS

OMICRON’S DIRANA DIELECTRIC RESPONSE ANALYSER Power transformers represent the most expensive link between the generation and utilisation side of energy, writes Omicron’s Andy Hedgecock. Due to the cost pressure of a de-regulated energy market, utilities have shifted maintenance from time-based to condition-based approaches. This development requires reliable diagnostic tools. Water entering in oil-paper insulations can cause three dangerous effects: it decreases the dielectric withstand strength, accelerates cellulose

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aging (de-polymerisation) and causes the emission of gas bubbles at high temperatures. Therefore an accurate knowledge about the actual moisture concentration is required in order to decide if further corrective action, such as on-site drying, is necessary. Moisture enters transformers from the atmosphere (breathing, leaky seals) and during installation and repair. Aging of the oil-paperinsulation also increases the moisture level. Thus, even in the case of a non-breathing

transformer, the moisture can reach a dangerous level. Dirana analyses the moisture content of the paper/ pressboard insulation. The test result is an independent quantity that can be compared to other moisture analysis techniques. Typically the solid part of the insulation structures, the pressboard, paper and wood holds most part of the water, 200 times more than the oil. Thus the moisture concentration in the solid insulation is much more important than that in the oil.

world in terms of degree, pace and scale of development of both the electrical infrastructure and the industrial base,” sums up Nick Parton, sales manager at Megger, who have been growing at around 15 percent in the region over the last ﬁve years. Those growth rates were not signiﬁcantly impaired by the recession. Both Hedgecock and Parton speak of a relative decline in business, albeit not at the rates experienced before. “There was no real decline, more of a temporary slow-down as budgets were held back to see how serious the recession was but by the end of the year it was business as usual,” says Omicron’s Hedgecock. Megger, who equally did not experience a serious downturn in business, could yet suffer from a sting in the tail of the recession, says Parton: “The question is still ‘will’ rather than ‘did’. Our business tends to come at the end of the project, and the slowdown in new projects during the last 18 months has probably still not hit us fully yet.”

CONSCIENTIOUS CUSTOMERS? With the power infrastructure in the Middle East still young, and utilities going through a steep learning curve, electrical testing and diagnostics was not always on the forefront of customer’s minds. But this has now changed. “Until the 1990’s there was a general ‘install and forget’ approach but there has been a distinct and recognizable change throughout the region and clients are now very aware of what should be considered,” says Hedgecock. September 2010

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Utilities Middle East 31

ELECTRICAL TESTING

While the appreciation for regular check ups and maintenance is there, growth rates and the subsequent growth in personnel can undermine those good intentions, believes Parton: “The pace of development and the regular inﬂux of new staff puts a lot of strain on the ability for people to keep up with the demand for testing in the installation and commissioning area as well as on the preventative routine maintenance side.”

MANPOWER SHORTAGE Another critical problem diagnostics companies are faced with today

PRODUCT FOCUS

THE MEGGER DELTA4000 INSULATION DIAGNOSTIC SYSTEM The new Delta4000 insulation diagnostic system will perform all the usual tests that the user will expect from a 12kV Tan Delta test set, writes Nick Parton, sales manager at Megger. This includes the power factor, dissipation factor, capacitance, excitation current, leakage reactance and turns ratio to provide an electrical insulation condition assessment in high voltage apparatus such as transformers, or circuit breakers. It operates over a wide sweep frequency range, and comes in a very lightweight

32 Utilities Middle East

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2-piece construction to maximise portability. The unit introduces two (pat pending) features that are new to this type of instrument. Firstly, the ability to automatically detect if the insulation is showing nonlinear properties and advise the operator that a ‘tip-up’ test should be performed to further investigate the problem. Secondly, the ability to perform temperature correction specific to the object being tested. It has long been established that the standard temperature

September 2010

correction curves used to standardise measurements for comparison purposes are severely limited. As well as using the standard correction curves, the Delta4000 gives the option of using ‘individual temperature correction’. By measuring the dissipation factor over a wide sweep frequency and using builtin mathematical formulas and models of insulation characteristics, the correct temperature correction can be determined.

is finding suitable staff for their operations, even if there has been progress. “The situation has improved dramatically in recent years but the training of local employees is still a key factor across the region,” says Hedgecock. The answer, he believes, lies in training staff up. Omicron’s regional office has facilities for both theoretical and practical training in addition to courses that are performed at site with customers. While there is much debate about adequate provision of higher education in the Middle East, Parton thinks that it is not the qualifications that are lacking. Rather, it is the absence of adequate experience that is hampering recruitment. “The problem is finding people with both the qualification and the relevant experience,” he says. “The electrical supply industry worldwide suffers from a lack of experienced qualified personnel. As equipment has become more sophisticated and automated over the years, the level of knowledge required to keep that machinery in operation, and the number of people required, has declined, says Parton. In response to this, utilities have destaffed, and thus de-skilled. “With the boom a couple of years ago there simply weren’t enough people about to do the work,” finds Parton.

www.utilities-me.com

SITE VISIT

Harbouring ambitions

The first phase of the ambitious Port Khalifa complex is set for completion in 2012. A great chunk of the utility contracts for the industrial zone has yet to be awarded.

34 Utilities Middle East

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September 2010

isions in the GCC tend to come in a supersized format. Mega projects such as the King Abdullah Economic City in Saudi Arabia testify to the ambition of governments to haul their countries into the modern age by creating vast expanses of infrastructure for industr y to develop. Not to be outdone, Abu Dhabi is similarly seeking to diversify itself away from fossil fuels, using the massive wealth generated from oil revenues to work

on its Abu Dhabi 2030 strategy. To facilitate this vision, the Abu Dhabi Ports Company (ADPC) has been tasked with building the Khalifa Port and Industrial Zone in Taweelah. The scale of the project is impressive. The first of two phases will be completed in 2012, and comprises of an offshore harbour of 2.7 km2, and an industrial zone (the Khalifa Port Industrial Zone, or KPIZ) of 51 km2. If all goes to plan, Industrial Zone B will add an astonishing 367 km2, www.utilities-me.com

SITE VISIT

the most attention by the developer. Set on an artificial island, 4.5 kilometres from the mainland, it will provide a gateway for UAE imports and exports. By 2012, it will have a capacity of two million TEUs and nine million tonnes of general cargo compared with 650,000 and 7.5 million at Mina Zayed respectively. By 2030, the aim is to have increased capacity to 15 million TEUs and 35 million tones of general cargo. Ongoing work includes the shifting of earth from Zone B to Zone A. Al Jaber Transport and General Contracting, and Ghantoot Transport and General Contracting Establishment were contracted to move 40 million cubic

outflows increase beyond a certain point, the ADPC will need to ensure that the used water does not restrict the cooling and water needs of the adjacent Taweelah IWPP power and desalination plant. To this end, the outflows, which contain high saline levels and can change the temperature levels of the sea around it, will have to be channelled further out to sea. “We might provide pipes on the seabed, to a diffuser that diffuses water into the sea a further 1.5 kilometres on top of the existing three kilometres. That would be the same distance as the offshore harbour,” says Jurjen Groen, ADPC project manager of the industrial zone.

Tony Douglas, CEO ADPC.

UTILITIES

“The KPIZ will be important in presenting a breadth of opportunities in line with the Abu Dhabi 2030 strategy.” Tony Douglas, CEO ADPC

metres of to raise the ground level in Area A by 2.5msl.

SEAWATER COOLING

the equivalent of 45 875 football pitches, by 2030. “Abu Dhabi Ports Company plays a fundamental part in the diversification of the UAE’s economy,” says ADPC chief executive officer Tony Douglas. “The Khalifa Port and Industrial Zone particularly will be important in presenting a breadth of opportunities in line with the Abu Dhabi 2030 strategy.” Work on the project is in full swing. So far, the construction of the harbour area has been given www.utilities-me.com

One of the big advantages of locating the industrial zone on the coastline is the ready access to seawater, which can be used for cooling purposes. The KPIZ already has its first tenant, with the Emirates Aluminum (Emal) swelter close to completion. This heated customer would not be able to function without the provision of cooling water. To harness the cool of the sea, a 1.7 kilometre canal has been constructed. A slender funnel narrowing from 80 meters at the opening to 45 metres at the base, the structure supplies an inner basin through 2.6 meter pipes that are fed by culverts taking in water at four meters deep, the optimal depth.

The Emal smelter, which upon completion will be the world’s biggest, will initially be allocated 45 000 cubic meters per hour, rising to 60 000 once the second stage of the project is complete. In total, the seawater cooling system will have a capacity of 143 000 cubic metres per day. While the system has been designed, the piping for the rest of the industrial zone has not been constructed yet, as the final structure depends on the requirements of the tenant industries. Once the industrial zone becomes operational, and the

As the groundwork for the project progresses apace, the ADPC has started to focus on the utilities infrastructure needed to service a major harbour and industrial park. In March, Larsen and Toubro began works for the design, construction, testing and commissioning of an electrical, medium voltage power supply for Phase 1A of the port. The company’s primary role was to install a 33kV power cable network and three 33kV / 11kV primary substations to provide the main power supply throughout the industrial zone. Meanwhile, Ed Zublin AG and Al Jaber Transport and General Contracting will be responsible for implementing the site-wide utilities infrastructure, including all of the major electrical, drainage, sewage and potable water networks.

UTILITY REQUIREMENTS FOR KPIZ AREA A • PIPING (DIFFERENT SIZES) • CABLES (33KV AND 11KV) • SUBSTATIONS (33KV /11KV)

246 KM 126 KM 13

September 2010

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Utilities Middle East 35

SITE VISIT

IN THE PIPELINE

Tony Douglas says KPIZ will be important in presenting a breadth of opportunities in line with Abu Dhabi’s 2030 strategy.

36 Utilities Middle East

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September 2010

At the time of writing, the ADPC is in the process of procuring key utilities infrastructure contracts for the first part of the industrial zone. Area A will be divided into three packages, to be awarded separately. The packages include all core infrastructure work, ranging from roadwork, sewage systems to sea water cooling. “We are currently in the process of procuring the contracts for the primar y road, infrastructure and utilities works in area A,” says Groens. “So that basically involves work on the roads, utilities, sewage, sea water cooling, and telecoms systems in the primar y corridors. We have divided the area into three parts and will be awarding three separate pack-

www.utilities-me.com

SITE VISIT

“We are currently in the process of procuring the contracts for the primary road, infrastructure and utilties in work area A.” Jurjen Groens, ADPC project manager for the KPIZ

ages, although the contracts will be fairly general in terms of the work involved.” “We are still going through the bidding stage so we cannot say anything about the costs of the contracts. This will be announced within the next few months,” adds Groens. The company has committed a total of AED 26.5 billion to Phase A of the project, which encompasses the construction of the first phase of the harbour, and the industrial Area A. Of this, around AED 13 billion will be spent on the construction of the port. So far, only AED 8 billion already committed and another AED 18.5 billion worth of contracts yet to be awarded. The ADPC hopes to have a clearer idea about the seawater cooling by mid November, when it will have worked out a phasing plan for the industrial zone. The zone will be populated by industr y only gradually, with different types of industr y having different cooling requirements. The industrial zone will be divided into seven clusters, most of which will be mixed to strike a balance between downstream and upstream industries. In July, the plans for the petrochemical cluster were thrown into disarray when the Abu Dhabi National Chemicals Company (ChemaWEyaat) announced it would not ser ve as the anchor tenant in the KPIZ, looking instead to establish a chemical complex in Ruwais, closer to www.utilities-me.com

an oil refiner y that provides its energy feedstock. For the rest of the infrastructure, more certainty exists. The area will need a total of 246km of piping of various sizes, 126 km of cabling, for 33kV and 11kV and a total of 13 33kV / 11kV low voltage substations. The harbour will require a total of 33 low voltage substations. To cater for the whole complex, Transco has already built a high voltage substation transforming 220kV into 33kV. Once the transmission and distribution and water infra-

structure has been completed, it will be handed over to the Abu Dhabi Water and Electricity Authority (Adwea) by the ADPC. The authority will then be responsible for maintaining the infrastructure, for ser vicing the industrial customers. Adwea estimates that the project requires a capacity of around 750MW, accord-

ing to an ADPC spokesman. This would be sufficient to power the port infrastructure, industrial zone infrastructure, construction, projected port tenants and projected industrial zone tenants. Keen to see its project succeed, the ADPC will be hoping that maximum capacity will be needed sooner rather than later.

The site of a future substation in the harbour area.

The seawater cooling channel extending out into the sea.

September 2010

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Utilities Middle East 37

Water and Wastewater Treatment

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INSIDER INTERVIEW

PEOPLE METER Wastewater Potential f

Peter Neuschaefer, director of environment, water and energyy in the Middle East for Waagner Biro Gulf, talks to UME about his environmentally friendly wastewater solutions

Can you outline your products and projects relating to renewable energy, water and power conser vation? When I joined Waagner Biro Gulf in 2004, our CEO and I decided to develop a new division in Water, Energy and Environment Technologies. By 2005, we were able to successfully treat wastewater by ﬁltering it through a reed bed. Since then, we have installed 20 reed bed systems at different locations in the Emirates and in Qatar. We are now launching the TerraSave concept which combines different technologies: photovoltaic (PV) and concentrated solar power (CSP), the cooling of these PV modules using treated wastewater, harvesting the reeds as biomass, and the storage of the solar power into batteries, so getting CO2 reduction results. The TerraSave concept requires little energy, doesn’t pollute the atmosphere with CO2, doesn’t need skilled labour for the maintenance, can treat even heavy metals, can pass as landscaped area, and enables the trade with the green house gas certiﬁcates (CER’s). There is no sludge, and thus methane, production, and we don’t need chemical additives. www.utilities-me.com

Since 2006 we are happy to have the UNESCO regional office of the Middle East as an observer at our pilot project, a labour camp here in Dubai. In 2009, we won the Qatar Today Green Innovation Award, proof that our TerraSave concept is finding acceptance. What is driving the demand for these solutions? Energy and Water savings. Basically our solutions are common sense. Of course we have to prove the return of investment all the time, but this is not all about returns. It is also about the long term solution, about sustainability. Is environmental consciousness a real factor in decision making in the power and water sector? No, it is still the investment. I try to demonstrate the benefits of the low running costs and low maintenance costs of our concepts, which are maybe 70 percent less than conventional concepts. But unfortunately, running and maintenance costs are not appreciated by buyers, and are not considered as money savings at tender phases or product offer stages.

Are households and business waking up to the need to conser ve water and power resources? Yes, I see some changes, but it is still too early to say there is a big movement coming from the end consumer. So long as the government doesn’t change regulations and laws it is difﬁcult for households and businesses change their habits. Laws and regulations were the key driver in Europe in forcing anybody to have an environmental consciousness. But looking at the actual movements in terms of laws and regulation in the Emirates, I am sure it will come very soon. Is a rising environmental consciousness translating into business opportunities for companies which supply environmentally friendly solutions? Yes it is. Green technologies are an engine for growth in many countries. It drives scientists to create new innovations which can be used for new business opportunities. When did you ﬁrst start perceiving environmental consciousness in the Middle East, and how did it manifest itself? I saw big changes in environmen-

tal consciousness in the last two years, let's say after the world wide economical downturn. For me this was a step to the right direction, as I came to the region in 1997 with the environment consciousness and awareness I had acquired in Europe. In the 1970s we had many environment disasters, and there was not enough fuel was available to drive a car on Sundays and so on. That changed the attitudes of people in Germany. What more needs to be done by governments to affect change? The governments have been making the right decisions in the past years. We cannot expect young nations to change radically in a very short time. In Europe, we were at this point 30 years ago. But the Middle East can develop much faster than we did, because the mistakes made in Europe can be avoided here. It is important for people to understand that promoting investment into a sustainable building or city requires radical change. The government can implement the regulations to force this through, and to push these new technologies. In the end the government

September 2010

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Utilities Middle East 39

INSIDER INTERVIEW

beneﬁts through less maintenance and investments in municipalities. Which countries are doing the most to promote energy efﬁciency and water conser vation? From my point of view it is Germany and some other European countries. In recent years the US has pushed hard to successfully implement renewable energy and water reuse policies. In the Middle East I see a strong movement towards adopting environmentally friendly solutions. Estidama, a regulation for a green buildings implemented by the UAE authorities, provides standards and help. In addition, I would like to mention the Masdar project as a good example of a green development.

As we are in a hot desert region, the things we have to consider most are the reuse of water and the lowest consumption of energy. But I believe that solutions focusing on the sun’s energy have a future: solar desalination; solar warm water production, energy storage, decentralised solar air. And so will energy storage, natural wastewater treatment, biomass production and natural aquifers. How important are renewables and water conser vation to Middle Eastern countries tr ying to meet increasing demand for power and water?

If we look into the future we have to consider the fast growing population in these regions. Decentralised water and power generation and wastewater treatment can help meet this rising demand. What technological breakthroughs are we going to see in these ﬁelds in the coming years? I am looking at future green technologies all over the world and I see decentralised sun powered energy (for air conditioning, for example) and natural wastewater treatment as the most efﬁcient technology for this region. They are much more

energy efﬁcient as the conventional technologies. Let take the example of district cooling technology which is one of the cheapest cooling concepts, but it is centralised. The problem we are faced with now is getting the billing for the service right. Everybody likes to know what he consumes on energy or water. If you are able to reduce your energy bill by saving energy, you like to see it at end of the month. But if you centralise a cooling technology, for example, environmental consciousness is not encouraged and the efforts of each consumer to save energy and water are undermined.

Which renewable and water conser vation methods are best suited to the region?

Peter Neuschaefer speaking in Dubai.

2010 The ultimate guide to starting out in Dubai

Waagner Biro Gulf have developed an integrated concept with TerraSave, which combines solar power generation with wastewater treatment.

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Setting Up PROPERTY | SCHOOLS | NIGHTLIFE | RESTAURANTS | HOBBIES

40 Utilities Middle East

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September 2010

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Power & Water Conference & Exhibition 4-6 October 2010 Qatar International Exhibition Centre, Doha, Qatar www.power-gen-middleeast.com

Under the Patronage of His Excellency Mr. Abdullah bin Hamad Al-Attiyah, Deputy Prime Minister and Minister of Energy & Industry

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Informative Conference Its leading conference programme covers strategic and technical power and water issues across the Middle East and aims to enhance dialogue for developing solutions to the regionâ&#x20AC;&#x2122;s issues.

Speakers include: Yousuf Ahmed Janahi Manager Corporate Planning & Business Development, Kahramaa, Qatar

Frank Wouters Chief Executive, Masdar Power, UAE

Dr. Abdulmajeed Ali Al-Awadhi Chief Executive, Bahrain Electricity & Water Authority, Bahrain

A full conference programme and speakers can be viewed at www.power-gen-middleeast.com

Leading Exhibition Discover new ideas, technologies and developments at the leading exhibition for the power and water industry and Source the latest products and services from leading companies and suppliers from around the world.

Opening Keynote Session

If you are involved in power and water industries and are looking to increase your business and knowledge in the region, POWER-GEN Middle East is the must attend event.

Monday 4th October 6:00pm

For full conference programme, exhibitors, products and services and to register

Monday 4th October 6:30pm â&#x20AC;&#x201C; 8:15pm

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PROJECTS

UTILITIES PROJECT TRACKER Information is supplied by Ventures Middle East. Tel: +971 2 622 2455. URL: www.ventures-uk.com MIDDLE EAST

Project Title

Client

Consultant

Main Contractor

Value / Value Range (US$. Mn)

Al Fanar Contracting

Project Status

Project Type

project under construction

Power Transmission

project under construction

Power Transmission

project under construction

Desalination Plant

245

project under construction

Desalination Plant

SAUDI ARABIA

9023/9001 Underground Cables

Saudi Electricity Company (SEC)

380kV Transmission Line North of Riyadh

Saudi Electricity Company (SEC)

Desalination Plant & Drinking Emaar Economic City,Saudi Water Infrastructure Desalination Plant in Jeddah - Phase 3

Saline Water Conversion Corporation (SWCC)

115kV Underground Cables in Madina 2nd Industrial City

Saudi Electricity Company (SEC) Saudi Electricity Company (SEC) Royal Commission for Jubail and Yanbu (RCJY)

Salwa IPP 10J Substation & 101 Satellite Substation in Yanbu Princess Noura Bin Abdulrahman University - High Voltage Substation

Ministry of Higher Education / Ministry of Finance

Kuljian Engineering Corporation

KEC International / Al Sharif Group for Contracting & Development Trading Huta-Hegerfeld & Huta-Marine Limited Company Doosan Heavy Industries & Const. Company / Saudi Berkefeld Filter (Witco)

project under construction project in concept stage project under construction

Power Transmission

Siemens

Not Appointed

290

Arabia Electric Ltd.

150

ABB Contracting Co. / Al Fanar Contracting

167

project under construction

Substation

Power Plant Substation

Yanbu IWPP

The Power & Water Utilities Company for Jubail & Yanbu (Marafiq)/Saline Water Conversion Corporation (SWCC)

Mohammed A.Turki Mott Not Appointed MacDonald

4000

project under design

Power and Desalination Plant

Qsai Dam at Jizan

Ministry of Water and Electricity,Saudi Arabia

Bin Jarallah EstablishZuhair Fayez ment for Trading & & Partners General Contracting (Bin Jarallah Group)

project under construction

Dam

380/110/13.8-kV Substation Expansion in Al Aziziyah Area

Saudi Electricity Company (SEC)

Siemens, Saudi

project under construction

Substation

Power Plant Expansion Duba

Saudi Electricity Company (SEC)

Najm Al Jazirah for Trading Contracting & Agriculture Co.

120

project under construction

Power Plant

King Abdullah Economic City (KAEC) - Power Grid Package

Emaar Middle East Properties

Siemens

400

project under construction

Substation

Not Appointed

2500

EPC Bid

Power & Desalination Plant

project under construction

Dam

120

project under construction

Substation

900

EPC Bid

Power & Desalination Plant

project under construction

Substation

Saudi Arabian Mining ComPower and Water Plant in Ras pany (Maaden) / Rio Tinto Al Zour Alcan Ministry of Water and Electricity

New Dam in Abha Substations 9024 and 8183/8184 Interim Power & Desalination Plant at Yanbu Rabigh IPP - 380-KV Substation

42 Utilities Middle East

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Saudi Electricity Company (SEC) The Power & Water Utilities Company for Jubail & Yanbu (Marafiq) Saudi Electricity Company (SEC); ACWA Power International; Korea Electric Power Corporation (Kepco);

September 2010

Bin Jarallah EstablishZuhair Fayez ment for Trading & & Partners General Contracting (Bin Jarallah Group) ABB Contracting Co. Jacobs EngiNot Appointed neering ABB Contracting Co., Saudi Arabia

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PROJECTS

UAE

Hassyan Complex - Station P Installation of 11 kV Cables Fujairah 2 (F2) IWPP

Dubai Electricity and Water Authority (DEWA) Dubai Electricity and Water Authority (DEWA) ADWEA/ Marubeni Corporation/ International Power

Mott MacDonald

Fichtner

Not Appointed

3000

Power Magic Electrical Works

Alstom Power / Sidem

3,000

Aqua Engineering, Techton Engineering & Construction SK Engineering & Construction Company, Abu Dhabi

Desalination Plant near Hamriyah Free Zone

Sharjah Electricity and Water Authority (SEWA)

General Utility Plant Expansion at Ruwais

Abu Dhabi Oil Refinery Company (Takreer)

Upgrade of Irrigation Networks and Pumping Stations

Department of Municipalities & Agriculture-Abu Dhabi

Not Appointed

Nuclear Power Plant in Abu Dhabi

Power and Desalination Plant Power Transmission Power and Desalination Plant

EPC Bid project under construction project under construction

122

project under construction

Desalination Plant

500

project under construction

Power Plant

EPC Bid

Pumping Station

Abu Dhabi Water and Electricity Authority / Emirates Nuclear Energy Corporation

Korean Electric Power Company / Hyundai Engineering & Construc20000 tion Company/Samsung C & T Corporation/ Doosan Heavy Industries

project under construction

Power Plant

Installation of 11kV Cables in Dubai

Dubai Electricity and Water Authority (DEWA)

Econ Contracting LLC

project under construction

Power Transmission

Two Desalination Plants in Ajman

Federal Electricity & Water Authority (FEWA)

Tecton Engineering & Construction / Aqua Engineering;

200

project under construction

Desalination Plant

National Contracting 11 Company (NCC), Kuwait

project under construction

Power Transmission

Not Appointed

EPC Bid

Substation

Not Appointed

500

EPC Bid

Water Distribution

Doosan Heavy Industries & Construction Kuwait

320

project under construction

Desalination Plant

Not Appointed

1000

Feasibility Study

Power Plant

Hyosung Group / Siemens

1500

project under construction

Power Transmission

Not Appointed

125

project under design

Desalination Plant

Global Chemicals & Maintenance Systems

project under construction

Power Plant

Shandong No.3 Electric Power Construction Corporation,China

750

project under construction

Power and Desalination Plant

Galfar Engineering & Contracting, Oman

project under construction

Substation

Degremont / Hyundai Heavy Industries (HHI)

4000

project under construction

Power and Desalination Plant

Energy Central

project under construction

Desalination Plant

KUWAIT

11kV Overhead Transmission Line for Subiya Road New Substations in Kuwait Water Storage Tanks in West Funaitees Shuwaikh Desalination Plant

Ministry of Electricity & Water (MEW), Kuwait Ministry of Electricity & Water (MEW), Kuwait Ministry of Electricity & Water (MEW), Kuwait Ministry of Energy (Electricity & Water)

QATAR

Solar Power Plant Qatar Power Transmission System Expansion - Phase 9 Reverse Osmosis Desalination Plant Pilot Project

Qatar General Electricity & Water Corporation (Kahramaa) Qatar General Electricity & Water Corporation (Kahramaa) Qatar General Electricity & Water Corporation (Kahramaa)

Energoprojekt Entel, Qatar Energoprojekt Entel, Qatar

OMAN

Power Plant in the Duqum Area - Phase 1 Salalah IWPP 132/33 kV Grid Station at Muttrah

Rural Areas Electricity Company Oman Power and Water Procurement Company /Sembcorp Utilities Pte Ltd /Oman Investment Corporation Oman Electricity Transmission Company (OETC)

BAHRAIN

Independent Water and Power Plant in Addur

Ministry of Finance / Ministry of Electricity & Water / Suez Energy International

Durrat Al Bahrain - Desalination Plant

Durrat Khaliji Bahrain

Mott MacDonald

Note : The above information is the sole property of Ventures Middle East LLC and cannot be published without the expressed permission of Ventures Middle East LLC, Abu Dhabi, UAE www.utilities-me.com

September 2010

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Utilities Middle East 43

TENDERS

Tender activity

To add a tender to our listing, email details to lutfi.qaraman@itp.com

Visit constructionweekonline.com for the latest tender information

UME provides free access to the latest publicly available tender listings from across the GCC countries. The tenders included are aggregated from a wide variety of public and private sector sources from across the region. When possible, tenders include the issuer, name and category of the tender, opening and closing dates, narratives, fees, bonds and contracts.

CONSTRUCTION OF TRANSFORMER WORKSHOP TO SEEB AND ALMABELA Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 251/2010 Title: Construction of Transformer Workshop to Seeb and Almabela Description: The scope of work includes construction of transformer workshop to Seeb and Almabela. Bond: N/A Tender fee: 185.00 OMR Closes: Sep 6, 2010 Contact: www.tenderboard.gov.om UNDERGROUNDING EXISTING HT & LT O/H LINES INTO CABLES AT MUSCAT AREA Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 249/2010 Title: Undergrounding Existing HT & LT O/H Lines into Cables at Muscat Area Description: The scope of work includes undergrounding existing HT & LT O/H Lines into cables at Muscat Area in Zone 1. Bond: N/A Tender fee: 1080.00 OMR Closes: Sep 6, 2010 Contact: www.tenderboard.gov.om UNDERGROUNDING EXISTING HT & LT O/H LINES INTO CABLES AT SIDHAB AREA Issuer: Muscat Electricity Distribution Co. (SAOC) Tender no: 248/2010 Title: Undergrounding Existing HT & LT O/H Lines into Cables at Sidhab Area Description: The scope of work undergrounding existing HT & LT O/H Lines into Cables at Sidhab Area in Zone 1. Bond: N/A Tender fee: 1285.00 OMR Closes: Sep 6, 2010 Contact: www.tenderboard.gov.om CONSTRUCTION OF 225 SECONDARY SUBSTATIONS IN SEVERAL AREAS OF KUWAIT Issuer: Central Tenders Committee Tender no: MEW/121/2009/2010 Title: Construction of 225 Secondary Substations in

44 Utilities Middle East

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September 2010

Several Areas of Kuwait Description: The scope of work includes construction of 225 secondary substations in several areas of Kuwait. Bond: Applicable Tender fee: 2000.00 KWD Closes: Sep 12, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water CONSTRUCTION OF DESALINATION PLANT Issuer: Public Authority for Electricity and Water Tender no: 244/2010 Title: Construction of Desalination Plant Description: The scope of work includes construction of desalination plant in Al Awaifiya - Wilayat Bahla. The contract also includes operation & maintenance for three years. Bond: Applicable Tender fee: 350.00 OMR Closes: Sep 13, 2010 Contact: www.tenderboard.gov.om THE OVERHAUL OF THE TURBINE AND GENERATOR AND PROMPTER NO. 2 Issuer: Saline Water Conversion Corporation (SWCC) Tender no: KH/5314 Title: The Overhaul of The Turbine and Generator and Prompter No. 2 Description: The scope of work includes providing the overhaul of the turbine and generator and prompter No. 2. Bond: N/A Tender fee: 500.00 SAR Closes: Sep 19, 2010 Contact: www.swcc.gov.sa REPLACEMENT OF FIVE TURBINE CONDENSATE PUMPS Issuer: Saline Water Conversion Corporation Tender no: JD/RM/579 Title: Replacement of Five Turbine Condensate Pumps Description: The scope of work includes replacement of five turbine condensate pumps & their canisters for Steam Turbines Units at Phase-4 of Jeddah Power Plant. Bond: N/A

Tender fee: 500.00 SAR Closes: Sep 19, 2010 Contact: www.swcc.gov.sa INSTALLATION OF DESALINATION UNIT IN AL ZOUR SOUTHERN IWPP Issuer: Central Tenders Committee Tender no: MEW/14/2010/2011 Title: Installation of Desalination Unit in Al Zour Southern IWPP Description: The scope of work includes supplying, installation and commissioning of desalination unit in Al Zour Southern IWPP. Bond: Applicable Tender fee: 4000.00 KWD Closes: Sep 19, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water. REFURBISHMENT OF WATER STORAGE TANKS AND WATER TOWERS IN KUWAIT Issuer: Central Tenders Committee Tender no: MEW/111/2009/2010 Title: Refurbishment of Water Storage Tanks and Water Towers in Kuwait Description: The scope of work includes refurbishment of water storage tanks and water towers in Kuwait. Bond: Applicable Tender fee: 500.00 KWD Closes: Sep 19, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water OVERHAULING OF 19 MEDIUM VOLTAGE MOTORS OF YANBU PLANT Issuer: Saline Water Conversion Corporation (SWCC) Tender no: YM/R/PE/137 Title: Overhauling of 19 Medium Voltage Motors of Yanbu Plant Description: The scope of work includes overhauling of 19 medium voltage motors of Yanbu Plant. Bond: N/A Tender fee: 500.00 SAR Closes: Sep 20, 2010 Contact: www.swcc.gov.sa www.utilities-me.com

TENDERS

INSTALLATION OF FIBRE CEMENT / GLASS REINFORCED EPOXY TRANSMISSION PIPELINES Issuer: Dubai Electricity & Water Authority Tender no: CW/0064/2010 Title: Installation of Fibre Cement / Glass Reinforced Epoxy Transmission Pipelines Description: The scope of work includes supply, installation, testing & commissioning of fibre cement / glass reinforced epoxy transmission pipelines to protect / divert under existing services and associated works at various locations in the Emirate of Dubai. Bond: Applicable Tender fee: 500.00 AED Closes: Sep 20, 2010 Contact: www.dewa.gov.ae REPLACEMENT OF 0.433/11-KV SUBSTATION Issuer: Central Tenders Committee Tender no: MEW/12/2010/2011 Title: Replacement of 0.433/11-kV Substation Description: The scope of work includes replacement of 0.433/11-kV substation. Bond: Applicable Tender fee: 2500.00 KWD Closes: Sep 21, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water. Tender Category: Power & Water BOILER INSPECTION PLAN Issuer: Saline Water Conversion Corporation Tender no: JD/R/M/394 Title: Boiler Inspection Plan Description: The scope of work includes providing specialized services to carry out the “Boiler Inspection Plan” and “Life Evaluation Program” of Boiler Unit #13 at Jeddah Ph-4 Plant. Bond: N/A Tender fee: 500.00 SAR Closes: Sep 22, 2010 Contact: www.swcc.gov.sa CONSTRUCTION OF 380-KV RAS AL-ZOUR SUBSTATION Issuer: Saline Water Conversion Corporation (SWCC) Tender no: RAZ-SubS-380KV Title: Construction of 380-kV Ras Al-Zour Substation Description: The scope of work includes design, supply and construction of 380-kV Ras Al-Zour Substation. Bond: N/A Tender fee: 50000.00 SAR Closes: Sep 22, 2010 Contact: www.swcc.gov.sa PRE-CONTRACT DESIGN SERVICES FOR NEW AL SHAMAL SEWAGE TREATMENT WORKS (STW) Issuer: Public Works Authority Tender no: PWA/ITC/007/10-11 www.utilities-me.com

Title: Pre-Contract Design Services for New Al Shamal Sewage Treatment Works (STW) Description: The scope of work includes providing pre-contract design services for New Al Shamal Sewage Treatment Works (STW). Bond: Applicable Tender fee: 750.00 QAR Closes: Sep 26, 2010 Contact: Fax: 00974 4950777, Contract Dept., Public Works Authority CONSTRUCTION OF 9 TOWERS FOR FRESH WATER AND ANNEXED WORKS AT SABAH EL-AHMED CITY Issuer: Central Tenders Committee Tender no: MEW/98/2009/2010 Title: Construction of 9 Towers for Fresh Water and Annexed Works at Sabah El-Ahmed City Description: The scope of work includes construction of 9 towers for fresh water and annexed works at Sabah El-Ahmed City. Bond: Applicable Tender fee: 2000.00 KWD Closes: Sep 26, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water.

KEY CONTRACT

CONSTRUCTION OF YANBU POWER AND DESALINATION PLANT PHASE 3 Saudi Arabia’s Saline Water Conversion Corporation (SWCC) has issued a tender for the Phase 3 of the Yanbu power and desalination plant. The project involves the design, engineering, construction, commissioning and testing of a new dual purpose power and desalination plant and associated facilities with capacities of oil-fired 1,700 MW net power output and 550, 000 cubic meter water production. The Project will be located within SWCC’s boundary in the south of the existing power and desalination plants in Yanbu area on the western coast of Saudi Arabia. The deadline for submissions is September 22, and the tender fee is 200000.00 SAR. Further details can be found on the corporation’s website: www.swcc.gov.sa

RELOCATION OF DOHA SOUTH SEWAGE TREATMENT WORKS Issuer: Public Works Authority Tender no: PWA/ITC/008/10-11 Title: Relocation of Doha South Sewage Treatment Works Description: Ashghal intends to relocate Doha South Sewage Treatment Works (STW) to another site about 25 kilometers away from the present location. A new site has been identified and some investigations have already been carried out during CP 734/1 project “Abu Nakhla Lagoon Diversion Transmission Pipeline”. The purpose of this study is to carry out detailed geotechnical studies required for designing and construction of treatment works at the new site. Bond: Applicable Tender fee: 750.00 QAR Closes: Sep 26, 2010 Contact: www.ashghal.gov.qa REHABILITATION OF BOILER (A) AT AZIZIAH PLANT Issuer: Saline Water Conversion Corporation (SWCC) Tender no: AZ/R/M/041 Title: Rehabilitation of Boiler (A) at Aziziah Plant Description: The scope of work includes rehabilitation of Boiler (A) at Aziziah Plant. Bond: N/A Tender fee: 500.00 SAR Closes: Sep 26, 2010 Contact: www.swcc.gov.sa PROVISION OF TEMPORARY POWER GENERATION SERVICES TO OMAN MAIN INTERCONNECTED SYSTEM Issuer: Oman Power &Water Procurement Company Tender no: 272/2010 Title: Provision of Temporary Power Generation Services to Oman Main Interconnected System Description: The scope of work includes provision of temporary power generation services to Oman Main Interconnected System. Bond: N/A Tender fee: 3000.00 OMR Closes: Sep 27, 2010 Contact: www.tenderboard.gov.om CONSTRUCTION OF 11/132/400-KV AL FUNAITEES SUBSTATION Issuer: Central Tenders Committee Tender no: MEW/76/2009/2010 Title: Construction of Al Funaitees Substation Description: The scope of work includes construction of 11/132/400-kV Al Funaitees Substation. Bond: Applicable Tender fee: 3000.00 KWD Closes: Oct 10, 2010 Contact: Central Tenders Committee - Ministry of Electricity & Water

September 2010

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Utilities Middle East 45

UPCOMING EVENTS

Upcoming conferences and exhibitions Saudi Water & Power Forum Jeddah, Saudi Arabia 3-6 October 2010 Jeddah Hilton Contact: Shunker Goel +44 20 7978 0080 sgoel@thecwcgroup.com Website: www.ksawpf.com/

Power-Gen Middle East Qatar International Exhibition Centre Doha, Qatar 4-6 October 2010 Contact: Worldwide Kelvin Marlow 44 (0)1992 656 610 kelvinm@pennwell.com US Bridgett Morgan +1.918.831.9130 bridgettm@pennwell.com Website: www.power-gen-middleeast.com

Power Generation and Water Middle East Abu Dhabi, UAE 17-19 October 2010 Abu Dhabi National Exhibition Centre Contact: Anita Mathews +971 4 335 3526 anita.mathews@iirme.com Website: www.powerandwaterme.com

Iraq Mega Projects Istanbul, Turkey 26-28 October Istanbul Hilton Website: http://www.cwcimp.com

Gulf Solar Abu Dhabi, UAE 23-24 November 2010 Sheraton Hotel Contact: 44 (0)207 099 0600 info@greenpowerconferences.com Website: www.greenpowerconferences.com

Arab Water Week Amman, Jordan 5-9 December 2010 Le Meridien Hotel Contact: + 9626 4642501/2/3 info@arabwaterweek.org Website: www.arabwaterweek.org

Electricity Middle East Dubai, UAE 8-10 February 2011 Dubai International Exhibition Centre Contact: Anita Mathews 971 4 407 2472 anita.mathews@iirme.com Website: www.middleeastelectricity.com

46 Utilities Middle East

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September er 2010

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SNAPSHOT: BAHRAIN

Growing Bahrain The island Kingdom has turned to public private partnerships to power its economic expansion part

ahrain is in need of new sources of power as well as upgraded and new power networks as it strives to meet the demands placed on by a growing economy and expanding population. This was made abundantly clear in July, when energy consumption reached a record 2,650MW, according to the Bahrain Tribune, as temperatures soared beyond 40 degrees Celsius. Bahrain had 2.3 gigawatts (GW) of installed electricity generation capacity in 2007, according to estimates by Business Monitor International (BMI), all of which coming from conventional thermal sources. An estimated 9.2 billion kilowatthours (KWh) of electricity was generated in 2006, an increase from 8.2 billion in 2005. There are currently no exports of electricity and no imports. Bahrain is now connected to the GCC Interconnection

Grid, however, which will enable it to tap electricity from other countries, as well as participating in a future regional energy market. The Ministry of Electricity and Water (MEW) anticipates annual growth in electricity consumption of seven percent each year for the next decade or so. The authorities are encouraging independent power plants (IPPs) to operate and they have also privatised some state power assets. Bahrain is one of the few countries in the Middle East that has laid the regulatory framework for the privatisation of the power generation industry, say experts. The private sector has already contributed to the electricity and water sector in Bahrain through the construction of Bahrain’s ﬁrst IPPs, Al Ezzel, and the enlargement of Al Hidd power and water station. When fully operational in 2011,

DESALINATED WATER OUTPUT, IN MILLION GALLONS

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2.3 Gigawatts Estimated installed electricity generation capacity in 2007 Source: BMI

the Al Dur independent power and water project (IWPP) will be the Kingdom’s largest electricity and desalination plant and will be operated on a built, own and operate (BOO) basis by GDF Suez and the Gulf Investment Authority (see boxout) According to media reports, Bahrain was seeking a US$1.3 billion infrastructure loan to ﬁnance

power and water projects in 2009. Of this total, $850 million will be allocated to add energy projects to the national grid between 2009 and 2014. Under the plans, Bahrain is looking to build 10 new power stations and expand four others, as well as adding 380 kilometres in underground cables. The remaining funding will be used to upgrade Bahrain’s water network.

BAHRAIN’S POWER HOUSE – THE AL DUR IWPP Once fully operational, the Al Dur independent water and power project will be Bahrain’s single biggest source of electricity and desalinated water. Located on the kingdom’s southeastern coast, the plant will have a capacity of 1,245MW and 191 million imperial gallons per day (MIGD) by June 2011. According to media reports, the plant began commercial operations in June this year, with an initial 400MW and 48 MIGD coming online. The projects was awarded as a build, own and operate (BOO) contract to a consortium comprising of French power generation company GDF Suez and the Gulf

Investment Corporation (GIC), an organisation promoting infrastructure development in the region. They constitute the Al Dur Power and Water Company, which be responsible for running the plant. Both partners initially had an equal 50:50 stake in Al Dur. Following the sale of 30 percent of their stakes to a group of investors from Bahrain, GIC now holds a 25 percent stake in Al Dur and GDF Suez is the largest stakeholder, with 45 percent. Hyundai Heavy Industries has been tasked with constructing the complex. BNP Paribas, Freshfields Bruckhaus Deringer and Mott MacDonald are advisors to the project.

September 2010

●

Utilities Middle East 47

SNAPSHOT: BAHRAIN

WATER Bahrain makes much use of desalinated water and major investments are planned to increase production from the current 143 million gallons per day, to 200 million gallons per day in 2011. New transmission systems and storage facilities will also be built. In the waste water sector, production will reach 164,250 cubic meters annually by 2015, up slightly from the current 163,000 cubic meter annual capacity, according to

data supplied by Aquastat, a division of the UN’s Food and Agricultural Organisation. Because of Bahrain’s size, the challenges it is facing in its water sector are easier to respond to than in larger neighbouring states, such as Saudi Arabia. According to Aquastat, total water withdrawals per capita increased by 14 percent between 2002 and 2007, equal to the rate of growth of the population over the same period. As the population remains small, with less than a million people, a well planned investment strategy in the water sector can cater for the country’s needs relatively easily. According to IMF data, the population will reach 920,000 in 2012, up from 830,000 today. It should be noted that the industrial sector has increased its share of water consumed in the country, chipping away at agricul-

BAHRAIN’S ECONOMY AT A GLANCE According to the UN Economic and Social Commission for Western Asia, Bahrain had the fasted growing economy in the Arab world in 2006, with the country benefitting from its oil reserves and a burgeoning financial industry. In 2008, Bahrain was named the world’s fastest growing financial center by the City of London’s Global Financial Services Index. Petroleum production and processing account for around 60 percent of export receipts, and 30 percent of gross domestic product. Business Monitor International estimates that the country’s nominal GDP stood at US$19.20bn in 2008. Bahrain was attested to be the freest economy in the Middle East in the 2006 Index of Economic Freedom.

ture’s share. As economic growth rises, the industrial sector demand is also anticipated to rise. In 2008, Bahrain’s Electricity and Water Authority signed a Memorandum of Understanding (MoU) with Singapore’s National Water Agency (PUB). The two agencies will col-

laborate on the operation and maintenance of water supply, and the design and construction of waste water treatment systems. This partnership will create opportunities for Singapore’s own water companies, such as Hyﬂux and Darco, to enter Bahrain’s water sector.

UPSTREAM ENERGY PROJECTS

48 Utilities Middle East

●

September 2010

thereafter. Gas production capacity is expected to grow from the current level of 1.7 billion cubic feet per day to over 2.5 billion cubic feet per day under the Field development plan. Oxy’s net share of production is expected to be approximately 28,000 barrels of oil equivalent per day (BOEPD) in 2010 growing to 56 000 BOEPD within five years. Mubadala’s net share of production is expected to be 18 500 BOEPD and 37 000 BOEPD for the same time periods. Net reserve additions over the life of the project for Oxy are said to be 450 million barrels of oil equivalent.

Bahrain hopes to increase production from its ageing oilfields by more than 100% by 2020. GETTY IMAGES

It is no exaggeration to say that Bahrain is currently going through its most exciting E&P phase in more than seven decades. Four offshore exploration and production sharing blocks have been allocated, and drilling commenced this year. Onshore, new depths are being plumbed to discover natural gas, and a host of enhanced oil recovery techniques are to be deployed to stem decline and increase production at the country’s 77-year old Bahrain Field. The shift from a sedate, almost forgotten upstream hamlet, into a thriving hotbed of activity has been expedited and made possible by a dramatic overhaul of the energy business in Bahrain. The National Oil and Gas Authority was born when three ministries with overlapping and blurred boundaries were streamlined into one body by Royal Decree in 2005, a sea change which the current flurry of activity can be attributed to. Bahrain shares an offshore field called Abu Saafa with Saudi Arabia. It is estimated that this produces some 300 000 barrels per day, which is split 50:50. The product from Abu Saafa is sold directly as crude on international spot markets, and does not come to Bahrain. Occidental Petroleum Corporation and Mubadala Oil & Gas, are working jointly on a development and production sharing agreement with the National Oil and Gas Authority of Bahrain (NOGA) for the further development of the Bahrain Field. Under this agreement, a Joint Operating Company was formed to serve as operator for the project under the DPSA. Oil production from the Bahrain field is expected to more than double to approximately 75 000 barrels per day within five years, and grow to a peak level of more than 100 000 barrels per day

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