Infrastructure ME April 2016

ISSUE 025 | APRIL 2016

Publication licensed by International Media Production Zone, Dubai Technology and Media Free Zone Authority

technoLogy

Managing Assets Malcolm Walters on Bentley’s shift into the asset management space p26

trAnSPort

Back on track Infrastructure ME reports from Middle East Rail 2016 p32

eXcLUSiVe interVieW

reALity check

David Cox, Regional MD of Mott MacDonald, on the changing realities of infrastructure development

PLUS toP 10 key kSA infrAStrUctUre ProjectS

A Broad Spectrum of Gas Treating Solutions

More than 1,000 references worldwide. Decades of reliable operations all over the world and local engineers for on-site services. Dow has the market knowledge, chemistry expertise and innovative offerings to serve customers in a broad range of applications – from natural gas and syngas to steam methane reforming and everything between.

We’re a global leader in amine production, drop-in chemical technology and a range of customized services and programs for process simulation, system monitoring and maintenance. Our portfolio of gas purification and heat transfer solutions to help optimize processes includes: • UCARSOL™ Specialty Amines and SELEXOL™ Solvents • ISOFORM™ Isomerization Grade Perchlorethylene • NORKOOL™ Coolants and Formulated Dehydration Glycols • DOWTHERM™ and SYLTHERM† Heat Transfer Fluids • AMINE MANAGEMENTSM Program • UCARSEP™ Solvent Purification Technology Whatever the challenge, our experienced team will consider it from every angle, then develop a solution tailored to your needs.

To learn more about our comprehensive oil and gas capabilities, visit www.dowoilandgas.com.

®™Trademark of The Dow Chemical Company (“Dow”) or an affiliated company of Dow SM Service mark of The Dow Chemical Company † SYLTHERM is a trademark of Dow Corning Corporation

CONTENTS

025 April 2016

04

12

26

ENERGY EFFICIENCY

COVER STORY

TECHNOLOGY

Mapping Energy Intensity

Reality Check

Managing Assets

Engineer Faisal Rashid outlines the steps Dubai is taking to support efficiency in the built environment, following the development of the region’s first Energy Intensity Map

Infrastructure ME sits down with David Cox, Regional MD for the Middle East and South Asia, Mott MacDonald, for a chat about the changing realities in infrastructure development

Malcolm Walters, COO of Bentley Systems, speaks to Infrastructure ME about the rationale behind his company’s foray into the asset management space

ALSO THIS MONTH...

OIL & GAS

TOP 10 FEATURE

18 In Full Flow

22 Ten KSA projects

Sean Evers, Managing Partner at Gulf Intelligence, argues that the future for gas, whether it’s in pipeline or LNG form, is still bright

Amid lower hydrocarbon revenues, Saudi Arabia is giving priority to investments in its energy and transportation sectors

RAIL

TENDERS

20 Back on track?

30 Infrastructure Tenders

Low oil prices and cuts in infrastructure spending haven’t dampened the mood of the railway industry in the region, as the turnout at ME Rail shows

Infrastructure ME’s monthly analysis of the biggest tenders and key projects across the Middle East region for April 2016 April 2016

INFRASTRUCTURE MIDDLE EAST 1

INTRODUCTION

Supported by

M

‫ﺟﻤﻌﻴﺔ اﻟﺸﺮق اﻻوﺳﻂ ﻟﺼﻨﺎﻋﺎت اﻟﻄﺎﻗﺔ اﻟﺸﻤﺴﻴﺔ‬

Middle East Solar Industry Association

Empowering Solar across the Middle East

GROUP FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD

PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5472 EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 5473 SUB EDITOR AELRED DOYLE aelred.doyle@cpimediagroup.com ADVERTISING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 433 2857 MARKETING MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DESIGN ART DIRECTOR SIMON COBON CIRCULATION AND PRODUCTION DISTRIBUTION MANAGER SUNIL KUMAR sunil.kumar@cpimediagroup.com +971 4 375 5476 PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713 DIGITAL WEB DEVELOPER MOHAMMAD AWAIS Published by

The big picture he energy theme runs deep in this issue of Infrastructure Middle East as the low oil price environment moves into year two and fiscal discipline on the part of governments starts affecting infrastructure projects.

Several projects are getting stalled or delayed; funding constraints are coming to the fore as governments dip into local markets, and people are getting redeployed if not laid off as companies start to tighten their belts.

According to S&P, there could be a gap as large as $270bn through 2019 between capital spending for projects by Gulf sovereigns and project contracts awarded, and a difference of $50bn for project contracts awarded in the infrastructure sector.

But not all the sectors are doing badly.

For example, dry docks are experiencing good business as ship owners take advantage of low cargo volumes to dock their ships for maintenance and repairs;

T

REGISTERED AT IMPZ PO BOX 13700, DUBAI, UAE TEL: +971 4 440 9100 FAX: +971 4 447 2409 WWW.CPIMEDIAGROUP.COM

Anoop K Menon Editor Infrastructure Middle East anoop.menon@cpimediagroup.com

Printed by Printwell Printing press LLC © Copyright 2016 CPI. All rights reserved While the publishers have made every effort to ensure the accuracy of all information in this magazine, they will not be held responsible for any errors therein.

2 INFRASTRUCTURE MIDDLE EAST

the renewable energy sector is reaping the benefits of volatility in energy markets as countries take advantage of falling panel prices to build solar power plants to secure power supply. In our part of the world, the conventional and unconventional gas sectors have been the key beneficiaries of the priority being given to energy security. And as the regional head of Mott MacDonald points out in this issue, “Programmes like the 2022 World Cup and Expo 2020 and the focus on increasing the capacity of air traffic into the region will ensure that big construction programmes will happen.”

While 2016 is expected to be a tough year, it is also evident that economic diversification based on world-class infrastructure continues to remain top of the agenda of the GCC governments.

Building a world-class infrastructure is integral to the diversification strategy.

The squeeze on revenues resulting from a sustained period of lower oil prices means governments will be looking for greater private sector participation to bridge the gap.

April 2016

ENERGY EFFICIENCY

DECISION SUppORT

MAppINg ENERgy INTENSITy Dubai is embarking on a unique project to support efficiency in the built environment By Eng. Faisal Rashid

he Dubai Supreme Council of Energy (SCE) has developed the first Energy Intensity Map in the region, with the assistance of energy consultancy companies Applus+ and Tecnalia. In line with the vision of HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to make Dubai the city with the smallest carbon footprint in the world by 2050, this tool provides the government with the data needed to make informed decisions when it comes to energy and water efficiency in buildings.

Developed countries devote considerable resources to supporting

T

4 INFRASTRUCTURE MIDDLE EAST

the implementation of energy efficiency policies and programmes. Policies and programmes are frequently developed without sufficient information to evaluate the estimated impact, meaning a considerable risk of failure in policy-making and achieving targets.

For this reason, the establishment of information mechanisms at national and subnational levels is the first priority for organisations like the International Energy Agency (IEA), the United Nations Economic Commission for Europe, the United Nations Economic and Social Commission for Western Asia, and ESMAP – the Energy Sector Management Assistance Programme at the World Bank Group. A reliable information system to support policy and programme April 2016

design and evaluation is critical.

The establishment of energy data collection capacities has been identified by the IEA as a top priority for the Arab region, as they provide strong foundations for the development of a national energy efficiency strategy.

Energy intensity indicators shall be related to potential savings and their associated policies and programmes.

In that context and in support of the Dubai Clean Energy Strategy 2050 to transform Dubai into an international hub for clean energy and green economy, the Dubai Supreme Council of Energy is working towards the implementation of the Demand Side Management Strategy, which features nine programmes that contribute to the

ENERGY EFFICIENCY

sustainable development of Dubai.

These nine programmes include rules and regulations for green buildings, rehabilitation of existing buildings, district cooling, regulations and standards for energy efficiency, reuse of wastewater for use in irrigation, technology to raise the efficiency of street lighting, and the Shams Dubai Initiative to transform Dubai into the city with the lowest carbon footprint in the world.

“The Energy Intensity Map enables data analysis for policy-making and supports the monitoring of the Demand Side Management Strategy and its nine programmes of Dubai government,” said HE Ahmad Buti Al Muhairbi, Secretary General of the Supreme Council of Energy.

The Energy Intensity Map is a unique database that combines consumption (kWh and imperial gallons for water) and building (sqm, usage, type of building, sector) information from different authorities. In addition, the tool provides an easy visualisation of intensity in buildings through a virtual and interactive map that uses a user-friendly website interface. The tool is also equipped with the necessary functionalities to download reports for analysis purposes at unit, building, community and city levels. These reports can be easily exported to MS Excel.

The Pilot Project has been now finalised and contemplates information related to

The Energy Intensity Map is a unique database that combines consumption and building information.

110 buildings. These buildings have been handpicked to showcase the particularities of seven communities in Dubai: Al Quoz Industrial Third, Burj Khalifa, Al Garhoud, Al Qusais Industrial First, Mirdif, Oud Metha and Trade Centre First. The map is fed from databases provided by DEWA, Dubai Municipality, Dubai Land Department, EMAAR and Trakhees.

“The Energy Intensity Map is the result of a joint effort made by a number of stakeholders committed to making Dubai greener,” said Al Muhairbi.

The building sector in Dubai consumes around 80% of energy and water.

Given the fact that the building stock is currently equipped with inefficient technologies, improperly insulated walls and openings, and is occasionally poorly

The building sector in Dubai consumes about 80% of all energy and water used in the city, data shows.

April 2016

managed and maintained, the energy and water saving potential is very high. The target of retrofitting 30,000 buildings and reducing 30% of energy demand by 2030 reinforces the need to fully implement the Energy Intensity Map. Knowing which buildings are less energy efficient allows the development of energy and water saving measures, especially designed on a case-by-case basis. The map helps to easily identify these buildings through a colour-based scale, on which buildings in green consume less energy or water than average; similarly, buildings in red consume more energy or water than the average. The same can be applied to communities. In addition, in the future the tool will allow, through the establishment of statistically representative samples, the analysis of high consuming sectors and the development of corresponding saving action measures.

Joaquim Bigas, Energy Efficiency Director in Applus+, says: “The basis of the project lies on the premise that ‘if you can’t measure it, you can’t manage it.’ This information collection is instrumental to develop targeted strategies to reduce energy and water consumption in high-intensive buildings, communities and sectors. Based on the analysis provided by the tool, the government INFRASTRUCTURE MIDDLE EAST 5

ENERGY EFFICIENCY

may decide to create a green rating system for hotels, undertake a watersaving campaign in villas in a certain community or subsidise LED lighting in high-rise buildings of a certain age.”

In addition, the tool gives the opportunity to compare consumption over time versus a baseline scenario for a given building, community or sector for energy and water consumption. This information allows tracking of consumption savings.

Furthermore, the tool can monitor the penetration of existing demand side management programmes, such as the number of buildings compliant with Dubai Green Building Regulations, or the number of buildings retrofitted using a particular technology, and the savings achieved. A total of 47 indicators have been identified as potentially to be measured by the tool.

The scale-up phase aims at having a totally automatic tool that is able to routinely read stakeholders’ databases and centralise information from all demand side management programme owners in only one database. The full implementation could potentially include information from around 130,000 existing buildings in Dubai and 500,000 units.

This volume of data may require the use of big data technologies, something the Dubai Supreme Council of Energy is in the process of considering for the long term.

Jose Maria Campos, Strategic Initiatives Director at Tecnalia, elaborated: “Another angle that could be tackled with the support of the Energy Intensity Map is the full understanding of consumer behaviour in Dubai. Consumer behaviour interventions could lead to over 20% energy savings, according to different research analysis. General programmes and campaigns tackling behavioural aspects of consumers are therefore relevant and must be part of any policy programme on energy efficiency. However, most effective 6 INFRASTRUCTURE MIDDLE EAST

“The Energy Intensity Map enables data analysis for policymaking and supports the monitoring of the Demand Side Management Strategy and its nine programmes of Dubai government.

The Energy Intensity Map is the result of a joint effort made by a number of stakeholders committed to make Dubai greener” HE AHMED BUTI AL MUHAIRBI, SECRETARy gENERAL OF DUBAI SUpREME COUNCIL OF ENERgy April 2016

consumer campaigns are the ones that target customers individually, and are tailored to his or her specificities. Big data and data analytics are an excellent tool to support these interventions.”

The tool has the potential to reach the unit level and benchmark consumer behaviour patterns to be consequently tackled in awareness raising campaigns.

The tool can then be used to monitor the success of these awareness-raising campaigns too. But the possibilities of this tool go beyond buildings.

Again in support of the demand side management strategy, upgrading the tool can result in monitoring and analysis of efficient outdoor lighting strategies, collecting relevant information regarding water use in landscaping areas, and last but not least tracking efficient products sold according to the labelling system developed by the Emirates Authority for Standardisation and Metrology (ESMA).

The map can also be used for modelling and simulation. For instance, the tool can support the elaboration of consumption scenarios for new electricity and water tariffs. Moreover, greenhouse gas emissions can be strictly monitored, and with the use of smart meters, the information can be instantly gathered and analysed.

All in all, the Energy Intensity Map is a way to easily visualise the energy and water scene in Dubai which allows a deep knowledge and monitoring of the building stock, information of great value for the government working on the process of making Dubai greener.

The first phase of the project, implementing the pilot project, revealed a number of important functionalities that have the potential to be developed for a more significant number of buildings. A roadmap for the scale-up phase is being studied by the relevant authorities.

The author is DSM Director, Dubai Supreme Council of Energy

ENERGY EFFICIENCY

EFFICIENCy CODE

CERTIFICATION, SpANISH STyLE

Joaquim Bigas, Energy Efficiency Director, Applus+, explains the steps taken by the Spanish government to simplify energy certification in existing buildings he Dubai Clean Energy Strategy 2050 launched in November 2015

by HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai, to provide 75% of the Emirate’s energy through clean energy sources by 2050, is a major driver to make Dubai the city with the smallest carbon footprint in the world as stated in its vision.

By launching this strategy, Dubai positioned itself as one of the worldwide leaders in the transition to a green economy right before the UAE signed

T

the agreement on the Conference of the Parties in Paris (COP21).

The strategy includes AED100bn investments in a Green Fund, and AED50bn in the second phase of Solar Park by 2030. In addition, and as part of the Demand Side Management Strategy of Supreme Council of Energy, Dubai Municipality launched the implementation of the Dubai Green Building Regulation.

After the development of the Dubai Green Building Regulation, under which compliance with the directive is mandatory for all new buildings in Dubai, be they government or non-government buildings, the Municipality announced the development of an Energy Efficiency April 2016

Ranking for existing buildings to be launched in 2016. The building sector nowadays consumes around 80% of the energy and water in Dubai. Given the fact that the building stock in Dubai is equipped with inefficient technologies (AC, Lighting), not properly insulated and poorly managed, the saving potential is very high.

With the announcement of this second initiative, Dubai Municipality achieves a three-fold objective. First, it establishes minimum energy performance standards via the building codes. This is done through the Dubai Green Building Regulation for new buildings; second, implementing energy efficiency certification of existing INFRASTRUCTURE MIDDLE EAST 7

ENERGY EFFICIENCY

buildings adds market transparency for final customers who through the certificate become aware of the energy costs associated with building occupancy. It is also an indicative of the quality of the construction works, as certificates should reflect the energy performance of buildings, allowing market differentiation which can be reflected in prices.

For example, in Ireland, the Energy Performance Certificates scheme came into effect in 2009 and became mandatory information for sales and leases. By mid-2014, 25% of homes had Building Energy Ratings (BERs) and certificates. A one-step increase in BER rating has been valued at a 2.8% increase in sale price and 1.4% of rent ; it also raises awareness of energy performance of buildings in the end consumer.

Similarly, the European Parliament Directive 2002/91/CE, from 16 December 2002, established the right of property buyers and users to be provided with an energy efficiency certification of buildings. With this measure, the European Parliament envisioned as the ultimate goal to promote high energy efficiency performing buildings and energy saving investments.

A Smart Tool for Building Certification In Spain, the implementation of this directive faced the need to create a customised tool for the certification process: the CE3 Energy Simulation Software. This tool was created

by Applus+, as commissioned by the Spanish Ministry of Industry, in collaboration with a number of stakeholders from government, private and educational entities. The tool enormously simplifies the process of building information collection and analysis, delivering not only the building rate according to the country’s certification scheme but also proposing 8 INFRASTRUCTURE MIDDLE EAST

The CE3 Energy Simulation Software was created by Applus+ for the Spanish Ministry of Industry.

“All in all, it allowed the government to efficiently perform energy certifications, raise awareness in energy efficiency and create a register of certified buildings with strategic information that supported the elaboration of targeted energy efficiency strategies (subsidies and incentives) at national or local levels” JOAqUIM BIgAS, ENERgy EFFICIENCy DIRECTOR, AppLUS+ April 2016

ad-hoc energy saving measures.

CE3 tool was set with a number of comprehensive databases that include information on weather parameters, construction elements, materials, building geometry, operation and functionality, HVAC and energy saving measures. The information in the databases in CE3 is a product of research and collaboration among companies, universities and other renowned entities in the construction sector.

The certification process is carried out by an accredited professional (AP) who conducts the field work and instantly delivers the certification rate.

On-site, the AP inputs in the software all values related to geometry, typology and surfaces by selecting in the dropdown menus. All the options allow the inclusion of shading elements, both in the building and remote obstacles. The AP also needs to insert the internal load of the building and related time of use such as occupancy, ventilation, lighting and HVAC, also available in the drop-down menus. In addition,

ENERGY EFFICIENCY

the software offers default values if occasionally information is not available.

Once all this information has been inserted in the tool, the system assesses energy demand and consumption of both the building and a reference building with identical geometry but that complies with energy regulation. This comparison with a reference building delivers the energy performance level of the building, meaning the building rate. The introduction of the building specifications in CE3 may take between thirty minutes and two hours, depending on the size of the building.

The result is a software tool that calculates not only energy demand, but also consumption over time and CO2 emissions. The methodology used is heavily based on working hours, which allows a more accurate assessment of the influence of strategies established in geometrical design, installations and building maintenance.

Energy Saving Measures specific for Certified Buildings The European Parliament Directive envisioned as the ultimate goal to promote the reduction of energy consumption in buildings and related emissions. For that reason, CE3 also promotes energy saving measures in those buildings in a context of technical viability and economic feasibility. CE3 does that by providing energy saving measures according to the input value and the certification rate. To give an idea, the energy saving module is able to generate 186,624 possible combinations of pre-defined energy saving measures, taking into consideration the initial position.

Some of the energy saving measures proposed by CE3 have to do with the reduction of demand, such as: increasing insulation in walls, envelopes and floors; modification of openings;

installation of solar protectors; or modification of air inflow. Some other measures target the systems, such as the substitution of boilers and cooling systems with better performing ones, the introduction of free cooling activities and the use of solar energy.

As a result, 1,515,628 buildings had been certified in Spain as of July 2015.

The Spanish government was able to create a register of certified buildings which included energy indicators, construction data, installations, etc.

Information in the register was used in Spain to elaborate strategic plans

HIgHlIgHTS • Implementing energy efficiency certification of buildings adds market transparency for final customers, who through the certificate become aware of the energy costs.

• The implementation of the regulation shows an energy rating improvement over time.

• In Ireland, building rating has been valued at a 2.8% increase in sale price and 1.4% of rent.

• The tool enormously simplifies the process of building information collection and analysis, delivering not only the building rate but also potential energy saving measures.

• The software, based on energy estimations, calculates energy demand, consumption over time and associated emissions.

• It also generates 186,624 possible combinations of pre-defined energy saving measures.

April 2016

for Demand Side Management and Renewable Energies subsidies and incentives. The implementation of the regulation shows an energy rating improvement over time. For instance, a slight decrease of buildings rated D and E was experienced.

Applus+ has a long track record on knowledge creation and is strongly committed to implementing stateof-the-art initiatives and systems. In this context, Applus+, in collaboration with the University of Seville (Spain), regularly develops new modules for CE3 that improve functionalities and scope to go beyond what current regulation requires. This collaboration allows a constant improvement of the tool to meet changing demands. Some of the examples of add-on modules are: • Economic analysis complement • Incorporation of special elements in the envelope • Incorporation of mechanic ventilation in residential buildings • Link with DE3A decision-making support tool to improve rating • Thermal bridge complement The work undertaken by Applus+, in collaboration with the rest of the stakeholders, significantly simplified the process of collecting technical information and calculating the energy performance of a building. It also provided technical data for the cases where lack of information posed a limitation. In addition, the smart tool was made to be able to propose energy saving measures for the user.

All in all, it allowed the government to efficiently perform energy certifications, raise awareness in energy efficiency and create a register of certified buildings with strategic information that supported the elaboration of targeted energy efficiency strategies (subsidies and incentives) at national or local levels.

INFRASTRUCTURE MIDDLE EAST 9

ENERGY EFFICIENCY

Learn why lighting is the easiest way to make big savings in infrastructure projects

nfrastructure companies in the Middle East can make big savings on their projects of up to 70% by using LED lighting. For instance, by simply swapping its 8,500 lights, the Dubai Energy and Water Authority (DEWA) saved an incredible 68% energy – or 14GWh –at its own power stations in Jebel Ali and Al Awir.

‘Lighting’s an easy and quick win and the payback is very short,’ says Stephane le Gentil, CEO of Etihad Energy Services, which helped enable the switch. ‘We’ve seen projects where the return

on investment is less than a year, so the opportunity is big.’

Le Gentil is one of 100 speakers at next month’s LuxLive Middle East exhibition and conference who’ll show you how to reap the benefits of the LED revolution. You’ll also be able to see the latest innovations in lighting and smart controls at the show and meet designers and consultants who can make it happen.

LuxLive Middle East 2016 takes place on Wednesday 13 April and Thursday 14 April at the Abu Dhabi National Exhibition Centre.

Entry is free, so what are you waiting for?

View the full programme and register for free at www.luxlive.ae

I

10 INFRASTRUCTURE MIDDLE EAST

April 2016

ENERGY EFFICIENCY

Taking energy to the next level

GE’s six-month-old start up brings to the Middle East a holistic energy-asa-service offering absent from industry urrent, powered by GE, is a first-of-itskind energy company that integrates GE’s LED, solar, energy storage and electric vehicle businesses with its industrial strength Predix platform to identify and deliver the most cost-effective, energyefficient solutions required by customers today and in the future. Current brings to market a holistic energy-as-a-service offering that includes sensor-enabled hardware, software, fulfillment, product management and financing solutions for commercial, industrial, municipal and utility customers.

“Our core focus is on how we can optimise the asset of the customer by optimising their energy,” says Erdem Soyal, General Manager for the Middle East & Turkey, Current, powered by GE. “What makes us different or unique is that nobody else has such an integrated offering. We are paving the way to a new market.”

Through Predix, GE will analyse energy consumption and provide customers with data around patterns and needs along with recommendations to increase efficiency – from reducing power levels to generating power on-site to creating new revenue streams for customers through the use of sensors and networked systems in buildings. These advanced solutions will help customers

C

Erdem Soyal, General Manager for the Middle East & Turkey, Current, powered by GE.

save an estimated 10-20% on their energy bills, and help utility partners better manage their distributed load.

Soyal sets forth the pitch as follows: “We go to customers with huge energy expenses and tell them – we aren’t here to sell you anything. Rather, we will reduce your electricity bill, and manage it for you. For example, if you are spending AED 10m on your energy bills, we will reduce that to AED 8m, giving immediate returns on your operations expenditure. We will manage your energy bill, and reduce it by 10-20% over a longer period of three to five years during which we will also renew your assets as April 2016

technology advancements are made.”

Current will use the most optimised solutions, whether developed in-house or from the market, to deliver value to the customer.

“In the next 10 years, the huge energy consumers will produce, manage, optimise and monetise their own energy,” says Soyal.

He is quick to assure that Current is not competing with facility management (FM) or energy service contracting or lighting companies.

“I think we complement them. By teaming up with us, FM companies, for instance, can manage assets better and make more money. Next to partnering, they might even become our customers.”

Helping Current push its agenda is GE’s financial heft. The value propositions offered by Current will be backed with finance, which is expected to be the clinching factor when it comes to major projects.

Soyal elaborates: “As a $130bn company, financing is an instrumental part of the GE business. We talk to customers with billion-dollar businesses, and if you don’t have financing, you can get stuck.

Since we are managing the energy of the customer for the duration of 10-20 years, financing will be an instrumental part of that. Current is thus complementing its value proposition with financing. In fact, we are already working on a $50m project for a customer in the region.”

INFRASTRUCTURE MIDDLE EAST 11

COVER STORY

12 INFRASTRUCTURE MIDDLE EAST

April 2016

COVER STORY

REALITy ChECk

David Cox, Regional Managing Director for the Middle East and South Asia, Mott MacDonald, tells Infrastructure Middle East how the new normal of low oil prices and funding constraints is forcing infrastructure stakeholders to revisit their business plans The million-dollar question is the long-term trend in oil prices and its impact on construction and infrastructure activity in the region.

In your opinion, what scenarios are we looking at in the medium term?

Volatility is the new norm, so building medium-term scenarios is a tough job.

Last year, everyone was speculating on the oil price, but today they have accepted that over the medium term oil price is going to stay low, and all the shocks will be further down, not up.

Therefore, governments, oil companies and contractors are crafting business plans on a low oil price scenario. There is more reality around business plans, with many at around $35/barrel. But even at this level of planning, the threat of prices falling to $25/barrel is enough to cause low confidence in investing and delays in many projects. Another impact of low oil prices will be around costs.

At one end, governments will need to increase revenue, so personal taxation, direct or hidden, will emerge. The introduction of corporate taxes is also a topic that is in the news. As a result, the cost of doing business will increase.

However, many companies have cut down on staff, which puts downward pressure on salaries. So the actual cost of labour is under downward pressure.

Programmes like the 2022 World Cup and Expo 2020 and the focus on increasing the capacity of air traffic into the region will ensure that big construction programmes happen. On the other hand, the hype around some master plans is still as strong as ever, especially in the real estate sector, so picking the projects with financial backing is crucial.

“Our clients base their buying decisions on trust rather than the size of our balance sheet.

Our strategy is about getting into the top five in the sectors and geographies we want to be. As I said earlier, we aren’t driven by volume” April 2016

With governments the biggest procurers of infrastructure projects, how are their priorities changing?

There are many drivers. Across the region, procurement is getting more experienced and incorporating best practices from around the world. At the same time, it is also introducing shortterm delays. For example, in Doha, the traditional approach of governments designing the infrastructure and then procuring the contractor is giving way to the design-build approach.

As a result, organisations that have invested time and money to operate in a traditional procurement model have to rebid on another. While creating delays, the end result will be a better procurement approach.

What trends do you see on the financing side?

We need to be clear about where we are trying to get our finance – the traditional lenders or contractors. Unless a project generates enough confidence, the traditional lending market will not come in. With contractors in the region struggling with cash flow, governments cannot expect them to put their balance sheet at risk.

Another form of financing is Public Private Partnerships (PPP).

INFRASTRUCTURE MIDDLE EAST 13

COVER STORY

The right legislative framework is critical to attracting private finance for PPP projects. Dubai’s new PPP legislation will enable mixing of private funding with public finance to fund infrastructure projects.

We are the number one global adviser on PPPs with a 20% market share, advising on everything from legislative programmes to achieving financial close. For example, in Turkey we have driven all the PPP programmes in the health sector, including the €1.1bn Etlik Integrated Healthcare Campus PPP project, which achieved financial close in January this year.

To get it to financial close, we had to unlock the legislative framework with the government as well as working with the lenders, lawyers and SPU. Increasingly, international governments too are getting involved in financing infrastructure projects through the Export Credit Agency (ECA) route. I believe Chinese money will increasingly play a major role in the funding infrastructure projects in this region. Their ‘One Belt One Road’ and China-Pakistan Economic Corridor initiatives have infrastructure as a core component, and in the latter, they are putting in finance, contractors and also consultancy.

Mott MacDonald is following that money and associated relationships.

How comfortable are governments with Chinese funding? For example, China’s role in the development of Africa’s infrastructure has been praised for lifting the region from its resource curse but also criticised for being exploitative.

There are political dimensions to government-led financing.

With infrastructure projects, key considerations are the cost of finance and the strings that come with it. But 14 INFRASTRUCTURE MIDDLE EAST

for the recipients, it is not just about getting something built but also creating a social legacy. Ten years ago, Chinese money going into Africa earned a bad name for leaving little by way of local legacy while taking away resources. But the Chinese have learned from this, and the new initiatives are actually about leaving something behind.

The argument about leaving legacies applies to the Middle East as well. We feel responsible for growing local expertise and careers and providing sustainable jobs.

In our operations in Oman, for April 2016

example, 30% of the staff is Omani, including the Divisional Director.

How are GCC governments prioritising their infrastructure spend?

On the railway front, I think the GCC Railway will still be on the agenda because of its political and strategic dimensions. If you are worried about shipping goods through the Straits of Hormuz, the GCC Railway network is certainly an alternative. The way I see it, political considerations as well as business considerations will bring this project back online.

COVER STORY

“Programmes like the 2022 World Cup and Expo 2020 and the focus on increasing the capacity of air traffic into the region will ensure that big construction programmes happen. On the other hand, the hype around some master plans is still as strong as ever, especially in the real estate sector, so picking the projects with financial backing is crucial” Another driver is reducing the dependency on oil, and GCC countries are looking at diverse revenue streams from tourism, aviation and industry sectors. Gulf countries are investing in renewable energy and nuclear power (in the UAE) as a way of making more oil available for export and revenue generation, as well as meeting carbon reduction commitments. Other drivers include water security, education and housing.

Should the infrastructure sector be worried about the return

of practices like re-tendering and delayed payments?

This has happened over the last 18 months, partly driven by insecurity about the actual trajectory of the oil prices and working on budgets that were suddenly far off from the reality of revenues. However, with plans being developed on a more realistic oil price, the uncertainty should go away.

Part of it is also being driven by the change towards a more professional and world-class procurement system.

For example, when we won the bid for a project a year ago, it was all about April 2016

design and design enhancements. But the project didn’t go ahead because the owners wanted to reconsider it. It went into rebid after a year, the focus being on value enhancement and revenue generation. The delay, in this instance, was not a tactic to keep hold of money. Rather, the delay helped to get the right solution. For us, it was about changing the way we respond to customers, understanding things other than design, like how design can generate revenue for a particular facility.

I think a collaborative approach between the public and private sectors is essential for successful project delivery.

The government and the private sector – whether it is consultants or contractors – should engage as partners rather than adversaries as early as possible.

One of the hidden benefits of PPP is early involvement. All parties become tied into the outcome of the project; all have a financial stake in the project, so you have to get the definition right.

What has been Mott MacDonald’s strategy for dealing with market cycles?

In a way, consultants can be more flexible than contractors. A good example would be how we responded to the oil price drop last year. We came to the start of 2015 with a busy pipeline of projects, which got slashed by 40% in the first month as our customers began to cut down. As a consultant, you are selling people’s skills and expertise and we had to switch very quickly to where the new market was. We went through our customer relationships, asking them what they wanted to do. By the end of last year, our forward order book going into this year was 20% higher than it was at the start of last year.

Consultants need to be quick, agile, use the relationships they have and understand the customer. For Mott INFRASTRUCTURE MIDDLE EAST 15

COVER STORY

MacDonald, it is also about connecting with our worldwide expertise. We have 16,500 people around the world, so the trick lies in understanding what someone is telling you locally and connecting it with our global expertise.

Because we are employee-owned, we are not looking for an immediate hit in the stock market. Therefore, we work with customers whom we want to work with, and who appreciate the value we bring to the relationship by thinking up different solutions, thinking of ways to extend asset life or reduce cost.

In this part of the world, the speed of procurement and delivery is a key driver. We can bring smart solutions like Building Information Management (BIM) that significantly reduce time and uncertainty. We will not follow a high volume, low-cost strategy. We will always stick to our principle of delivering value to customers.

With the recent wave of consolidation in the consultancy business, is being big important to future success?

As part of our strategy, we have looked at how to respond in the face of all the consolidation taking place in our industry. To a large extent, the consolidation trend can be attributed to the arbitrage of two listed companies getting financial gains from a merger.

The impetus, in other words, is shareholder returns rather than customer focus. Undoubtedly, having a bigger asset balance sheet is going to enable you to invest into the business plan you have. When we talked to our customers, their feedback was that we needed to be big enough to respond with global expertise. Our clients base their buying decisions on trust rather than the size of our balance sheet. Our strategy is about getting into the top five in the sectors and geographies we want to be. As I said 16 INFRASTRUCTURE MIDDLE EAST

earlier, we aren’t driven by volume.

What sort of people will businesses like Mott MacDonald need to employ in the future?

The moot question is whether design and designers will exist in the next five to ten years or not. Smart solutions and applications are already being developed and used to design and modify designs quickly and with low cost. I think the sort of people we will need going forward are those who reflect the global diversity of our customers. We need individuals who are technically smart but with the right soft skills to be able to understand and empathise with our customers and think of business solutions, not just engineering solutions.

“Unless a project generates enough confidence, the traditional lending market will not come in. With contractors in the region struggling with cash flow, governments cannot expect them to put their balance sheet at risk” April 2016

Finally, how do you rate Iran as a potential market?

Iran has untapped potentials; it has a huge population and a large GDP. But it’s also important to understand that after the imposition of sanctions, Iran survived on its own behind closed doors for a very long time. They have excellent engineers and technologists, so we have to be careful about saying that we will come and help you. Going forward, it will be about forging the right partnerships in Iran.

But I would still be cautious about Iran due to its banking environment.

They need an operating banking system that generates confidence. Before the sanctions were imposed, we were involved in a massive telecom rollout, and getting cash out was really difficult. If you want to do business with Iran, you need to figure out how to get paid for what you do and also how to repatriate the money. We have been maintaining existing relationships, but as consultants, we will initially follow our international customers rather than developing new local customers.

OIL & GAS

GAS MARKET

In full flow

The future for gas, in pipeline or LNG form, is still bright, argues Sean Evers, managing partner, Gulf Intelligence ignificant changes loom over the global gas and liquefied natural gas (LNG) market in 2016, as emerging players backed by huge reserves start to elbow established suppliers aside.

Will a sanctions-free Iran, home to the world’s second largest gas reserves, realise its regional supply agreements? And how will Qatar, the world’s largest LNG exporter, react now that both the US and Australia are capable of stealing its crown by 2020?

Questions abound, but there is

S

18 INFRASTRUCTURE MIDDLE EAST

a level of consensus among energy professionals. There is likely to be a rise in LNG spot market activity in the three primary hubs over the coming year: Europe, the Middle East and Asia and the US. Prices are expected to stay depressed by the oversupply throughout 2016 at the very least, but most likely until 2019, as an already abundant supply is swamped by volume from emerging suppliers, notably the US and Iran.

The LNG market is expected to continue the growth it reported in 2015, despite weakened demand and the impact of the oil price crash. LNG April 2016

production hit 250m metric tonnes (m/t) last year, up 4m m/t on 2014, according to a Wood Mackenzie report. The consultancy cautions that a further 125m m/t of LNG under development means that the majority of market growth will come after 2016.

New supply contracts, such as the 5.8m m/t of LNG for Jordan, Egypt and Pakistan in 2015, are expected to be supplied via fast-tracked floating storage and regasification units (FSRU) – rising competition means plugging into new markets quickly will prove key. Overall, the future for gas, in pipeline or LNG form, is still bright.

OIL & GAS

US market awakens The start of LNG exports from Sabine Pass in the US in early 2016 is a key milestone signifying another surprise move in the American journey from energy importer to exporter, and will spark a shift in global market dynamics.

Conservative estimates put the US as one of the world’s top LNG suppliers by 2020, after Qatar and Australia.

The first US LNG export is expected to be shipped by Cheniere Energy from the Sabine Pass plant by early March, with a wave of mega LNG infrastructure projects also underway in 2016.

The export of Henry Hub linked gas from the US could allow Henry Hub to emerge as the global price marker, while the geographic convenience and underused import infrastructure in Europe could tempt US exporters to the continent. The new US LNG market is also expected to find clients within the Pacific Rim and possibly even the Far East, via the newly expanded Panama Canal.

Iran wades back in Iran, home to the world’s second largest gas reserves, has long declared it will be a major gas and LNG supplier as soon as sanctions are reversed. The P5+1 lifted sanctions on January 17, loosening Tehran’s economic shackles.

Now all eyes are on how quickly Tehran will be able to action its gas memoranda of understanding (MoU) with Oman, Turkey and Europe.

In Central Asia, a sanctions-free Iran means that the 2,700km Iran-PakistanIndia gas pipeline – first touted in 2002 – could finally gain traction. Indian and Pakistani energy officials say the vast economic and societal benefits of the gas pipeline through their lands could override their fractious relationship.

However, given Pakistan’s proximity to Iran, it is likely it will be the

“The LNG market is expected to continue the growth it reported in 2015, despite weakened demand and the impact of the oil price crash” SEAN EvERS, MANAGING pARTNER, GULF INTELLIGENCE immediate beneficiary of Iranian pipeline gas long before India. In addition, such energy infrastructure plans demand complex and vast infrastructure, which in turn demands equally vast investment – both will take time. Political and economic clarity surrounding Iran’s gas MoU and pipeline projects is likely in 2016, but the country will not be a contender for Qatar’s crown for a while yet.

Australia’s quiet boom Australia is getting ready to become the world’s biggest LNG exporter by 2018, with the country ramping up its capacity to satisfy growing Asian demand. Although Japan’s net April 2016

imports of LNG will likely fall over the medium term, due to more of its nuclear reactors coming online, Australia is ideally placed to provide more LNG in the future – but price will be the big decider here.

Australia’s plan to widen its Asian client portfolio in 2016 has had a strong start, with a tentative agreement by the country’s largest gas project, Gorgon, to fulfil a LNG supply contract to China. The 10-year deal from 2018 will supply around half a million tonnes per year. Like all LNG exporters, Australia will have to navigate the slight softening in Asian demand, with Wood Mackenzie seeing demand fall to 245m m/t as natural gas production rose to 250m m/t in 2015.

Russia juggles politics Russia will push to retain its spot as a top regional gas supplier in the year ahead, but geopolitical issues in Europe, Ukraine and Turkey muddy the country’s potential. The weakening relationship with Europe, illustrated

by Europe’s frequent and often empty threats to curb the relationship, puts Moscow under renewed pressure to improve its public relations strategy.

The emergence of US LNG exports could tempt Russia’s traditional customers to look westwards, where supply contracts may not be so bogged down in political turmoil. Lithuania, for example, has signed supply agreements with US LNG exporters, including Cheniere Energy. Still, the marginal costs for Europe of seeking additional imports from Russia should sharpen Moscow’s competitive edge.

Russia’s gas players could always carve out homes in China and wider Asia, but the region’s appetite is expected to be slightly subdued in 2016, and Australia and the Gulf have largely cornered that market.

INFRASTRUCTURE MIDDLE EAST 19

TRANSPORTATION

RAIL

Back on track?

Low oil prices haven’t dampened the mood of the railway industry in the region, as the huge turnout at the Middle East Rail event showed hough railway projects have borne the brunt of spending cuts imposed by Gulf countries squeezed by low oil revenues, they haven’t been cancelled outright.

Etihad Rail has suspended the Stage Two tender process while it reviews the most appropriate options for the timing and delivery of this phase of the project. Oman Rail has said it will refocus its priorities on using rail to transport minerals and other commodities from non-coastal areas to the country’s major ports at Sohar, Duqm and Salalah to drive exports. However, the country is expected to welcome its first rail line only by 2019. Ongoing metro projects in Riyadh and Doha are more or less on schedule but no information is available on whether Saudi Arabia will go with the planned metro projects in Jeddah and Makkah this year. Dubai is expected to award the Route 2020 line soon.

In fact, the 2016 edition of Middle East Rail surprised one and all with its visitor turnout, given the challenging times facing the rail sector. The organisers reported a 25% in increase in exhibition space compared to 2015, as the global rail industry gathered in Dubai to take advantage of the opportunity to network at the regional rail industry’s ultimate marketplace. The number of exhibitors was 300, compared to the 2015 edition, which hosted 221 exhibitors.

T

20 INFRASTRUCTURE MIDDLE EAST

In his keynote speech, HE Dr Abdulla Belhaif Al Nuaimi, Minster of Infrastructure Development and Chairman, Federal Transport Authority – Land & Maritime, said the Middle East Rail positions the UAE as a leader in railway industry by gathering GCC, Arab and international ministries of transport and encouraged the move to establish a rail network for the GCC countries.

Speaking at the event Abdullah bin Juma Al Shibli, the GCC assistant secretary general for economic affairs, said that technical specifications for the entire GCC rail project will be completed this year, keeping hopes alive for the mega GCC Rail project.

Abdul Mohsin Ebrahim Younus, CEO of RTA’s Rail Agency, told delegates that RTA is currently evaluating the tenders from five participating firms for Route April 2016

2020 and the contract to design and build the extension will be awarded shortly. He said work on the design of the extension of Green Line will begin early next year.

RTA is also planning to commission a study on a 5km extension of Dubai Tram.

Middle East Rail also witnessed exclusive launches by exhibitors.

The most audacious was perhaps the Hesan Alkhaleej or ‘Horse of the Gulf’ concept for a premium high-speed capacity intercity train, tailored for the Gulf region from Siemens.

The Hesan Alkhaleej concept is designed to withstand ambient temperatures in excess of 55 degrees Celsius, and incorporates sand-filtering technologies to ensure reliable service in the region’s challenging climate.

Unprecedented levels of redundancy, especially with regard to air conditioning

TRANSPORTATION

and power supply, ensure that even in the event of multiple failures the train will be able to continue its journey and protect passengers. The Hesan Alkhaleej would also be equipped to run on tracks suitable for heavy freight services, enabling mixed-use services to accommodate the varied future requirements of the region’s rail systems.

“The Hesan Alkhaleej is a premium intercity train; our vision of a real alternative to road and air travel in the Gulf region,” said Joerg Scheifler, Senior Executive Vice President, Mobility, Siemens Middle East. “Mobility between cities is a key driver of economic stimulus, and while there are already a number of modern city transit systems in the region, we see the need arising for fast, safe, luxurious and efficient intercity services to link these together.”

During a panel discussion on day 1 of the event, Niklaus Koenig, CEO of maglev developers SwissRapide AG, proposed ultra-high-speed magnetic levitation (maglev) trains travelling at up to 450km/h that could reduce the travel time between Dubai and Abu Dhabi to just 25 minutes.

Apart from the Abu Dhabi-Dubai link, Koenig also proposed a 450km route between Riyadh, Damman and Bahrain

and a metro project linking Muscat’s old town and airport maglev monorails.

Rockwell Automation and Avanceon presented their work with regard to the Tunnel Ventilation System [TVS], the Environmental Control System [ECS] and the Emergency Shutdown System [EDS] for the red and green lines of the Dubai Metro.

Bakhtiar H Wain, Avanceon CEO, said: “I’m proud of the high safety and ventilation specifications we implemented across this landmark network; it means that commuters can breathe easily.”

Avanceon’s bespoke engineering design relates closely to the Rockwell Automation SIL-2 redundant ControlLogix system, the backbone of world-class automated safety systems.

“Our Controllogix system is built into the very foundations, a key factor in providing safer control of temperature regulation and quality of air inside the tunnel infrastructure,” added Neil Enright, Regional Sales Director, Rockwell Automation Middle East.

Thales showcased its signalling solutions at the event, including its offering under the European Train Control System (ETCS), which is the core signalling solution of the European Rail

April 2016

Traffic Management System for mainline networks (ERTMS). It also presented its SelTrac CBTC signaling system, which has been deployed in the Dubai metro. In Qatar, Thales is a member of a consortium in charge of the construction of the first metro system in Doha.

Autodesk presented the key benefits and advantages to be gained from using BIM for rail projects in the region. “Autodesk’s BIM technology can help the Middle East rail industry reduce risk and deliver more successful and profitable projects, thereby strengthening and positioning the region as one of the world’s leading innovation hubs for sustainable transport infrastructure,” said Louay Dahmash, Head of Autodesk Middle East.

Bombardier showcased its latest mobility solutions for cities and airports at the event.

“At Bombardier, we’re redefining the way people move with our innovative mobility solutions for cities and airports, from e-mobility to driverless automated people movers, metros and elevated monorail systems,” said Philippe Casgrain, Vice President, Europe, Middle East and Africa, Systems Division at Bombardier Transportation. He added, “Bombardier is already a major rail infrastructure provider in the Middle East, delivering turnkey transit systems and rail projects in this dynamic region.”

Bombardier, as a member of the ArRiyadh New Mobility Consortium, is designing and building 47 two-car driverless BOMBARDIER INNOVIA Metro 300 trains for the prestigious Riyadh Metro Line 3 (Orange).

For the Haramain High Speed Railway, Bombardier is supplying its BOMBARDIER MITRAC 3000 propulsion package and BOMBARDIER FLEXX speed bogies for the powerheads of the 35 very high-speed trains (for speeds up to 330km/h) from Talgo SA. INFRASTRUCTURE MIDDLE EAST 21

TEN KSA INFRASTRUCTURE PROJECTS

MAkkAh MASS RAIL TRANSIT SySTEM DEvELopMENT pRojECT Owner: Makkah Mass Rail Transit Company Budget: $16bn Progress: Invitation to bid

kSA PROJECTS Amid lower hydrocarbon revenues, Saudi Arabia is giving priority to investments in its energy and transportation sectors 22 INFRASTRUCTURE MIDDLE EAST

April 2016

The Makkah metro comprises four lines with a total length of 114km and 62 stations, and is part of a comprehensive transport system including various types of buses. In December last year, the client announced that it expects to award five contracts worth $8.8bn for Phase 1 of this scheme in the first quarter of 2016. Four of the packages will be for lines B and C and include 44km of track and 22 stations. The contracts will be civil 1 (tunnels), civil 2 (viaducts), systems and finishing, and rolling stock. The fifth contract is for a bus system. Kuala Lumpur transport agency Prasarana has been awarded a $2m contract to provide consultancy services during the implementation of Phase 1.

TEN KSA INFRASTRUCTURE PROJECTS

jEDDAh pUbLIC TRANSpoRT DEvELopMENT pRojECT Owner: Jeddah Municipality Budget: $12bn Progress: Prequalification process underway The three-line Jeddah metro will be a 149km elevated metro system, of which 20km will be underground. It is scheduled to start operations in 2020. In August last year, ACES was awarded the geotechnical investigation contract for the preliminary engineering design phase . In September, the client issued a Request for Qualification (RFQ) for the Bus Network (Design & Build) project. The main contracts for three separate packages of the metro are due for award in 2016, with the completion date for green, orange and blue lines set for 2020 and the red line for 2022. In December 2015, Jeddah Metro Company issued a prequalification tender for supply of rolling stock, train control and signalling system for the metro scheme.

INTEgRATED SoLAR & CoMbINED-CyCLE powER pLANT pRojECT – TAIbA Owner: Saudi Electricity Company (SEC) Budget: $3bn Progress: EPC bid stage The project involves an EPC contract to build an Integrated Solar and Combined-Cycle (ISCC) power plant with total capacity of 3,600MW. The solar component’s capacity is 180MW. SEC has extended the deadline to May 15, 2016 for submission of technical proposals for the EPC contract, a significant extension on the previous submission date of mid-February 2016. Nine bids have been received for the owner’s engineer role on this project. US firm Black & Veatch is understood to have submitted the lowest bid, followed by Sweden’s AF Consult and Germany’s Lahmeyer. Other bidders include WorleyParsons, SNC Lavalin, Poyry, PB Power, ESBI and Ramboll.

April 2016

RAS TANURA REFINERy CLEAN FUELS & ARoMATICS pRojECT Owner: Saudi Aramco Budget: $3bn Progress: EPC bid stage The project involves an EPC contract for the implementation of major modifications to the existing refinery at Ras Tanura, aimed at complying with the new environmental regulations and producing highergrade clean fuel. The two packages of the project are a) Offsites and Utilities b) Naphtha and Toluene. In November 2015, Saudi Aramco announced that eight companies have prequalified for Package 1 with five for Package 2. In February this year, the client set a deadline and invited companies to submit bids on the two main packages of this project. Reuters reported that the fresh due date for bids is in May 2016, with an award expected in August. The project was originally due to go on stream this year.

INFRASTRUCTURE MIDDLE EAST 23

TEN KSA INFRASTRUCTURE PROJECTS

hASbAh SoUR gAS FIELD ExpANSIoN pRojECT

MASTER gAS SySTEM ExpANSIoN pRojECT – phASE 2

Owner: Saudi Aramco Budget: $1.5bn Progress: EPC bid stage

Owner: Saudi Aramco Budget: $1.5bn Progress: Contract award underway

The project involves project expansion of the offshore Hasbah sour gas field, which will feed the planned Fadhili gas plant with 2m standard cubic feet per day (scfd) of gas, while the remaining 500m scfd will come from Khursaniyah. Gas is a top priority for Saudi Arabia as it tries to burn less crude oil for power generation and desalination. According to Middle East Tenders, two companies have emerged as frontrunners to win the EPC contract. They are US-based Dynamic Industries and Italy’s Saipem.

Bids submitted by Dynamic Industries and Saipem are thought to be very close in terms of price, with McDermott the third lowest bidder and Larsen & Toubro submitting the highest value proposal. Hasbah and another offshore gas field, Arabiyah, will feed major gas plant Wasit.

24 INFRASTRUCTURE MIDDLE EAST

The project involves an EPC contract for the second phase expansion of a Master Gas System Expansion (MGSE) project. In February 2016, Saudi Aramco awarded local firm Saudi KAD Construction the three pipeline packages, worth a total of about $1bn.

Last month, Zamil Projects was awarded a contract worth $6.8m from China’s Shandong Electric Power Construction Corporation (SEPCO) to provide engineering, procurement and production services, as well as mechanical works for the HVAC systems and equipment on this scheme. Last year, SEPCO was awarded the $750m EPC contract for the compressor booster station package aimed at raising the system’s capacity to 12.5bn cubic feet of gas a day (cfd) by 2018, from 8.4bn cfd currently.

April 2016

pETRoChEMICALS pLANT pRojECT – yANbU Owner: Farabi Petrochemicals Company Budget: $1bn Progress: Work underway The plant will concentrate on two dozen grades of surfactant allied business chemicals, including detergents, wetting agents, emulsifiers, foaming agents and dispersant. The UK’s Amec Foster Wheeler completed a concept study and technology selection for production of low aromatics solvent and the treatment of heavy fuel oil. The overall concept for the petrochemicals scheme includes a world-scale LAB plant and a range of units producing specialty chemicals from a diesel fuel stock. In April last year, the client awarded the FEED and project management consultancy (PMC) contract to Technip. In December 2015, the client completed the prequalification of firms for the EPC contract on the project.

TEN KSA INFRASTRUCTURE PROJECTS

DUbA 1 INTEgRATED SoLAR CoMbINED-CyCLE pLANT pRojECT

kINg FAhD CAUSEwAy ExpANSIoN pRojECT

jEDDAh 4 DESALINATIoN pLANT pRojECT

Owner: SEC Budget: $600m Progress: EPC awarded

Owner: King Fahd Causeway Authority Budget: $535m Progress: Work underway

Owner: Saline Water Conversion Corporation Budget: $100m Progress: EPC stage

The project involves an EPC contract to build an ISCC power plant with a capacity of 550MW in the Tabuk region of Saudi Arabia. The plant will primarily burn natural gas but will generate 50MW with the support of solar energy to increase fuel efficiency. General Electric (GE) was awarded the original equipment manufacturer (OEM) contract for this project. The contract includes 2 F-class gas turbines, a steam turbine, generators, heat recovery steam generators, condenser, control system and a long-term service agreement. In November last year, Spain’s Initec Energía, together with local partner SSEM, was awarded the EPC contract. Initec’s combined bid beat back the challenge from compatriot Abener; its combined cycle bid was 6.8% lower.

This project involves expansion of the King Fahd Causeway. In January 2015, Canada’s SNC Lavalin was awarded the contract to carry out feasibility study of the construction. In February, stateowned Bahrain News Agency (BNA) reported that the expansion is expected to start within six months and involves increasing the number of lanes from 17 to 45, representing an increase of 120% to 132%.

The client has already received bids for a contract to build a new island close to the Saudi coast, as part of this project. The marine works contract entails dredging and reclamation of about 6m m3 of material, together with rock protection. Another island close to the Bahraini coast is expected to be tendered later.

Jeddah 4 will enhance water resources for the city’s five million people by creating a 400mld reverse osmosis (RO) plant. In February 2015, Black & Veatch was appointed by SWCC as engineering and design consultant for the project. The scope includes studies of site and adjacent sea conditions, conceptual process and engineering design, and preparation of tender documents. In October last year, SWCC tendered the main construction contract and invited contractors to submit proposals. Last month, SWCC extended the deadline to submit bids for the EPC contract from the previous deadline of March 15, 2016. SWCC is also considering using the independent water project (IWP) procurement model instead of the EPC model as originally planned.

April 2016

INFRASTRUCTURE MIDDLE EAST 25

TECHNOLOGY

INTELLIGENT INFRASTRUCTURE

MANAGING ASSETS

Malcolm Walters, COO, Bentley Systems, speaks to Infrastructure Middle East on the rationale behind his company’s foray into asset management space, how infrastructure software companies are capitalising on technological advances, and how Bentley can be part of the solution for tackling climate and economic challenges

As a provider of infrastructure design software and solutions, what prompted Bentley to get into the asset management space?

If you look at our user base, owners make up 50%, with engineering and contracting firms that serve them making up the remaining 50%.

Historically, a lot of owners used to do their own design and engineering, but increasingly they are getting engineering and contracting firms to do the design while they concentrate more on the 26 INFRASTRUCTURE MIDDLE EAST

operation of their assets. As a result, we are increasingly being asked to address issues related to asset management.

Also, deep in our hearts, we knew that sooner or later we would end up addressing the asset management side.

If you look back, when the design model was handed over to construction as drawings, the model died at that point. The marked-up drawings would be handed over by construction to the owner after the asset got built, and that’s how the industry worked for April 2016

decades. But at Bentley, we have always believed that this rich information, while always providing tremendous value in construction, could deliver its greatest value in asset operations.

Since half our users are owners, they are now starting to get enlightened about the value of the data coming to them.

Where the portfolio is concerned, the gaps in asset management are way bigger than in the design space and construction space, because it is a new territory; but that’s also

TECHNOLOGY

fine because that’s what makes staying in the business fun.

How are you different from traditional Enterprise Asset Management (EAM) software providers?

I don’t think we compete with them.

Traditional EAM systems address maintenance planning and scheduling and they are tied into Enterprise Resource Planning (ERP) systems, whereas our focus is on predictive maintenance. By identifying patterns

from the data generated by sensors embedded in physical assets, we can tell the owners or operators that if a particular pattern comes up, the asset needs to be attended to immediately, irrespective of whether it is on a three-month or six-month maintenance schedule. We will initiate the EAM system to generate a work order to attend to that equipment.

How do you address perception issues arising from the fact that April 2016

EAM or CMMS solutions have cornered maintenance space?

We don’t want to be in the procurement space. We don’t want to deal with invoices, payments, purchase order status and the like. Rather, we would like to take the detailed design and turn that into a Bill of Material (BOM) that can feed procurement, and equally, pull out from procurement when the material is supposed to be delivered to do a construction plan.

We can interface with procurement INFRASTRUCTURE MIDDLE EAST 27

TECHNOLOGY

in a way that makes BOM information useful to them and vice-versa.

Predictive maintenance has always been seen as an aspiration for asset-heavy companies. Are we any closer to that goal?

Bentley’s acquisition of Ivara in 2012 brought predictive maintenance into our portfolio. Let us look at the basics first. In the area of maintenance, there is an actual way you evaluate a piece of equipment statistically to say this is the maintenance schedule we are going to adopt. Once you establish that rule-based schedule for that equipment, you measure to see where you are on those rules.

The way I explain it, you want to spend your maintenance dollars before something breaks, because once it breaks, it is not only more expensive to fix but there is also production downtime. Ideally, I would like to spend that money a day before that asset is scheduled to break. But knowing what that day is is the hardest part.

So you create a plan for every piece of asset that you are going to measure.

Sensors embedded in that asset will give feedback on what’s happening, and if, at some point, that asset is going to trip over, you would want to fix it at that point instead of waiting for the schedule to come in. What we do is tell the EAM system to fix the equipment now.

The other thing you want to do is not spend money fixing something that needs to be replaced, because that is a real waste of money. Ivara helps you make that decision based on the equipment’s history.

How are infrastructure software companies factoring technological advances outside their core areas, like the Internet of Things (IoT) and drones, into their products?

28 INFRASTRUCTURE MIDDLE EAST

Our advanced research group is always looking beyond the headlights, so to speak, and they are always giving us ideas to play around with. But it will be three to five years before you can start seeing products coming out of that. For example, the journey to our recently launched ContextCapture product – which enables users to create 3D models of existing conditions using photos taken with any digital camera – started eight to ten years ago with laser scanning.

Today, laser scanning is pretty much in every workflow, part of the reason being everything that we build is in the context of something else. With laser scanning, you can capture the as-built context.

But laser scanning requires expensive equipment to capture the scan. It also generates enormous files, and managing those files as part of the workflow is hard. Our Pointools product tackles that challenge by streaming the point clouds to you.

Lastly, there is no engineering content in a laser scan – it’s just a bunch of dots. You can create engineering content by building 3D design inside the scan, but that’s a lot of work.

Laser scans provide a very accurate point cloud that can be part of a new 3D design, and you can see where the connection points are. But there is no engineering content in those dots.

With ContextCapture, we have solved all the challenges I mentioned earlier. You can start with a digital photo taken by a smartphone and construct highly detailed 3D models of virtually any size. The files are not as large as laser scans, so you can also deal with the data pretty efficiently. The software generates a detailed reality mesh, which gives you measurable, engineering content with precise geometric accuracy. I April 2016

“Here are two things that I like to think are going to happen. One, we are going to be a lot more careful about what we build. A new bar has to be set on the economic justification front.

Second, whatever we build, it should be with the idea that the asset is going to last 100 years. In other words, it shouldn’t need a major overhaul after 20 years” think ContextCapture represents a major leap in reality modelling.

With the acquisition of Amulet last year, we also acquired the ability to do predictive analytics on an asset using IoT. One of our clients, South Australia Water (SA Water), used Amulet to evaluate disparate data from a variety of sources to make real-time decisions about a desalination plant. Now desalinated water is extremely expensive, and you don’t want to run it all full steam unless you have to. Being able to predict when you have to is useful.

TECHNOLOGY

challenge for Dubai, especially in the context of sea level rise.

Extreme weather events like storms and flooding have helped put the spotlight on resilient infrastructure.

Can Bentley be part of the solution?

Cities created their plans based on the 100-year storm, and now we see 100-year storms coming every 20 years. But if you have an effective model of your city, you can simulate anything including 100-year storms, and what happens when water levels rise. For example, using Bentley’s ContextCapture, you can build an accurate model of your city. You can add to that your storm drainage system and

its actual capacity in terms of removing water from the area. You can simulate a major storm and get a highly accurate model. Now all you need to do is work out how 100-year storms become 20year storms, how often are they going to happen, what the water level is going to be. We are all going to get better at that, but the bigger question is – is software going to help our understanding of this? And it is clear that it will, because Bentley is in the geo-spatial space, and the water, wastewater, stormwater drainage spaces. Resilient infrastructure represents a fascinating April 2016

Finally, falling oil prices have upset the momentum in infrastructure development in the Middle East due to fiscal constraints imposed by low oil revenues. Again, how do you see infrastructure software companies being part of the solution?

The Middle East is in some ways unlike any other place in the world, because there hadn’t been a lot of constraints on public funding.

However, a sustained low oil price environment will certainly impact public spending. The Middle East will have to evaluate capital projects like the rest of world does. In other words, projects will have to meet the economic sense criteria to move forward.

Here are two things that I like to think are going to happen. One, we are going to be a lot more careful about what we build. A new bar has to be set on the economic justification front.

Second, whatever we build, it should be with the idea that the asset is going to last 100 years. In other words, it shouldn’t need a major overhaul after 20 years. Additionally, the decisions needed to ensure that an asset sustains over a 60-75-100-year life cycle will have to be made differently.

I think we are going to spend more time in the conceptual design phase than we used to. Now we are capable of building a very detailed model, and because we have that model, we can understand how we will operate over the long haul. That’s good news for the entire industry everywhere.

And that’s why the UK, for example, is laying down BIM mandates. I believe that information models will have us building more structurally sound assets that are going to be more sustainable in the long run.

INFRASTRUCTURE MIDDLE EAST 29

MIDDLE EAST INFRASTRUCTURE TENDERS

Infrastructure Tenders

Our monthly analysis of new tenders and key projects across the region

OMAN NATIONAL RAILwAy PROjECT

hAIL & ghAShA OFFShORE gAS FIELDS PROjECT

AL ABDALIyAh INTEgRATED SOLAR COMBINED CyCLE

NORTh ALwAThBA hOUSINg COMPLEx DEvELOPMENT

BUDgET: $15 BILLION

BUDgET: $10 BILLION

BUDgET: $3 BILLION

BUDgET: $2 BILLION

Territory: Oman Client Name: Ministry of Transport Description: Engineering, Procurement & Construction (EPC) contract for 2,135kmlong national railway network.

Period: 2018 Status: New Tender

Territory: UAE Client Name: Abu Dhabi National Oil Company (ADNOC) Description: Development of sour gas from two offshore fields with estimated capacity of 1bn cf/d.

Period: 2016 Status: New Tender

Territory: Kuwait Client Name: KAPP Description: Build-operatetransfer (BOT) contract for the construction of a 280MW thermal solar power and natural gas hybrid plant.

Period: 2017 Status: New Tender

Territory: Abu Dhabi Client Name: Musanada Description: The project will be located north of Baniyas and south of Shamkha and house 130,000 people.

Period: 2017 Status: New Tender

30 INFRASTRUCTURE MIDDLE EAST

April 2016

MIDDLE EAST INFRASTRUCTURE TENDERS

Top Tenders UAE SOLAR ENERgy IPP – SwEIhAN Project Number: MPP2999-U Client Name: Abu Dhabi Water & Electricity Authority (ADWEA) Address: ADWEA Building, Al-Falah Street, Abu Dhabi Phone: (+971-2) 694 3333 Fax: (+971-2) 626 7725 Website: www.adwea.gov.ae Description: A 350MW Solar Photovoltaic Independent Power Project (IPP) in Sweihan, Abu Dhabi. The developer or developer consortium will own up to 40% of the special purpose vehicle which will implement the project including development, financing, construction, operation, maintenance and ownership.

Status: New Tender Tender Categories: Power and Alternative Energy

offices, conference centres.

Status: New Tender Tender Categories: Hotels

OMAN SALALAh INDEPENDENT wATER PROjECT (IwP) Project Number: 17/2015-O/11 Client Name: Oman Power & Water Procurement Company Address: Floor 5, Bldg 5, Muscat Grand Mall, Tilal Complex, Al Khuwair Al Janubiyyah, Ruwi PC 112 Phone: (+968) 2450 8400 Website: www.omanpwp.co.om Description: The project involves the construction of an Independent Water Project (IWP) with capacity of 100,000m3/day with RO technology for desalination.

Status: New Tender Tender Categories: Water Works

KUWAIT AL ZOUR NORTh IwPP – PhASE 2

DUqM OIL REFINERy DEvELOPMENT PROjECT – PhASE 1 Project Number: MPP1632-O Client Name: Oman Oil Company Address: Al-Harthy Complex, Muscat PC 118 Phone: (+968-2457 3100 Fax: (+968) 2457 3101 Website: www.oman-oil.com Description: The project involves an EPC contract for the development of a 230,000bpd grass-roots refinery in Duqm. The contracts linked to the establishment of this refinery will be awarded towards the end of 2016.

Period: 2019 Status: New Tender Tender Categories: Industrial & Special Projects

Project Number: ZPR445-K Client Name: Kuwait Authority for Partnership Projects (KAPP) Address: Touristic Enterprises Co Bldg, Shuwaikh Phone: (+965) 2496 5900 Website: www.ptb.gov.kw Description: Build-OperateTransfer (BOT) contract for the construction of Al Zour North independent water and power project (IWPP) with capacity of 1,500MW of power and 102 million gallons a day of desalination – Phase 2.

Status: New Tender Tender Categories: Power & Alternative Energy; Water Works

PrOdUcEd IN AssOcIATION WITh MIddlE EAsT TENdErs

UNION OASIS MIxEDUSE REAL ESTATE DEvELOPMENT PROjECT Project Number: MPP2263-U Client Name: RTA Address: Marrakech Road, Dubai Phone: (+971-4) 284 4444 Website: www.rta.ae Description: Development of mixed-use scheme comprising residences, serviced apartments, hotels,

April 2016

INFRASTRUCTURE MIDDLE EAST 31

EVENTS

CoMINg SooN

INNoTRANS 2016 20-23 September 2016, Berlin Every two years, the world’s rail industry meets at InnoTrans in Berlin. For rail industry professionals, the leading international trade fair for rail transport technology is a firm fixture on the calendar of events.

At InnoTrans 2014, 133,595 trade visitors from 146 countries came to Berlin to find out about the innovative products of the global rail industry, which were displayed in 40 halls by 2,761 exhibitors from 55 countries. More than 3,000 students from around the world travelled to the German capital to find out about the growing number of job opportunities in this sector.

At the outdoor display site, 149 innovative rail vehicles were displayed on tracks totalling 3,500 metres in length.

In 2014, for the first time, visitors were able to admire rolling stock exhibits on a purpose-built Special Gauge display area.

In the Railway Infrastructure hall, which has continued to expand, more than 550 international exhibitors displayed their innovative products on an overall area covering more than 30,000 sqm. In addition to signalling and control systems, rail track technology and equipment for overhead lines were also exhibited in six halls. Extensive services for planning and monitoring construction work rounded off the exhibition.

According to organisers Messe Berlin, current booking levels indicate that the next edition of this leading trade fair will continue its history of success. Around 90% of the overall display area has already been booked.

Contact: Kerstin Schulz Tel: +49 30 3038 2032 Email: k.schulz@messe-berlin.de www.innotrans.de

32 INFRASTRUCTURE MIDDLE EAST

LuxLivE 13-14 APRiL, 2016 ABu DHABi With more than 4,000sqm of exhibition space and over 70 of the world’s leading lighting brands, LuxLive is set to repeat its success in the UK. Contact: Peter Rowledge Tel: +44 7740 110 261 www.luxlive.ae AiRPORT SHOW 09-11 MAy, 2016 DuBAi The region’s massive airport development projects and infrastructure investments will be under the spotlight at the 16th

MENASoL 2016 25-26 May 2016, Dubai MENASOL 2016 is MENA’s biggest convergence of leading solar executives, financiers and government representatives. The 8th annual edition returns fresher, bigger and better than ever before.

Over 60 handpicked experts from across the value chain will speak on a variety of topics. Speakers from institutions like Kuwait Oil Company, National Bank of Abu Dhabi and Dubai Supreme Council of Energy will address key challenges faced by the solar industry.

MENASOL 2016 will welcome over 600

Mark your diary...

key players in the solar industry to generate new business opportunities, exchange ideas and forge new partnerships to cement their share of the MENA market.

The event will focus on new market trends, the latest technology available, the development of government regulations and innovative strategies driving the MENA solar market.

Airport Show, which will feature over 300 exhibitors.

Contact: Raed El Forkh Tel: +971 2 409 0484 www.theairportshow.com FM ExPO 23-25 MAy, 2016 DuBAi FM EXPO is the Middle East’s premier event for the facilities management industry, and serves as a meeting platform for industry professionals.

Contact: Octavio Murekian Tel: +44 207 422 4305 Email: octavio@pv-insider.com uS toll-free: 1800 814 3459 ext 4305

April 2016

Contact: DMG Events Tel: +971 4 4380355 www.fm-expo.com

thalesgroup.com

Ground Transportation solutions Wherever safety and security matter, we deliver PASSENGER SATISFACTION Offering real time information and ensuring security TRANSPORT SAFETY Automate critical decisions to eliminate human errors

OPERATIONAL EFFICIENCY Ensure optimised network management with minimal investment

NETWORK CAPACITY Improve flow with automated signalling for optimal train frequency

SEAMLESS JOURNEYS Unique fare systems for all transport modes

Millions of critical decisions are made every day in transportation.

The ability to run networks smoothly and efficiently is crucial to economic growth and quality of life. Thales is at the heart of this.

We design, develop and deliver equipment, systems and services, providing end-to-end solutions. Our integrated smart technologies give decision makers the information and control they need to make more effective responses in critical environments. Every moment of every day, wherever safety and security are critical, Thales delivers.

Search: Thalesgroup

REVENUE PROTECTION Innovative solutions to collect revenues