Infrastructure Middle East November 2014 by Infrastructure ME

ISSUE 007 | NOVEMBER 2014

anaLySIS

oIL & GaS

the right time? IMF advocates infrastructure push

convergence risks Cyber attacks target energy sector

p30

p44

UtILItIeS

tecHnoLoGy

Legacy of growth Megger’s electronics makeover

design deadlines Cutting down CAD modelling time

p36

p46

eXcLUSIVe InterVIew

SUbSea ProSPectS

e-marine’s omar jassim bin Kalban explains why telecom’s future is submarine

PLUS toP 10 downStream ProjectS In tHe Gcc

INTRODUCTION

GROUP GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP COO GINA O’HARA

PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5713 EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 5473 CONTRIBUTING EDITOR ASHISH SARAF ashish.saraf@cpimediagroup.com +971 4 375 5495 SUB EDITOR AELRED DOYLE ADVERTISING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 433 2857 SENIOR SALES MANAGER JUNAID RAFIqUE junaid.rafique@cpimediagroup.com +971 4 375 5716 SENIOR SALES MANAGER LIAM FIRKIN liam.firkin@cpimediagroup.com +971 4 375 5495 MARKETING MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DESIGN ART DIRECTOR SIMON COBON JUNIOR DESIGNER PERCIVAL MANALAYSAY CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH M rajeesh.nair@cpimediagroup.com +971 4 440 9147 PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713

Back to basics revisited hortage of engineering talent was a recurring theme in many of the interviews I did for this issue. Whether in oil & gas or the electrical industry, engineering as a discipline seems to be losing out in the high-stakes race for young talent. Today’s youth, it seems, prefer to bypass the messy workplace of engineering for the perks and comfort of the services or the knowledge sectors. Oil & gas companies are finding it difficult to recruit skilled engineers to fill positions left vacant by a retiring workforce; the electrical industry’s challenges were summed up by Peter Frank, chairman of electrical test and measurement major Megger, as a “reinforcing” loop, where “because you haven’t got skilled people, you want more intelligent instruments and because you have more intelligent instruments, you can afford to operate with a guy who perhaps doesn’t have that skill.” (If this got you thinking, turn to Page 36) Much has been written about the relationship between the declining numbers of Science, Technology, Engineering and Mathematics (STEM) graduates and the talent deficit confronting the engineering profession. However, questions are also being asked about the quality of engineers entering the workforce and the mismatch between the skills they possess and the requirements of the jobs. And what if technological advances and the spread of digitisation make it possible for organisations to put a non-engineer on a job that required engineering knowledge in the past? This could explain why pay scales in the field haven’t exactly shot up to reflect the demand-supply gap. But the overall consensus seems to be that our children aren’t getting what one expert calls “a solid grounding” in the STEM subjects. In his IEEE Spectrum article ‘The STEM Crisis Is a Myth’, contributing editor Robert N Charette calls on governments and industry to focus their efforts on making children literate, in the true sense of the term, in the STEM subjects as well as the arts. This, he argues, will “give them the best foundation to pursue a career and then transition to new ones”. A strong foundation does matter, whatever the field.

DIGITAL DIGITAL SERVICE MANAGER TRISTAN TROY MAAGMA Published by

REGISTERED AT IMPZ PO BOX 13700, DUBAI, UAE TEL: +971 4 440 9100 FAX: +971 4 447 2409 WWW.CPIMEDIAGROUP.COM Printed by Printwell Printing press LLC

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

© Copyright 2014 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.

November 2014

INFRASTRUCTURE MIDDLE EAST

At the 2014 Construction Machinery Show we sold 70 units and 100 more units are under discussion. We have delivered a positive message to our existing clients, our competitors, and grabbed new clients. I think gaining such an appreciation from all members in the construction equipment sector is a great honour and will encourage us to work very hard to keep the same level of style, image, and standards.”

This year the CM Show team delivered an exhibition Saudi deserves. For years, we have seen a vision in this Show and this year the vision was achieved. We wanted quality traffic and we saw equipment and company owners; and we were able to offer some promotions to entice sales. I saw an increase in our sales immediately. Our principles, Doosan and Everdigm, really enjoyed themselves. We anticipate the upcoming years to be even better.”

The Construction Machinery Show was perfect from an awareness point of view. We explained Roots Group Arabia’s capability of covering the construction industry with all of its needs and requirements. The attendance was good especially during weekdays and towards the end of the exhibition. See you next year.”

Al-Qahtani & Sons Khaled El Shatoury, Managing Director

Saudi Diesel Equipment Ahmed Alkooheji, Marketing Manager

Roots Group Arabia Abdulaziz Felemban, Brand Manager

Co-located with

Raz Islam Publishing Director raz.islam@cpimediagroup.com Mobile: +971 50 451 8213

Michael Stansfield Commercial Director michael.stansfield@cpimediagroup.com Mobile: +971 55 150 3849

CONTENTS

009 November 2014 32

COVER STORy

REgULARS

Subsea prospects

06 Regional update

E-marine’s Omar Jassim Bin Kalban explains why telecom’s future is submarine Report by Anoop K Menon

Bahrain plans $22bn infra spend; Kuwait to eliminate energy subsidies ALSO: BizBriefs

09 Global update Oil demand to weaken; World Bank sets up Global Infrastructure Facility

10 In focus

TOp 10 FEATURE

Downstream projects The GCC’s downstream investments are aimed at economic diversification and local value creation. Infrastructure ME presents the region’s premier downstream projects

RAKIA’s growth plans; Thales’ rail successes in the Middle East

20 Bottom line matters 23 Infrastructure tenders 48 Executive insight Acting on the solar vision

51 Events 52 Infrastructure milestones This month: Bahrain Airport

INDUSTRy SECTORS COLUMN

UTILITIES

18 Cutting energy costs

40 Broader Baseload

ANALySIS

OIL & gAS

30 The right time?

44 Perils of convergence

UTILITIES

CONSTRUCTION

36 Legacy of growth

46 Meeting project deadlines

AspenTech’s Ossama Tawfick on how utility planning software can help process plants reduce their energy costs

Public investment in infrastructure could become a powerful policy tool to counter a weak global recovery

Peter Frank, Chairman of Megger Group holds forth on the electrical test and measurement industry’s electronic future

INFRASTRUCTURE MIDDLE EAST

November 2014

Colin Elcoate of SPX Flow Technology on how new nuclear technologies could deliver cheap, secure and resilient power

Oil & gas companies are increasingly concerned about securing their business-critical operations against cyber-attacks

Reducing CAD model building time helped Dar Al-Omran meet the tight design deadlines for Jordan’s Zarqa water project

regional UPDaTe

the world’s first purpose-built aerotropolis. He said: “The Expo 2020 site is strategically located within Dubai World Central, which is the future economic driver of the Emirate of Dubai.”

UAE The UAE Cabinet has cleared a $13.37bn draft union budget for financial year 2015, an increase of 6.3% from 2014. The bulk of the budget has been allocated to health, education and social services, as well as developing government services for UAE citizens. The social development and social benefits sector received 49% of the total federal budget, while government sector affairs received 41%. The budget allocated $49m (3.7%) to the infrastructure and economic sector, $44m (3.2%) to financial assets and $27m (2.1%) to federal spending. The Council of Ministers also okayed issuing the executive regulations of the UAE Competition Law, which

Expo 2020 Dubai has shared its preliminary plans and priorities for the Expo with BIE

regulates economic activities and exploitation of intellectual property rights (IPR). The Expo 2020 Dubai Committee shared its preliminary plans, priorities and governance with the Bureau International des Expositions (BIE), the intergovernmental organisation overseeing the

World and International Expos. Khalifa Al Zaffin, Executive Chairman of Dubai Aviation City Corporation (DACCP) and Member of the Expo 2020 Dubai Higher Committee, presented an overview of the site’s positioning and legacy, highlighting its strategic placement within Dubai and the UAE, especially in the context of Dubai World Central,

Sultanate. An international consultant is currently assisting the company in the preparation of tender documents, which are due to be floated before the end of this month. An award is likely by the first quarter of 2015. Recently, ONTC announced specifications governing the buses that will be eventually acquired and deployed for intra-city, intercity and long-distance operation.

Oman Oman’s projects market is set to receive a massive boost, with 2015 witnessing an influx of up to $26bn in capital expenditure. As much as $145bn worth of projects are currently underway or will be awarded in Oman, according to MEED Projects. Opportunities in the pipeline include the latest Duqm developments valued at $12.5bn and fisheries harbours valued at $13.6bn. Among the projects at the forefront of Oman’s aggressive expansion programme are the $26bn Khazzan & Makarem Fields projects, the Suwaiq IWPP and the Haima Solar Thermal Hybrid Power Plant. Furthermore, $13bn is to be invested in the Takamul

INFRASTRUCTURE MIDDLE EAST

The UAE Telecommunications Regulatory Authority (TRA) is rolling out a federal government network, or FEDnet, which will let federal and local government entities share infrastructure and services on a cloud system. The National, quoting TRA’s director of eGovernment operations Saeed Belhoul, said that FEDnet will reorganise existing internet-based networking between government entities to connect via one centralised hub. TRA hopes to connect more than 50 government entities to FEDnet from February 2015.

A GCC first Omani and UAE officials sign the pact for a 50MW wind farm in Dhofar

downstream project and ORPIC’s Liwa Plastic Project Initiative, with another $12bn dedicated solely to the development of Duqm as Oman’s new energy, industrial, residential and tourism and leisure hub. Government-owned Oman National Transport Company (ONTC) is preparing to commission an ambitious November 2014

master-plan study that will transform the company’s evolution into an internationalclass bus operator over the 2015-2040 timeframe. According to the Oman Daily Observer, the initiative is an integral part of the Omani government’s strategy to roll out an integrated public transport network initially in Muscat City and later in other areas of the

Oman will be home to the first large-scale wind farm in the Gulf Cooperation Council. Abu Dhabi’s Masdar has signed a joint development agreement with the Rural Areas Electricity Company (RAECO) to build the $125m, 50MW wind farm in the Dhofar Governorate. Construction begins in the final quarter of 2015. Upon completion, wind energy will represent 7% of Dhofar’s installed generation capacity.

REGIONAL UPDATE

Bahrain Bahrain will invest $22bn in infrastructure over the next four years, covering various sectors, said Kamal bin Ahmed, Minister of Transportation and Acting Chief Executive of the Bahrain Economic Development Board (EDB). Projects include the Bahrain International Airport modernisation project, the development of Al Jazair Beach, investment projects in Durrat Al Bahrain, expansion of the Aluminium Bahrain (ALBA) smelter and the modernisation project being carried out by Bahrain Petroleum Company (BAPCO). Bahrain is also investing in other areas, including housing and accompanying infrastructure

Bahrain Airport Prequalification deadline for the new terminal has been extended

projects, one of the Kingdom’s priorities which is included in the $7.5bn provided as part of the GCC Development Fund. Bahrain aims to create 40,000 new housing units in a quick and efficient manner, along with investment in education facilities to support this growth. In 2014, Bahrain’s Real Gross Domestic Product is expected

to be around 4%, said Minister for Commerce and Industry Dr Hassan Al Fakhro, speaking at the ninth edition of Invest in Bahrain. At the event, the authorities showcased investment opportunities in the metal, plastics, glass panelling, aluminium and other small and medium industries. Investment in 2013 was around

$1bn, the minister said. The Bahrain International Investment Park in Salman Industrial City has attracted $2bn, 85% of which is direct foreign investment. Among the incentives for people investing in Bahrain is the Free Trade Agreement with the US, which gives an investor, particularly from the industrial sector, many opportunities to enter the largest market in the world without US taxes. Bahrain’s Ministry of Transport has extended the contractor prequalification deadline for the main construction works of Bahrain International Airport. The work for the new passenger terminal comprises approximately 170,000 sqm of buildings, including all general civil engineering works, MEP, aircraft parking, and car park interior and exterior.

FINISHED PRODUCT SALES HOSE & BELT MANAGEMENT HYDRAULIC TUBING & PIPING HYDRAULIC SYSTEM REFURBISHMENT GATES ENGINEERING & SERVICES

MENA Headquarters, Jebel Ali Free Zone Dubai, United Arab Emirates Telephone +971 4 886 1414 Fax +971 4 886 1413

FLUID POWER EQUIPMENT DESIGN & BUILD mena@gates.com <> Gates.com

regional UPDaTe

projects including the Clean Fuels project, the Mubarak Al-Kabeer port on Boubyan Island, the international airport expansion project and the metro projects.

Kuwait Kuwait has started eliminating subsidies as part of a broader reform to contain current spending, the International Monetary Fund (IMF) said. According to an IMF report, subsidies have been eliminated for diesel, with a potential saving of 0.5% of GDP. Recently, the cabinet accepted the government’s proposal for reducing subsidies for kerosene and electricity. The IMF report notes that containing current spending growth by restraining wage bills and reforming subsidies is important for ensuring fiscal sustainability. Energy subsidy accounts for approximately $17.63bn annually, roughly a quarter of the government’s projected spending this fiscal year.

Five-year plan Kuwait will spend $21.7bn on stategically important projects

The Kuwait government had awarded more than $20.7bn worth of contracts by the end of August, almost twice as much as last year, making the country’s projects market among the fastest growing in the region. The National Bank of Kuwait (NBK), citing data from MEED Projects, said $17bn in contracts is

expected to be awarded before the year-end. The country’s projects market is the fourth largest in the GCC with a market value of $217bn. Kuwait’s new 2015-2020 fiveyear plan envisages average annual investment spending of $40.7bn over the next five years. From this, $21.7bn per annum has been earmarked for public investment in a range of strategically important

and services throughout Saudi Arabia. It is currently overseeing more than 30 existing and underdevelopment cities across a total area of approximately 164m sqm, including locations such as Riyadh, Jeddah and Dammam. Saudi Arabia’s industrial cities employ more than 350,000 workers.

Saudi Arabia Saudi Arabia is expected to achieve a budget surplus of $39.18bn this year on revenues of $2.93tn, over the projected $227.89bn budget estimated earlier in the year. The analysis by Al-Eqtisadiah daily factors in oil revenues of $266.54bn and non-oil revenues of $26.65bn. The expected surplus is based on the average price of oil at $90/bbl for the rest of the year, compared to the average price of Brent oil at $105/bbl during the first nine months of 2014. Saudi daily oil exports averaged 6.73m barrels compared to local daily consumption of nearly 2.3m barrels, said the report. Saudi crude oil is normally sold at a discount of nearly $4 on the

INFRASTRUCTURE MIDDLE EAST

Kuwait is in talks with five major oil companies to help boost crude production and develop some of its oilfields, including the giant Burgan, said a report by Reuters. Kuwait has invited BP, Total, Royal Dutch Shell, ExxonMobil and Chevron to bid for an enhanced technical service agreement for the northern Ratqa heavy oilfield, said Hashem Hashem, chief executive of Kuwait Oil Company (KOC). He said Kuwait will try to conclude a contract by the first or second quarter of 2015. The plan is part of efforts to meet Kuwait’s target of producing 4m bpd by 2020. The OPEC member currently produces around 3m bpd and

Network Rail Britain’s railway operator is the front runner for an advisory deal in KSA

Brent; the price of Saudi crude oil averaged $101 during the first nine months and is expected to remain at $86 for the rest of the year. Oil revenues normally comprise nearly 90% of the Saudi budget. Saudi Industry Property Authority (MODON) has awarded Jacobs Engineering Group a two-year framework contract for design services November 2014

to support the development of various industrial cities throughout Saudi Arabia. Under the terms of this contract, Jacobs will provide concept and detailed design services for at least three new industrial cities. Established in 2001, MODON is responsible for the development of industrial cities with integrated infrastructure

Britain’s railway infrastructure operator Network Rail is the front runner for a major contract to advise Saudi Arabia on how to improve its railways. According to a report in The Telegraph, the value of the contract is more than $80m. Set up in 2012, Network Rail Consulting has tied up with CH2M HILL and Atkins to offer consultancy across advisory, strategic planning, asset management, operations and maintenance, and capital projects.

REgIoNAL UPDATE

contracts have been awarded by Iraq’s Ministry of Municipalities and Public Works, with the Japanese government funding the construction. Hitachi and Veolia’s share of the $213m deal is $87.85m. The plant is scheduled for completion by April 2017.

Biz Briefs Arabtec said that it expects to conclude a final agreement with Egyptian authorities before the end of the year, to kick off its $40bn housing project in the country. The ambitious project, which involves the construction of 1m residential units, will be implemented in four stages over the next five years in 13 locations. Phase one of the project will be in the cities of Obour, Badr and New Minya and will comprise 120,000 housing units, forming integrated cities that include public services and facilities, including schools, hospitals and places of worship. The first homes are to be delivered in early 2017. Emirates Global Aluminium (EGA) is planning to spend $3bn to build the UAE’s first alumina refinery by the end of 2017, after the completion of a feasibility study for a site in Abu Dhabi. Alumina, extracted from bauxite in the refining process, is used to produce primary aluminium. The refinery would produce 2m tonnes of alumina annually in the initial phase and an additional 2m tonnes in the second phase. Emirates Global Aluminium currently produces 2.4m tonnes of aluminium products each year – nearly 50% of the GCC’s annual aluminium production – and is the world’s fourth largest producer of the metal. Etihad Airways reported a 29% increase in revenues for the third quarter of 2014. The airline earned total revenues of $1.8bn on the back of passenger and cargo growth during the summer. James Hogan, President and

Riyadh Metro The geotechnical survey contract for the project has gone to ACTS

Chief Executive Officer of Etihad Airways, said: “Our focus on organic growth, codeshare partnerships and minority investments in other airlines has continued to produce strong results, despite the prevalence of industry challenges such as volatile oil prices, economic and political instability, overcapacity in the market and access constraints.” The airline’s global route network currently includes 110 existing or announced destinations. SNC-Lavalin Gulf Contractors (SLGC) has been awarded a $37m contract by Tabreed Parks Investment, a subsidiary of National Central Cooling Company (Tabreed), to provide district cooling facilities for the Meraasland Themed Entertainment Resort in Dubai. SLGC will provide design, procurement, construction and

commissioning services for a district cooling plant with an initial capacity of 25,000 refrigeration tonnes (RT) and an ultimate capacity of 35,000RT. With an extensive portfolio of nearly 40 completed district cooling projects, primarily in the Middle East, SLGC has become one of the leading providers of district cooling solutions in the world. Following the award of an engineering, procurement and construction (EPC) contract for a desalination plant in Basra in January this year, a consortium of Japan’s Hitachi, France’s Veolia Environnement and Egypt’s ArabCo has been awarded a follow-up EPC contract for the plant’s pretreatment works. The desalination package is bundled with a five-year operation and maintenance (O&M) deal. Both

Suez thermal project Siemens will supply the electrical equipment for the plant

November 2014

Advanced Construction Technology Services (ACTS), a consulting organisation in the field of construction materials and geotechnical engineering, has bagged the geotechnical survey contract on the Riyadh Metro project. The company’s geotechnical engineering experts will oversee drilling and logging works and conduct testing and analysis along Riyadh Metro Lines 1 and 2 of the six-line project. ACTS is also looking after quality control work for other megaprojects in the Kingdom, including the King Abdulaziz International Airport and the Kingdom Tower in Jeddah. Siemens has received an order to supply, install and commission major electrical components for the East Delta Electricity Production Company’s (EDEPC) Suez Thermal Power Plant in Egypt. The scope of contract covers the whole electrical package, including key electrical components such as UPS and all types of cables. In addition, Siemens is responsible for the installation, testing and commissioning of equipment supplied by EDEPC. The project site at Suez is located on the north coast of the Gulf of Suez, on the Red Sea. The oil-fired thermal power plant is part of a national plan to enhance the power supply network across Egypt and will be commissioned in June 2016. Siemens has supplied to some of the largest power generation facilities in the region.

INFRASTRUCTURE MIDDLE EAST 09

gLoBAL UPDATE

Round Up A weak global economy is expected to further weaken the demand for oil in 2015, the International Energy Agency (IEA) said. The IEA cut its 2015 estimate for oil demand growth by 300,000bpd from its previous forecast and now expects demand growth of 1.1m bpd to 93.5m bpd. The agency cut its 2014 estimate by 200,000 bpd to 0.7m bpd. It said demand would be supported by prices near fouryear lows – oil is around $88 a barrel from above $115 in June, a 25% drop resulting from a boom in US shale oil production, slow global growth and a strong dollar. The IEA said oil prices might not yet have dropped enough to force OPEC to make cuts, because an “analysis of light, tight oil supply suggests that most of it remains profitable at $80 a barrel Brent”. Rwandan President Paul Kagame has called on African countries to embrace regional integration in order to achieve economic transformation. Speaking at the second Annual Africa Global Business Forum in Dubai, Kagame said that Africa faces intra-trade deficit and lack of infrastructure to facilitate economic development. Trade between African countries stands at 15%, according to the United Nations; in Europe, intra-trade is at 72%, in Asia at 52% and in North America at 48%. Mohammed Dewji, CEO of Tanzanian multinational conglomerate MeTL Group, highlighted East Africa as an example of the benefits of regional integration. “To be successful in textiles,

010

INFRASTRUCTURE MIDDLE EAST

Long way IEA suggests that light, tight oil remains profitable at $80/bbl

you need cotton, power and cheap labour, East Africa has all the three,” he said. East Africa has formed the East African Community, a regional block made up of Kenya, Uganda, Tanzania, Burundi and Rwanda. The region, with a population of more than 120m people, has signed protocols including a common market and a customs union. The World Bank has launched a new Global Infrastructure Facility (GIF) to pave the way for institutional investors to help fill infrastructure gaps in the developing world. The GIF brings multilateral development institutions and donor nations together with some of the world’s largest asset management and private equity firms, pension and insurance funds and commercial banks. World Bank Group Managing Director and CFO Bertrand Badre said GIF would begin operations later this year in a pilot phase to “road test” new models to deliver complex public-private infrastructure in low and middle income countries. The key focus would be on climate friendly investments as well as ventures to bolster trade. According to World Bank data, private infrastructure investment in emerging markets and developing economies dropped November 2014

from $186bn in 2012 to $150bn last year. According to the US Energy Information Administration, US crude oil exports recently reached their second highest monthly level since 1920. The US exported 401,000bpd of crude oil in July 2014, the highest level in 57 years and the second highest monthly export volume since 1920, when EIA’s published data starts. Recent crude oil exports are also noteworthy for both their origin and destination. Typically, crude exports are sourced domestically and sent only to Canada. However, since April, crude exports have included modest amounts of Canadian-produced barrels moved through the United States and re-exported to Switzerland, Spain, Italy and Singapore. Egypt has signed contracts with two consortiums to carry out dredging of the new Suez Canal. The ‘new’ canal will partially run in parallel to the current waterway and partially entail widening and deepening of existing parts. Consortium one comprises the Netherlands’ Royal Boskalis Westminster and Van Oord, UAE’s NMDC and Belgium’s

Jan de Nul. The total contract value amounts to $1.5bn, with each partner entitled to an equal share of $375m. Consortium two comprises Great Lakes from the US (25%) and Belgium’s Dredging International (75%), with the total contract value of $540m split in that ratio. The contract awarded to consortium one includes the construction of the parallel section of the canal, with a length of approximately 50km to allow ships to simultaneously transit in two directions, as well as the widening and deepening of a number of existing sections to a depth of 24 metres. The contract awarded to consortium two involves the widening and deepening of the western branch of the Suez Canal at Great Bitter Lake, Deversoir Reach and Kabret Reach (lot number 6), over a length of 25km and to a depth of 24m. ABB is partnering with Vestas to electrify off-grid communities in Africa by combining low-cost winddiesel generation with microgrid systems The two companies will jointly deliver power technology and system integration solutions for remote off-grid and microgrid communities. Under the agreement, factory-refurbished Vestas wind turbines will be combined with ABB microgrid power stabilisation solutions to create hybrid generation systems that can operate in remote locations with limited infrastructure. The project is part of Vestas’ Wind for Prosperity initiative, a commercially-based business model designed to bring affordable, reliable and stable wind-generated electricity systems to rural populations in developing countries.

Energy costs out of control? Bentley helps you fight back.

Reduce energy costs from pumping and water loss Up to 4 percent of all electricity produced is consumed by water utilities – and energy costs can reach as much as 40 percent of total operating costs.* Reducing energy costs is a clear priority, and Bentley software will help you do that now – for pump scheduling, optimization, and water loss.

To learn how to reduce energy costs, visit: www.bentley.com/Reduce-Energy © 2014 Bentley Systems, Incorporated. Bentley and the “B” Bentley logo are either registered or unregistered trademarks or service marks of Bentley Systems, Incorporated or one of its direct or indirect wholly owned subsidiaries. Other brands and product names are trademarks of their respective owners. *Source: United States Environmental Protection Agency (2013)

IN FOCUS

SUCCESS STORY

RAKIA targets 50% growth The investment authority is banking on Al Ghail industrial park to drive future growth he Ras Al Khaimah Investment Authority (RAKIA), which recently celebrated 10 years of existence, is targeting a 50% increase in new business over the next five years. Having invested $27m to date in developing 30m sqm of land in its Al Hamra and Al Ghail industrial parks, RAKIA is planning to channel substantial resources into enhancing its physical assets and services. Last month, the investment authority celebrated 10 years of existence at a gala event attended by HH Sheikh Saud Bin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah, and HH Sheikh Ahmad Bin Saqr Al Qasimi, Chairman of RAKIA. Delivering the welcome address, Rino Sabatino, CEO of RAKIA said, “Our goal is to extend RAKIA’s position as a preferred destination, not only for manufacturing companies, but also to businesses from a broad range of sectors including services and information technology.” Sabatini said that RAKIA intends to increase the number of new licences issued by 50% in the next five years. To achieve this growth, RAKIA will invest in the infrastructure development of Al Ghail, the newer of the two industrial parks. Al Ghail’s land area is double that of the older Al Hamra Industrial Park, which has already leased out 95% of its 7m sqm. RAKIA has commissioned a 65MW power plant in Al Ghail

INFRASTRUCTURE MIDDLE EAST

and a 45MW power plant in Al Hamra. RAKIA is home to over 7,000 companies, including 500 manufacturing units. Major companies operating from RAKIA’s industrial parks include Peikko (Finland), POSCO (South Korea), Kirby Steel (Kuwait), Mabani Steel (India), Zamil Steel (Saudi Arabia), Kludi RAK (Germany), Franke (Switzerland), Ashok Leyland (India) and Dabur India (India). RAKIA was also named Best Free Trade Zone in the GCC by London-based International Finance Magazine. RAKIA came ahead of five

“Our goal is to extend RAKIA’s position as a preferred destination, not only for manufacturing companies, but also to businesses from a broad range of sectors” RINO SABATINO CEO, RAKIA shortlisted free zone authorities based on its economic potential, promotional strategies for foreign direct investment, transportation links, incentives and cost-effectiveness. The commemoration event at the Al Hamra Convention Centre was also attended by the ambassadors of the Russian Federation

November 2014

and Poland. Speaking at the event, Timothy Lefebvre, president of Mabani Steel and cochairman of RAKIA’s Tenants’ Committee, thanked RAKIA for the support extended to tenants. The Tenants’ Committee is a recently launched initiative that aims to encourage dialogue among the CEOs and senior managers among RAKIA’s tenants. Acknowledging that RAKIA’s tenants are key contributors to and partners in driving the company’s ongoing success, Sabatino said: “In conjunction with our growth initiatives, we are constantly seeking to improve and streamline business processes within our industrial parks, making it ever more effortless for our existing tenants to run their businesses.” A recent note by Standard & Poor’s (S&P) Ratings Services pointed to the fact that “RAK is revising the scope of its GDP to now include the contribution of its three sizable free-trade zones, which could boost GDP by up to 20% (and therefore increase GDP per capita to close to $20,000).” S&P has revised its outlook on RAK to stable from negative. According to the rating agency’s note, RAK’s port infrastructure enables “the buoyant manufacturing and trade sectors to capitalise on the emirate’s strategic location. Relatively diversified industrial clusters are developing and pulling new workers into the labour force, which expanded by roughly 5% between 2011 and 2013, thereby lifting consumption’s contribution to growth.”

COMPLETE WATER AND WASTE WATER SOLUTIONS

OIL & GAS / POWER / INDUSTRIAL / MUNICIPAL

info@aesarabia.com

IN FOCUS

RAIL SYSTEMS

On the right track Thales is looking to cement its presence in the Middle East’s rapidly growing rail sector By Anoop K Menon ccording to Lionel Canella, Sales & Bid Director, Thales Rail Signalling Solutions, the Gulf region is at a huge advantage when it comes to rail projects as the countries here are starting out with a clean slate. They can choose and deploy the best solutions available in the market. “Europe doesn’t have this advantage because they have to take care of legacy solutions that are still working,” said Canella. “In such a situation, upgrading to more advanced solutions becomes a complex exercise.” While Thales has always enjoyed a strong presence in the Middle East in sectors like aviation and defence, it’s entry into rail is relatively recent. “Dubai Metro was our first entry into the market,” said Canella. “We signed the contract for the project in 2005.” Dubai Metro demonstrates the full range of Thales’s capabilities, from signalling and train control for driverless operations to communications and information systems to support operational and passenger needs, intermodal ticketing for seamless journeys and video surveillance for enhanced security. In parallel, the company was also pursuing main line opportunities in the Middle East, including one in Saudi Arabia. This was in addition to bidding for the Kingdom’s first metro. In 2009, Thales inked two contracts in Saudi Arabia for the first line of the Makkah Metro and the North South Railway project. Perhaps, part of the credit for the choice of European Train Control System (ETCS) standard by the GCC Railway should go to Thales. The company pioneered the first commercial application of ETCS in the Middle East for the North-South Railway project. The 2,400km North-South Railway deal is also the longest implementation of the ETCS standard in the world. ETCS is a component of the European

INFRASTRUCTURE MIDDLE EAST

Lionel Canella, Sales & Bid Director, Thales Rail Signalling Solutions

Railway Traffic Management System (ERTMS). Originally designed for the European market, the ETCS standard is gaining traction across the globe. It enables increased capacity of lines, ensuring interoperability between national networks and different equipment suppliers, all the while guaranteeing the safety of passengers and optimised operating costs. Thales is deploying ETCS in several countries including India, Morocco, South Korea and Mexico. For Metro rail systems, Thales offers

Thales pioneered the first commercial application of ETCS in the Middle East for the North-South Railway project in Saudi Arabia, which is also the longest implementation of the ETCS standard in the world

November 2014

Communication-Based Train Control (CBTC) solution, a state-of-the-art automatic rail traffic control system based on continuous communication between the train and the computers responsible for controlling the traffic. Taking a dig at competitors who push integrated turnkey systems, Canella pointed out that Thales is open to integrating with other suppliers. He continued: “Whether the rolling stock is coming from Spain, Korea or even China, we can integrate with them. Choosing Thales allows our customers to benefit from more competition.” Earlier this year, the company signed a Memorandum of Understanding (MoU) with Egypt’s Transport Ministry to create a multidomain transport academy in the country. The academy will provide academic and professional training programmes in urban and main line railway systems and develop local resources for the rail industry. In 2013, Thales was awarded the first contract under Egypt’s modernisation plan, which called for the upgrade of the 208kmlong Cairo-Alexandria line. The company is also the main supplier of ticketing and communication systems for the Cairo metro. Canella pointed out that his company is committed to supporting its customers by helping develop their human resources as well as supplying technological solutions. In fact, Thales has extensive experience in knowledge transfer across all its areas of expertise. The company is partnering with Malaysian authorities in setting up a rail transport academy in Kuala Lumpur. In January this year, it signed an agreement for the creation of a rail academy in the UAE, and is looking at the possibility of setting up a similar one in Saudi Arabia. “We want to build on our strong presence in the region by developing local expertise and support. We want to develop the region’s knowledge of rail control systems,” said Canella.

Pioneers in shaping the Smart Grid Landis+Gyr’s Gridstream Solutions for Utilities

Keeping demand and supply in balance shall be the core energy challenge of the future. Landis+Gyr’s end-to-end Gridstream solutions comprehensively address smart metering applications with-in the generation, transmission and distribution segments offering distinct beneﬁts to utilities and network operators, energy consumers and the environment. Landis+Gyr Gridstream solutions provide the Software, communication and device components of smart grid applications as in controlling decentralized power generation as well as the demand side management, Integration to SCADA systems, integration of national and international grids. Data collected and analysed provide Utilites with means to optimise their network, addressing challenges as in power quality and ageing infrastructure maintenance. The major Utilities, energy supply and industrial consumers in the Middle East have chosen Landis+Gyr as business partner and preferred supplier.

To contact the Landis+Gyr regional team for customising a solution for you: Landis+Gyr AG Ofﬁce 301, DIC – 12, PO Box 500470 Dubai, United Arab Emirates Switchboard: +971 4 452 66 26/+971 4 447 20 52 Fax: +971 4 452 62 87 Attn: Rajiv Sawhney (Managing Director) rajiv.sawhney@landisgyr.com

your pathway to the smart grid

column

BIGGER PICTURE

Cutting energy costs AspenTechâ&#x20AC;&#x2122;s Ossama Tawfick on how utility planning software can help process plants reduce energy costs ompanies face constant pressures to make effective capital planning decisions. Running a refinery, chemical plant or power station is a complex business. Therefore, being able to see the bigger economic picture is vital in effectively managing operational maintenance, regulatory requirements, energy efficiency and sustainability goals. Energy is the single largest operating expense, after raw materials, for the process industry. Cutting-edge utilities software allows manufacturers to manage and optimise the way they use and source energy across an entire production site. It enables companies to ensure that all their processes receive reliable supplies, while minimising running costs by reducing overall consumption and identifying the most economical sources of supply. Crucially, utility planning software defines and improves the energy business processes that are important to the overall economic performance of the site.

the required utilities system for a process and help specify quantity and timeframe for utility need. From a designated utility purchasing contract, the software will optimise based on the cheapest method of acquisition â&#x20AC;&#x201C; inplant production or outside purchase.

Reducing pRoduction costs

Minimising energy costs and maximising operational reliability of the utilities system can be achieved simultaneously through the implementation of an integrated energy management and optimisation system, which links business and operational objectives. In turn, this enables companies to make more profitable decisions about how to use and source energy across an entire production site. Utilities are integral to the functionality of a plant, providing the heating and cooling, electricity and fuel used by vital machinery to ensure that product quality standards are consistently met and there is optimum operational effectiveness. It is common for fuel, power, steam production and consumption networks to be modelled in high detail to build a customised model,

INFRASTRUCTURE MIDDLE EAST

A complete opeRAtionAl oveRview

ossama tawfick

which helps users understand how to quickly reduce site energy costs. Many plant decision-makers have adopted utility planning software, to improve their weekly and daily planning. This includes forecasting plans and demand based on current results and the provision of future assets, recommending how to operate the plant, eliminating or reducing fuel and steam venting, and performing a what-if analysis of future investment while operating and optimising current assets. From a defined model, they expect fully optimised assets based on economic evaluations, in order to obtain specific recommendations for fuel exchange, proposals to operate steam turbines or information on boiler loads. Companies can import utilities from outside sources, or produce their own solutions. The key to choosing an optimum schedule is establishing the blend between purchasing and producing utilities in order to minimise cost. Cutting-edge utilities software can model

November 2014

From a business perspective, utilities software considers all aspects of utility system operation, for a reliable supply of energy or energy sourced at the lowest overall cost that meets reliability and environmental goals. Companies can achieve both technical and commercial excellence in energy and utilities management by adopting software applications for different types of users, from plant operators to utilities contract managers to senior management. Aspen Utilities enables process manufactures to optimise and manage energy usage and sourcing across an entire production site. It enables companies to ensure all their processes receive reliable supplies, while at the same time minimising running costs by reducing overall consumption and identifying the most economical sources of supply. Another crucial benefit is that the software can integrate with existing plant and business systems â&#x20AC;&#x201C; planning and scheduling systems, historical data and ERP systems. In conclusion, the process industry is experiencing dramatic changes as it endeavours to meet energy requirements while maintaining competitive rates. Executive decision-makers who embrace more robust project planning methodologies and implement thorough plans to gain greater visibility of the overall operation will deliver a better financial return, while meeting the needs of their customers. By establishing a two-way link between production and energy scheduling, companies can ensure continuous energy supply for production plants and avoid unnecessary costs. Ossama Tawfick is Regional Senior Director, MENA, AspenTech

Enabling the Smart Grids of the future

Lucy Electric is a market leader in providing switching and protection solutions for electrical distribution systems. At the cutting edge of Medium Voltage switchgear technology design and innovation, we specialise in ground and pole mounted switchgear and network automation.

MV ring mains

Overhead line equipment

Distribution automation

Contracting & installation

With 200 years experience in the design and manufacturing of products and solutions for electrical distribution networks, we are a partner you can trust.

For more information on our solutions contact us on:

+97 148 129 999 Lucy Middle East FZE PO Box 17335 â&#x20AC;˘ Jebel Ali Dubai â&#x20AC;˘ United Arab Emirates t: +97 148 129 999 salesme@lucyelectric.com

CASE STUDY

Bottomline Matters Helping you make the smartest decisions

TESTING SUCCESS

World-class type testing is now a local reality, as the succcessful experience of Elastimold, ABB Kabeldon and Ducab HV attests. Read on.......

ecently, Elastimold, ABB Kabeldon and Ducab HV successfully completed a type test of a 132kV cable system at the Ducab HV test facility in Dubai. The test, in accordance to IEC 60840 standards was independently witnessed by KEMA, Netherlands. “The type test is ultimately a test of all cable system components, not just the cable” says Mally Clarke, Manager - Cable Accessories, Elastimold. “Type tests are performed in order to assure the long term performance of the accessory and cable combination. Longevity of the cable system is critical for all utility companies.”

R 20

INFRASTRUCTURE MIDDLE EAST

Type testing of cables and cable accessories is a mandatory requirement to do business with GCC utilities. “No utility in the region will accept a cable system including the joints and terminations (accessories) without a type test complying with IEC standards and local standards, if any,” says Clarke. “Hence, not doing a type test is simply not an option.” This is an important milestone for the region’s cable industry because it counters a widely prevalent view that such type testing is the domain of European laboratories, and is a testament to the development of local capabilities in this area. “Our high voltage lab is the most advanced of its kind in the region,” says

November 2014

Engineer Aqeel Mohammed Aqeel Al Awady, Assistant Manager – Test, Ducab HV. “We have the capability to type test cable systems up to a rated voltage of 420kV. In fact, it is the only lab in the Gulf region that can go up to 420kV.” But why type test cable systems in the first place? As a critical part of the electricity infrastructure which connects power plants to end-users, cable systems are expected to stand the test of time, performing efficiently and reliably in all climes. All cable system suppliers are required to pass type tests to ensure that the performance level meets the requirements of IEC standards drawn up by an independent international body of experts. The cable and cable accessories can be tested as separate components or as a system. But utilities have always insisted on a system test for the highest voltages, to

CASE STUDY

ensure clear accountability for the system performance. “In the approval process, the interfaces between the components are also considered,” says Clarke. “Incompatibility between the different materials and interfaces can be disastrous because significant differences in properties could have a detrimental effect on performance and could lead to breakdown. In fact, cable accessories are acknowledged as the weakest point of the cable system, because they are assembled on site as opposed to a factory environment” iEc 60840 stipulates the tests that need to be done for high voltage cables

Ground conditions

It is important that type tests simulate operating conditions to ascertain whether the cables and cable accessories are fit for purpose. The main standard for 132kV cable is IEC 60840, which covers high voltage cable systems up to and including 170kV. The IEC standards are often augmented by additional tests specified by the utility to meet their particular system requirements. “The fact that most cable-related R&D takes place outside the Middle East makes this practice all the more important. IEC sets the minimum performance requirements, but local site conditions like high water table, high salinity, extreme heating and cooling of the desert, are among the most challenging for underground cable systems,” says Al Awady. “The most difficult test is probably the joint immersion test in a saline solution, under pressure” adds Clarke. “Inside the lab, we can stress the system significantly more than in real operation, by combining thermal cycling and electrical testing. This gives us visibility into long-term performance as our customers expect the cable system to last 30

to 40 years or even more.” To carry out electrical tests, the Ducab HV lab has a 600kV AC test set and a 1.9MV impulse generator, as well as advanced equipment for measurement of partial discharge, tan delta and resistance. For non-electrical tests, the lab has advanced analytical equipment such as Fourier Transform Infrared Spectroscopy (FT-IR), Thermal Gravimetric Analysis (TGA) and Differential Scanning Calorimetry (DSC). Ducab HV also uses the facility as a centre of excellence for specialised training in cable system technology. The IEC standards stipulate the tests that need to be done for a particular type of cable as well as the methodology. However, the results aren’t interpreted strictly in black and white. The results are analysed to get insights into site, lifetime of the cable, materials and accessories and the overall compatibility of the cable system. The manufacturers can use the test results as a feedback mechanism to improve their products, while utilities can take benefit of these insights for developing technical

(Ltor) Eng Aqeel Mohammed Aqeel Al Awady of ducab HV with Mally clarke of Elastimold

specifications. For high voltage cable projects time is always critical and getting type tests done locally rather than overseas provides an advantage to all concerned parties. “The actual tests take approximately one month but the test installation and preparation can double the time” says Al Awady. “Shipping cable takes time and stationing engineers at an overseas site for the test period is a costly proposition.” “From a manufacturer’s perspective, the benefit is mainly compression of time,” says Clarke. “If you opt for the best labs overseas, you are on a waiting list that can stretch to over a year. But that is too long because we actually won a project based on the fact that we can do a type test in a very short period.” In the past, overseas cable manufacturers dominated the local market. However, the market now favours local cable manufacturers due to their cost advantages, provided they meet the stringent quality requirements. This has created a market opportunity for independent cable accessory manufacturers like Elastimold and ABB Kabeldon to partner with local cable manufacturers like Ducab HV to provide a world class cable system solution. “Choosing the right partner is important for Elastimold and Kabeldon because both partners must have complete confidence in each other’s quality and reliability” says Clarke. “We completed the 132kV type test from the start point to the end point without any issues, using the Ducab HV facility gave significant time and cost savings. Having a lab in the region also provides an economic opportunity for our customers to send engineers to gain knowledge and experience.”

November 2014

INFRASTRUCTURE MIDDLE EAST

New TDS NT Cable Diagnostic System

The Next Generation in Cable Diagnostics. Network operators can now get faster and significantly more reliable information about the quality and the condition of their cables. This is made possible thanks to the brand new â&#x20AC;&#x153;50Hz Slopeâ&#x20AC;? Technology. For the first time, it has become possible to immediately locate faults in under-ground cables during the actual PD measurement.

50Hz Slope Technology offers partial dischage diagnostics representative of 50 Hz network frequency. TDS NT unit offers both VLF and Damped-AC voltage source. Megger Limited Dubai Internet City, Dubai, UAE T: 00971 4443 5489 E: mesales@megger.com www.megger.com

MIDDLE EAST INFRASTRUCTURE TENDERS

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

FUjAIRAh REFINERy PRojECT

KUwAIT INTERNATIoNAL AIRPoRT - TERMINAL 2 PRojECT

RAS LAFFAN PETRoChEMICAL CoMPLEx PRojECT

MUSCAT - SohAR PRoDUCT PIPELINE PRojECT

BUDgET: $3,500,000,000

BUDgET: $3,200,000,000

BUDgET: $6,500,000,000

BUDgET: $200,000,000

Territory: UAE Client Name: IPIC, Abu Dhabi Description: Engineering, Procurement and Construction (EPC) contract to build a 200,000bpd greenfield refinery. Period: 2016 Status: New Tender

Territory: Kuwait Client Name: Ministry of Public Works Description: Design and construction of a new Airport Terminal with 30 to 51 gates, a transit hotel, VIP and first-class lounges and car parking. Period: 2017 Status: New Tender

Territory: Qatar Client Name: Qatar Petroleum Description: EPC contract to build a petchem complex with a steam cracker, an oxo alcohols unit, an MEG unit, an LAO unit and olefin derivatives. Period: 2018 Status: New Tender

Territory: Oman Client Name: ORPIC Description: EPC contract to build a new 280-km-long product pipeline to connect refineries in Sohar and Muscat. Period: 2016 Status: New Tender

November 2014

INFRASTRUCTURE MIDDLE EAST

MIDDLE EAST INFRASTRUCTURE TENDERS

Top Tenders UAE jEBEL ALI REFINERy UPgRADE PRojECT Project Number: MPP2908-U Client Name: Emirates National Oil Company (ENOC) Address: Dubai, PO BOX 6442 Phone: (+971-4) 337 4400 Fax: (+971-4) 313 4402 Website: www.enoc.com Description: Engineering, Procurement and Construction (EPC) contract for upgrading the existing refinery at Jebel Ali to meet domestic fuel demand. The client is planning to add two new processing trains – jet and diesel hydro-treaters and an isomerisation unit – that will lead to the production of Euro 5 grade products like high-octane gasoline, low-sulphur jet fuel and ultra-low sulphur diesel. Invitation to bid for the EPC contract is expected in the third quarter of 2014. Construction of the refinery is expected to commence in the first quarter of 2015. Kellogg Brown & Root (KBR) has been awarded the Front End Engineering and Design (FEED) contract on this scheme. Status: New Tender Tender Categories: Gas Processing & Distribution; Oilfields & Refineries

TACAMooL PETRoChEMICALS CoMPLEx Project Number: MPP2250-U Client Name: Abu Dhabi National Chemicals Company Address: Al Bateen Towers C-1, 11th Floor, Abu Dhabi Phone: (+971-2) 411 0000 Fax: (+971-2) 435 9259 Website: www.chemaweyaat.com Description: EPC contract for

INFRASTRUCTURE MIDDLE EAST

the development of Tacamool petrochemicals complex, comprising a combination of olefin, aromatics and fertiliser production facilities. The project is still under FEED study, which is expected to be completed in the first quarter of 2015. Bid announcement for the EPC contract is expected to be made in second quarter of 2015. Status: New Tender Tender Categories: Industrial & Special Projects

hASSyAN CoALFIRED PowER PLANT PRojECT - PhASE 1 Project Number: OPP342-U Client Name: : Dubai Electricity & Water Authority (DEWA) Address: Head Office, Near Wafi Shopping Mall, Zabeel East Phone: (+971-4) 601 9999 Fax: (+971-4) 601 9995 Website: www.dewa.gov.ae Description: The project involves the construction of a 1,200MW clean coal-fired power plant. The client has extended the deadline to submit bids for the EPC contract by two months from the previous deadline of November 26, 2014. Prequalified consortiums now have more time to submit proposals Status: New Tender Tender Categories: Power & Alternative Energy

KSA KINg ABDUL AzIz RoAD DEvELoPMENT PRojECT INFRASTRUCTURE woRKS Project Number: WPR455-SA Client Name: Umm AlQura for Development &

November 2014

Construction Company Address: Makkah, Saudi Arabia Phone: (+966-2) 530 0888 Fax: (+966-2) 539 0050 Website: www.kaar.com Description: The project is being developed along a section of the King Abdul Aziz Road (KAAR) development in Makkah, near the Haram and Jabal Omar development. Scope of work entails building roads and general infrastructure. The design and build contract also includes tunnels and two station boxes that will be used for the upcoming Mecca Metro project. The two companies short-listed for the main contract are the local Huta Group and Nesma & Partners Construction. Status: New Tender Tender Categories: Roads, Bridges & Infrastructure

rehabilitation of offshore oil and gas facilities to maintain production. The contract will run alongside the Maintain Potential Programme (MPP), which is a long-term contract for engineering, design and project management of Aramco’s offshore operations. Client has extended the deadline to end-November 2014 for the long-term contract it is planning to award to four EPC contractors. The duration of the contract will be five years, with the option of a three-year extension. Bidders include India’s Larsen & Toubro (L7t), US’ McDermott, UAE’s National Petroleum Construction Company (NPCC); and Italy’s Saipem. Period: 2020 Status: New Tender Tender Categories: Gas Processing & Distribution; Oilfields & Refineries

oFFShoRE oIL & gAS FACILITIES MAINTENANCE PRojECT

oBhUR CREEK CRoSSINg PRojECT

Project Number: MPP2944-SA Client Name: Saudi Aramco Address: Dhahran 31311 Phone: (+966-3) 872 0115 Fax: (++966-3) 873 8190 Website: www.saudiaramco.com Description: The project involves an EPC contract for extensive

Project Number: MPP2947-SA Client Name: Jeddah Development & Urban Regeneration Company Address: Al Maadey Street, Jeddah 21481 Phone: (+966-12) 614 2166 Fax: (+966-12) 614 0642 Website: www.jdurc.com

MIDDLE EAST INFRASTRUCTURE TENDERS

comprising coolers, drums, piping works and separators. the FEED contract. AMEC has been awarded a contract to carry out the FEED study. The Invitation to Bid for the EPC contract will be issued in the fourth quarter of 2014. Status: New Tender Tender categories: Gas Processing & Distribution Oilfields & Refineries

Description: The project involves design and construction of a concrete arch bridge, 380 metres long and 75 metres wide, comprising eight lanes for road traffic, a single railway line and two sidewalks. The scheme is expected to be split into five packages, with the main package covering design and construction of a concrete arch bridge. The client is preparing to invite companies to prequalify for the work. Figg has prepared the preliminary design, while AECOM is providing programme management services on the project. Status: New Tender Tender Categories: Roads, Bridges & Infrastructure

QATAR DohA BAy CRoSSINg (ShARq CRoSSINg) PRojECT Project Number: ZPR096-Q Client Name: Ministry of Municipal & Urban Planning Address: Al Kornish Street, Doha Phone: (+974) 4426 6666 Fax: (+974) 4426 5689 Website: www.baladiya.gov.qa Description: The project involves the construction of a 12-km-long crossing at Doha Bay. The crossing will include three separate bridge sections, which meet at three different points. The bridge will meet at Lusail development, West Bay

and the New Doha International Airport. Each bridge section will be connected to an immersed tube tunnel of 8km in length. The crossing will consist of an expressway with six lanes in total, with three lanes in each direction. It is understood that Belgiumâ&#x20AC;&#x2122;s Besix is among a group of firms to have entered the pre-qualification stage for one of the main packages on this project. Besix is leading a joint venture of four contractors for the subsea tunnels package. Contractors have submitted a second set of prequalification documents on October 18, 2014. Names of companies are yet to be revealed. Status: New Tender Tender Categories: Public Transportation Projects Roads, Bridges & Infrastructure

oMAn PTA & PET CoMPLEx PRojECT - SohAR PoRT Project Number: ZPR883-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: EPC contract to build a Purified Terephthalic Acid (PTA) plant with capacity of 1.1 MTPA and Polyethylene Terephthalate (PET) plant with

capacity of 500,000TPA. PTA is the raw material for PET, which is used in the production of bottles for packaging of carbonated soft drinks, drinking water, cosmetics, pharmaceuticals and food. The client has signed a Joint Development Agreement with South Koreaâ&#x20AC;&#x2122;s LG International (LGI) to implement the scheme. The new joint venture company will be owned 70% by the client and 30% by LGI. The project will be implemented in two phases. The FEED is almost complete and the client is planning to tender the EPC contract at the beginning of 2015. WorleyParsons has been appointed as the project manager. Status: New Tender Tender Categories: Plastics Manufacturing Plants

PRodUcEd In ASSocIATIon WITh MIddlE EAST TEndERS

KUWAIT MINA ABDULLAh FLARE gAS RECovERy UNIT PRojECT - U01 Project Number: MPP2588-SA Client Name: Kuwait National Petroleum Company (KNPC) Address: Imad Commercial Centre, Safat 13001 Phone: (+965) 2244 7477 Fax: (+965) 2244 7492 Website: www.knpc.com.kw Description: EPC contract to build a flare gas recovery unit

November 2014

INFRASTRUCTURE MIDDLE EAST

TEN GCC DOWNSTREAM PROJECTS

GCC

DOWNSTREAM PROJECTS Downstream investments offer GCC governments an opportunity to diversify their economies, encourage local value addition and create job opportunities for youth. Infrastructure ME presents the regionâ&#x20AC;&#x2122;s premier downstream projects

INFRASTRUCTURE MIDDLE EAST

November 2014

SADARA ChEMICAL COMPLEx

Owner: Sadara Chemical Company Budget: $20bn Progress: 70% complete The Sadara Chemical Complex in Jubail Industrial City II is the worldâ&#x20AC;&#x2122;s largest to be built in a single phase. Comprising 26 world-scale manufacturing units, the complex is one of the largest integrated chemical facilities in the world and includes a world-scale cracker that will be able to crack a wide range of feed stocks. The complex will eventually produce more than 3m MT of value-add performance plastics and specialty chemical products targeted at the rapidly growing sectors of energy, transportation and infrastructure. Sadara is on track to deliver its first products in the second half of 2015, with the complex in full operation in 2016. Many of its products will be produced for the very first time in the Kingdom.

TEN GCC DOWNSTREAM PROJECTS

AL-ZOUR REFINERy PROJECT

Owner: Kuwait Petroleum Corporation (KPC) Budget: $15bn Progress: EPC stage Al Zour refinery, with a capacity of 615,000bpd, will make oil products such as diesel, kerosene and naphtha for export, and low-sulphur fuel oil for domestic power stations. The client has extended the bid deadline for the Engineering, Procurement and Construction (EPC) contracts. Submission of bids for packages 1, 2 and 3 have been extended until the end of 2014, while the deadline for packages 4 and 5 has been set at the first week of November 2014. For packages 1, 2 and 3, the shortlisted international consortia are KBR, Japan’s JGC Corporation and Fluor Corporation from the US; and Spain’s Tecnicas Reunidas, Italy’s Saipem and UK’s Petrofac. For 4 and 5, a joint venture of South Korea’s GS Engineering and Al Kazemi International has been invited to submit bids. Dutch contractor Van Oord has completed nearly 9% of the land reclamation for this project.

NEW REFINERy PROJECT

CLEAN FUELS PROJECT

Owner: Kuwait National Petroleum Company (KNPC) Budget: $14bn Progress: RFQ stage

Owner: KNPC Budget: $14bn Progress: Mobilisation works

The project originally involved an EPC contract to build an ecologically friendly new refinery with capacity to produce 615,000bpd, including kerosene and diesel, at Shuaiba. KNPC recently announced that it intends to merge this project with a planned petrochemical project in the same area to create an integrated refining complex. However, the combined value of this complex is yet to be announced. Meanwhile, with regard to the refinery project, KNPC has extended the deadlines to January next year for package 1, which covers the main process units; package 2, which covers support process units; and package 3, which covers utilities and offsites. The deadline for package 4, which covers the tank farm, has been set for November. There has been a request from one of the prequalified companies to delay the bid deadlines for package 5, which covers the marine facilities.

The project involves the upgrade and capacity expansion of Mina Al-Ahmadi and Mina Abdullah refineries. The first EPC package covers process units at Mina Abdullah refinery. The second package covers revamping of the Mina Abdullah plant together with offsites and utilities, while the final package is for revamping and installation of units and interfaces at Mina Al-Ahmadi refinery. Japan’s JGC Corporation, and South Korea’s SK Engineering and GS Engineering have been awarded the Mina Ahmadi package, worth $4.8bn. UK’s Petrofac, South Korea’s Samsung Engineering and CB&I Lummus from the US have been awarded the Mina Abdullah 1 package, worth $3.74bn. Fluor Corporation from the US and South Korea’s Hyundai Heavy Industries and Daewoo Engineering have been awarded the Mina Abdullah 1 package, worth $3.4bn. In September, NBK Capital was awarded the financial advisory contract for the project.

November 2014

INFRASTRUCTURE MIDDLE EAST

TEN GCC DOWNSTREAM PROJECTS

JUbAIL ExPORT REFINERy PROJECT

Owner: Saudi Aramco Total Refining & Petrochemical Company (SATORP) Budget: $14bn Progress: On schedule The project involves an EPC contract to build an export refinery at Jubail with nameplate capacity of 400,000bpd. It will refine heavy crude into a range of fuels, from gasoline to petroleum coke, for domestic consumption and export. The complex is expected to start full operations in 2015 as scheduled; certain units, such as the crude distillation unit, have been operational for some time now. The project is central to Saudi Arabia’s plans to boost refining production to meet the region’s growing demand, and is expected to replace most imports. Currently, the plant utilities package, the distillate and hydrotreater package, permanent infrastructure and the multi-feed cracker are being commissioned. The completion of crude storage tanks package 2 next year will mark the project’s completion.

INFRASTRUCTURE MIDDLE EAST

AL-DAbbIyA OIL FIELD DEvELOPMENT PROJECT - PhASE 3

Owner: Abu Dhabi National Oil Company (ADNOC) Budget: $1.5bn Progress: EPC stage The project involves the third phase development of Al-Dabbiya onshore oil field in the North East Bab (NEB) asset, located about 31km from Abu Dhabi city. The objective is to increase production to allow Al-Dabbiya field throughput to increase by 73,000 BPD. The commercial bids submmited for the Engineering, Procurement and Construction (EPC) contract are being assessed. Bidders include South Korea’s GS Engineering & Construction, Daewoo and SK Engineering & Construction; the UK’s Petrofac; Italy’s Saipem and Technimont; and Spain’s Technicas Reunidas. An award is expected before the end of this year. France’s Technip has completed the Front-End Engineering Design (FEED) for the project. NEB-3 will help the UAE to meet its targeted quotas of oil production in 2018.

November 2014

yANbU ExPORT REFINERy PROJECT (yERP)

Owner: Yanbu Aramco Sinopec Refining Company (YASREF) Budget: $12bn Progress: Commissioning underway Located on the west coast of Saudi Arabia, YERP is a 400,000bpd, full-conversion refinery being built in Yanbu Industrial City. The refinery will process Arabian Heavy crude oil and produce gasoline, high-quality diesel and Liquefied Petroleum Gas (LPG), as well as sulphur as a by-product and petroleum coke for export. The plant’s hydrocracker is expected to start operating in mid-2015. The main EPC contractors were Tecnicas Reunidas for the Coker package; Petro-Chem Zamil for the Delayed Coker Furnaces; SK Engineering for the Crude package; Dayim Punj Lloyd for Offsite Pipelines; Daelim for the Gasoline and Hydrocracker packages; Rajeh H Al-Marri for the onsite Pipeline Relocation package; ENPPI for the Tank Farm; and Techint for the transportation and storage of petroleum coke. The project’s commissioning is on schedule.

TEN GCC DOWNSTREAM PROJECTS

JIzAN REFINERy PROJECT – JIzAN ECONOMIC CITy

PETRORAbIGh COMPLEx ExPANSION PROJECT – PhASE 2

Owner: Saudi Aramco Budget: $9bn Progress: Mobilisation works

Owner: Saudi Aramco Budget: $8.5bn Progress: RFP for financing

The project consists of an EPC contract to build a grass-roots export refinery in Jizan Economic City with capacity of 400,000 tonnes/year and 500,000 tonnes/year of Benzene and Xylene, in addition to a naphtha cracker which will produce olefin and polyolefin. In 2012, Aramco awarded EPC contracts worth $1.4bn for different units of the refinery, but infrastructure bottlenecks have delayed the project. In June 2014, it was announced that construction work on the contract packages awarded had started. Additionally, local company Mohammed Al-Mojil Group (MMG) signed a JV deal with EPC giant Essar Projects to provide construction services for the project. More recently, Korea’s Hanwha was awarded the Paramax complex contract; construction is expected to commence in November and be completed by the third quarter of 2017.

The configuration of the project entails the expansion of the existing ethane cracker to process an additional 30 MMSCFD of ethane and the addition of a new naphtha reformer/ aromatics complex processing more than 2.7 MTPA (net) of naphtha. In September this year, founding shareholders Saudi Aramco and Sumitomo Chemical released a Request for Proposal (RFP) to a group of international, regional and local banks with respect to providing financing facilities to Rabigh Refining and Petrochemical Company (Petro Rabigh) for the Petro Rabigh phase 2 project. The project will bring derivative products that are high value-added and in high demand, including methyl methacrylate (MMA) monomer and polymethyl methacrylate (PMMA). Each plant will be brought on stream as it becomes available for operation, with first product expected in the first half of 2016.

DUqM OIL REFINERy DEvELOPMENT PROJECT PhASE 1

Owner: Oman Oil Company Budget: $6bn Progress: Expression of Interest (EoI) stage The project is being developed by Duqm Refinery and Petrochemical Industries Company (DRPIC), a 50:50 joint venture of Oman Oil Company and Abu Dhabi’s International Petroleum Investment Company (IPIC). In March, Foster Wheeler was awarded the Front-End Engineering Design (FEED) contract for project. The first phase will see the development of a 230,000bpd grassroots merchant export refinery within the Duqm Special Economic Zone (SEZ). Designed as a full conversion refinery, the plant will use delayed coking technology for bottom of the barrel processing. The second phase is being planned as an associated petrochemical complex. An invitation to bid (ITB) for the key EPC package is expected to be floated in the second quarter of 2015.

November 2014

INFRASTRUCTURE MIDDLE EAST

AnAlysis

NEW MOMENTUM

The right time? Public investment in infrastructure could become a powerful policy tool for governments to counter a weak global recovery

he International Monetary Fund (IMF) has made a strong pitch for higher public investment in infrastructure to counter the weakness in global economic recovery. Its recently released World Economic Outlook (WEO) features a study which examines the macroeconomic effects of public investment in a large number of countries. Due to weaker than expected global activity in the first half of 2014, the IMF has revised downward the growth forecast for the world economy to 3.3% for this year, 0.4 of a percentage point lower than in the April 2014 WEO. The global growth projection for 2015 was lowered to 3.8%. In a speech made at Georgetown University last month, Christine Lagarde, Managing Director, IMF, said that public investment in infrastructure, together with growth-friendly fiscal policies and structural reforms, can “accelerate growth, increase employment and achieve a new momentum” instead of

INFRASTRUCTURE MIDDLE EAST

muddling along to a “new mediocre”. She warned that a weak global recovery, if not addressed squarely, could lead to “low growth for a long time”, as people cut back on investment and consumption IN NUMBERS

3.3% The IMF’s growth forecast for the world economy in 2014

0.4% The impact of an increase of one percentage point of GDP in investment spending on the level of output

4.5% Cost of integrating lower emission standards into infrastructure investment as part of the total spend

November 2014

today in fear of tomorrow’s lower growth potential. Other clouds on the horizon include asynchronous monetary policy normalisation; migration of new market and liquidity risk to the less-regulated, non-bank sector; and a build-up of financial sector excesses in advanced economies. According to the WEO study, in advanced economies an increase in infrastructure investment could provide a much-needed fillip to demand, and is one of the few remaining policy levers available to support growth, given already accommodative monetary policy. “The crisis has inflicted a heavy toll on both growth and investment, which remain well below their long-term trends,” said Lagarde. “As of last year, we have estimated that for the G-20 countries, GDP is 8% lower than it could otherwise have been. The shortfall in investment is even higher – nearly 20% below trend.” The study notes that the stock of public capital, which reflects to a large extent the availability of infrastructure, has declined significantly as a share of output over the past three decades across advanced, emerging

AnAlysis

market and developing economies. In advanced economies, this reflects primarily a trend decline in public investment from about 4% of GDP in the 1980s to 3% of GDP at present. This has led to deficiencies in the quality of existing infrastructure stock in these countries. For example, the American Society of Civil Engineers noted in 2013 that 32% of major roads in the US are now in poor or mediocre condition, and the US Federal Highway Administration estimates that between $124bn and $146bn annually in capital investment will be needed for substantial improvement in conditions and performance. However, emerging economies still have only a fraction of the public capital available in advanced economies, due to lower efficiency of public Investment. Power generation capacity per person in emerging market economies is one-fifth the level in advanced economies, and in low-income countries it is only oneeighth the level in emerging markets. The discrepancy in road kilometres per person is similarly large.

policy accommodation helps limit any increase in interest rates in response to the rise in investment. The study also presents evidence from advanced economies that suggests that an increase in public investment that is debt financed can have larger output effects than one that is budget neutral (by raising taxes or cutting other spending), with both options delivering similar declines in the publicdebt-to-GDP ratio. But it also cautions that

“The crisis has inflicted a heavy toll on both growth and investment, which remain well below their long-term trends” ChRISTINE LAgARDE, MANAgINg DIRECTOR, IMF

KEy coNSIdERaTIoNS

The WEO study bases its recommendation of higher public investment in infrastructure on two key factors. One, real interest rates are expected to remain lower than pre-crisis levels for the foreseeable future; and two, higher public investment raises output, both in the short term because of demand effects and in the long term as a result of supply effects, as the productive capacity of the economy increases with a higher infrastructure capital stock. In a sample of advanced economies, an increase of one percentage point of GDP in investment spending raises the level of output by about 0.4% in the same year and by 1.5% four years after the increase. In addition, the boost to GDP a country gets from increasing public infrastructure investment offsets the rise in debt, so that the public debt-to-GDP ratio does not rise. Thus, if done correctly, public infrastructure investment pays for itself. The WEO study notes that economies with clearly identified infrastructure needs and efficient public investment processes, and where there is economic slack and monetary accommodation, stand to benefit from higher public infrastructure investment. Apart from the short-term boost to output, monetary

INFRaSTRUcTURE dIFFERENTIaToRS First, infrastructure investments are often large, capital-intensive projects that tend to be natural monopolies – meaning it is often more cost-effective for services to be provided by a single entity. Second, they tend to have significant upfront costs, but the benefits or returns accrue over very long periods of time, often many decades; this longevity (and the associated difficulty of ascertaining adequate returns over such a long horizon) can pose a challenge to private financing and provision. Third, infrastructure investments have the potential to generate positive externalities, so that the social return of a project can exceed the private returns it can generate for the operator. This can lead to underprovision of needed investments. For these reasons, infrastructure has historically been provided by the public sector, public-private partnerships or regulated private entities. Source: World Economic Outlook 2014

this should not be interpreted as a blanket recommendation for debt-financed public investment, as adverse market reactions – which might occur in some countries with already-high debt-to-GDP ratios or where returns on infrastructure investment are uncertain – could raise financing costs and further increase debt pressure. For those emerging market and developing economies where infrastructure bottlenecks are constraining growth, the gains from alleviating these bottlenecks could be large; but increasing public investment may lead to limited output gains, if efficiency in the investment process is not improved. Thus, a key priority in many economies, particularly in those with relatively inefficient public investment, should be to raise the quality of infrastructure investment by improving the public investment process. This could involve, among other reforms, better project appraisal and selection that identifies and targets infrastructure bottlenecks, including centralised independent reviews, rigorous cost-benefit analysis, risk costing, zero-based budgeting principles and improved project execution. The report also quotes an April 2014 Fiscal Monitor article which found that only half of the increase in government investment in emerging market and developing economies from 1980-2012 translated into productive capital. The same article noted that reducing all inefficiencies in public investment by 2030 would provide the same boost to the capital stock as increasing government investment by five percentage points of GDP in emerging market economies, or by 14 percentage points of GDP in low-income countries. To conclude, while the scope for investment differs across countries, depending on infrastructure gaps and fiscal space, ensuring efficient infrastructure spending is crucial for all countries. In the part of her speech touching on public investment in infrastructure, the IMF chief cited the Global Commission on the Economy and Climate’s finding that integrating lower emission standards into infrastructure investment would cost only a tiny fraction (about 4.5%) of total projected spending. Efficient investment can be good for growth, good for jobs and good for the environment.

November 2014

INFRASTRUCTURE MIDDLE EAST

COVER STORY

EXCLUSIVE INTERVIEW

Subsea Prospects E-marine’s Omar Jassim Bin Kalban explains why telecom’s future is submarine By Anoop K Menon 32

INFRASTRUCTURE MIDDLE EAST

November 2014

COVER STORY

-marine’s genesis can be traced back to an incident,” recollects the company’s MD & CEO Omar Jassim Bin Kalban. “The communications cable between the UAE and India was damaged by a ship’s anchor, and after considerable time spent on search, we found a ship in the UK capable of repairing the cable. But the ship took almost four weeks to arrive, two weeks to finish the job and four weeks to go back, leaving us with a hefty bill.” However, the experience convinced the UAE authorities that if they used their own cable repair ships, considerable savings could be achieved on the opex front, given that submarine cables are vulnerable to being damaged more than once. Accordingly, Etisalat’s board decided to go for their own cable ship, which was commissioned in 1991. “It was the first cable ship built outside the US, Europe and the Far East,” says Kalban. “The ship laid the first cable connecting the UAE with Iran, and started looking after the maintenance of submarine cables in the region.” E-marine’s history goes back even further; it was established as a department within Etisalat in the early 1980s to maintain the submarine cable network connecting the UAE to its neighbours. The first cable – the Lower Gulf Cable – connecting the UAE to Qatar and Bahrain was laid in 1984, replacing the old telegraph cables. In 1986, Pakistan and India were connected to the UAE through Fujairah, followed by Iran in 1991. “With Etisalat becoming a hub for eastto-west telecom traffic, we realised that we needed a standalone entity to look after this network,” explains Kalban. E-marine was spun off from Etisalat in

1998, with the erstwhile parent becoming a shareholder in the new entity. The company has grown since then, with an operational footprint that extends from Iraq to Colombo and from Egypt to Tanzania, but that’s not all. Kalban continues: “When we started, the region’s submarine cable network was less than 400km; today, it stands at 100,000km. We have grown from one cable ship to four, and from a handful of people to a workforce of 350 highly specialised people. We have depots in Sharjah and Salalah to provide service support to our customers.” The E-marine chief points out that the company’s achievements should be viewed

“i believe that our capability, knowledge, know-how and equipment make us second to none, as vindicated by our 80% market share in the gulf region” OMAR JASSIM BIN KALBAN MD & CEO, E-MARINE in the context of its relatively late entry into the game. “We started this business more than 25 years ago, but there are companies who are in the business for over a 100 years, given that submarine cables started on a global level somewhere in the 18th century. However, I believe that our capability, knowledge, knowhow and equipment make us second to none, as vindicated by our 80% market share in the Gulf region.”

Strong credentialS

E-marine has established strong credentials in the construction and maintenance aspects of the business. “Our clients could be from the US, the Europe or the Far East,” says Kalban. “If they didn’t trust us, they wouldn’t give the projects to us. Project maintenance, however, is a longterm proposition because submarine cables last for quite a number of years. The only reason you take them out of service is due to the advent of new technology. “But if you have a network which lasts for more than 20 years, you need someone reliable and trustworthy to look after your network, from spares management, to attending to faults, to future enhancements. Our advantage lies in the fact that we have direct relations with most of our clients on the back of world-class services, facilities and equipment.” To drive home the point that maintaining submarine cables in the high seas is not a cakewalk, Kalban paints a picture of the work location in terms of eight-metre waves, wind speeds of 45-60 knots and no anchor or rope for the vessel to hold itself with. The situation becomes more complicated if the damaged submarine cable is a fibre optic cable, because the challenge is to join strands of glass fibre that are slightly thicker than human hair. “We also need a suitable calm place to carry out the repairs – no vibration or hard pitching or rolling – to allow the person to join this strand,” says Kalban, adding that last year, E-marine carried out repairs on a 4,000m cable in similar circumstances, and repair activity lasted nearly a month. “When a submarine cable is damaged, the parties don’t care whether its seas are smooth or rough,” he continues. “We have to mobilise the ship and attend to the problem. In fact, we regard ourselves like an ambulance service, where we

November 2014

INFRASTRUCTURE MIDDLE EAST

COVER STORY

are equipped and ready to mobilise in order to attend to our patient, which is the cable.” capital intenSive

The long-term contractual nature of the business means E-marine has to invest in equipment, technology and people to stay ahead of its industry peers. “This business is capital intensive, and the market itself is niche and specialised,” says Kalban. “You need to invest in the state-ofthe-art equipment, and more importantly, you need to have highly-trained and competent people to operate this equipment. “I feel that human resources is our biggest strength when it comes to competing with other companies. Our work demands a high level of training and experience, and people loss cannot be easily replenished. We are good at retaining people.” The E-marine MD & CEO believes that the Middle East region is yet to reach its full potential on the telecom front. “A lot of things need to be done, from a telecom point of view, to bring this region to the standard enjoyed in the other parts of the world,” says Kalban. “Submarine cables are an essential part of the strategy to bridge this gap.” When he looks a little further, in terms of 1.5bn people living within a four-fivehour flight from the UAE, the business opportunities are immense. “A lot of places in this region lack basic telecom facilities,” says Kalban. “Bring telecom infrastructure to these areas that are on a par with the standards in advanced countries, and you will appreciate how much the potential is there.” He also feels that the region’s telecom sector is poised to scale greater heights, which bodes well for the submarine cable industry. “The general public wants everything on their mobile phones. From a business standpoint, companies are looking to open bases in the region, and they need to be able to communicate with their head offices and corporate offices. The region is also hosting mega events like Expo 2020 in Dubai and the 2022 World Cup in Qatar. You need proper infrastructure to build on that, and the only major infrastructure that is unique is the submarine cable.” While E-marine counts most of the telecom companies in the region as its customers, in the last 10 years the company has made a mark in the oil & gas sector as well. In fact,

INFRASTRUCTURE MIDDLE EAST

africa foray Kalban is planning to set up a new base on the east coast of the continent

submarine cables play a vital role in electric power transmission too. “Communication and power supply are vital to proper development and enhancement of the oil fields or concessions,” explains Kalban. “The accommodation facilities and equipment on oil platforms need electricity and telecom services.” Future planS

E-marine’s future plans have factored in the potential of Africa. To participate in the development of telecommunication infrastructure on the continent, the company is planning to open a base on its east coast, taking its total number of depots to three. Within the region, E-marine is carrying out a study to finalise a location for stationing a ship and a depot stocked with spares to provide service to its customers. The company has committed more than $190m to expanding its fleet and geographical coverage. “Our pipeline of projects is healthy,” says Kalban. “We have gained the trust of the region. Whenever they want to develop their communication infrastructure, they call on us to get financial visibility or technical advice.

“Human resources is our biggest strength when it comes to competing with other companies” OMAR JASSIM BIN KALBAN MD & CEO, E-MARINE

November 2014

We are very happy to play our part in the development of this region. “Because of our good relations, we are able to get permits quickly to lay cables across countries. Though the permits have become more stringent, we have always got them on time to complete our projects. We are now asking for cooperation from concerned authorities to consider cable repair ships as an emergency ship coming to do service for the local society.” He is very proud of E-marine’s contribution to making the UAE a global leader with regard to telecommunication infrastructure. “Today, without telecom infrastructure, a country cannot attract investment,” says Kalban. “In order to communicate across borders, you need a network. However, as someone in the company pointed out, we are the unknown soldiers. People remember us only when their internet speed slows down, or the media cannot operate, or when the ordinary consumer starts complaining. We have to go and fix the cable or repair it, whatever the elements out there.” While acknowledging competition from satellite-based communication systems, Kalban feels that their issues with regard to data transmission rates have proved to be a limiting factor. “The submarine cable is the most reliable infrastructure for telecom services,” says Kalban. “The fact that it carries so much bandwidth and so much traffic at the speed of light, connecting continents and providing content from any place at your fingertips, makes it a hard act to beat.”

DELIVERING RELIABLE, AFFORDABLE ENERGY. SOLAR IS JUST HOW WE GET IT DONE. With more than 9GW installed worldwide, First Solar is integrating solar power into the global energy mix. Our comprehensive PV energy solutions address the energy needs of today and result in reliable, bankable, and profitable solar solutions for our customers and partners worldwide.

First Solar engineered and constructed the first phase of the landmark 1GW Mohammed bin Rashid Al Maktoum Solar Park in Dubai â&#x20AC;&#x201C; the largest PV power plant in the Middle East. To see what we can do for you, contact mena@firstsolar.com

First Solar, Office 201, EIB Building #3, Dubai Internet City, PO Box 502975, Dubai, UAE | firstsolar.com

UTILITIES

EXCLUSIVE INTERVIEW

Legacy of growth

Peter Frank, chairman of Megger Group, speaks to Anoop K Menon about the digitisation of the electrical test and measurement industry and the significance of customer-driven innovation 36

INFRASTRUCTURE MIDDLE EAST

November 2014

UTILITIES

hat is the composition of Megger’s customer base?

Our customers are mainly electricity utilities, very large consumers of power like the railways that operate enormous electrical networks and big industrial plants and ships with their own power systems. In the US, we also count the military among our major customers as they operate from self-contained bases with standalone power infrastructure. We prefer to sell directly to such large customers because they have great technical capabilities, big engineering departments, and are particular about the things they want, and at good prices. As in many industries, electricity utilities too have gone through a process of specialisation and fragmentation. From running massive maintenance departments in-house, they are beginning to outsource that function to very large service companies, who now constitute our single biggest customer worldwide. These service companies, often extensions of major electrical giants, have thousands of staff and work with a wide range of equipment Megger’s portfolio of test and measurement products comprises cutting-edge as well as older products that go back 30-40 years. Is that a deliberate strategy?

The physics of electricity, its fundamentals, are how nature intended them to be. And the fundamentals and ways of measuring certain characteristics of electricity remain relevant to this day. For example, the original Megger business was measuring the quality of electrical insulation, which was invented and patented more than a century ago. If you look today at our electrical insulation testers, yes, they look a bit more fancy; but the only major change, and this is a development over the last 20 years and a key driver of what we do, is the digital microelectronics we have built into the instrument. The embedded intelligence makes it much more valuable to the user. AA hundred years ago, if you took these instruments apart, there would be some wiring, some mechanical parts and a gauge

that tells you something. You connect them up, see what the gauge says, write that down, make another measurement, write that down, and that’s how you worked. But modern insulation testers record and store the measurements, analyse them and can run different tests. This is far more efficient and enables you to do a lot more things. We are going from electrical to electronic but the instrument is the same, and so are the measurements. What has changed is the way we make the instruments. But some things have changed radically. If you go back 20 years, most of the power was used to create light or heat. The quality of electricity was, frankly speaking, not very important. You could live with a little flicker now and then.

“An electricity network is a huge, complex and finely balanced system. People who run these networks take a rather conservative approach to everything they do, because it doesn’t take much to trigger a crisis”

The test and measurement industry is an integral part of the electrical industry, but also a highly technical and niche segment. Is that an entry barrier to competition?

PETER FRANk ChAIRMAN, MEggER gROUP However, today, most of the electricity consumption is going into digital electronics, especially televisions and computers. Even modern LED lighting is electronic. They need a clean and stable power source, otherwise they can trip out or get damaged. This has created a whole new market in assessing the quality of power in great detail. The tolerance limits for poor quality are getting lower. How do you factor these developments into your products and solutions?

We try to understand how these trends work, but our basic reference is what our customers want. What we are now finding is

that customers of power companies want to measure the quality of power, and if it is not right, they want to know what the problem is and how it can be corrected. Now power companies want equipment which enables their engineers to go out and solve these problems, and that’s what we react to. We don’t follow the global trends so much as react to what is coming at us from our customers, who tell us that this is our new problem and we want your help to solve it. At the same time, an electricity network is a huge, complex and finely balanced system. People who run these networks take a rather conservative approach to everything they do, because it doesn’t take much to trigger a crisis. They are very careful about what instruments they want and measurements they make. If they adopt a new instrument, they have to adopt a new technique and they have to train their people. This doesn’t happen easily or cheaply, which poses a big challenge where change is concerned.

There are two main entry barriers. First, it is important to have products with the functionality that customers want. They have got to be robust and reliable, and that in effect is a barrier; if you are starting from zero, you can design one or two products, which can be very challenging. Even if you design a product and get it right, you still have to make it reliable and robust, which isn’t easy. The second barrier, of course, is our distribution network. We have a pathway to the customer, they know us and we know them. For a new entrant, these are huge barriers. Megger is one of the few companies where you have technology-savvy, knowledgeable people at the front line. Is that an advantage?

We have a high percentage of people who are experts in what they do. In a sense, we are selling technical solutions. Our best sales people can engage with our customers to understand their problems and propose how we can help them. To do that, you need to have a certain level of understanding of what the owners of these

November 2014

INFRASTRUCTURE MIDDLE EAST

UTILITIES

technical systems are talking about. Our sales don’t have the expertise to necessarily work through the details, but we have specialists back at our factories to do that. This is an important part of our structure, the fact we have an enormous amount of linkage across the group, amongst the people. They know each other, communicate easily and work together to solve the problems of the customer. Is customer requirement the main driver of innovation in the test and measurement industry? Do you look elsewhere?

At one level, it comes from solving customer problems. At another level, what you will find is that the physical techniques used to solve test and measurement challenges originated in the universities, and they often sit there for a very long time before they find their place in the real world. What we have to do is turn them into something that can be manufactured in some volume and sold, and can be used by our customers in a practical way on a day-to-day basis. Since you mentioned universities, do you feel that electrical engineers with solid grounding in the fundamentals are becoming harder to find?

The quality, experience and education, if you will, of many of the frontline engineers is not as good as it used to be. This is a big problem for our customers running electrical networks, because they get people who lack the expertise of the ones retiring. We have responded to this challenge by trying to automate that expertise or build it into our instruments. The new breed of instruments can guide you through the various steps and procedures, making sure you do them right. There is also a safety aspect to this, because ignorance can be lifethreatening. The new instruments can alert the user to take necessary precautions, for example flash a red light warning if it is not properly grounded. The previous generation was able to protect themselves through their skill sets and knowledge. It seems that intelligent instruments are doing the hard work that the electrical engineers were once expected to do.

These things are self-reinforcing. Because you haven’t got such skilled people, you want more intelligent instruments. And because you have more intelligent instruments, you

INFRASTRUCTURE MIDDLE EAST

can afford to operate with a guy who, perhaps, doesn’t have those skills. As the test and measurement industry goes digital, where do you think this evolution is ultimately headed?

The move to digital electronics took place within the last 30 years. It started in the 1980s but accelerated as digital electronics became cheaper. We went from a generation of manual instruments to electronic, but we haven’t finished. At the same time, I can also see the end of the road, if I may say so. The example I often give is the invention of pocket calculators. When I started work, electronic calculators didn’t exist. When you had to add two numbers, you took out a pencil and did the math or used slide rules,

“The quality, experience and education of many of the frontline engineers is not as good as it used to be. This is a big problem for our customers running electrical networks because they get people who lack the expertise of the ones retiring” PETER FRANk ChAIRMAN, MEggER gROUP

I have really enjoyed growing Megger from a small local company based in the UK to a multinational and global leader in the electrical test and measurement industry. I also enjoyed building up a big group of enthusiastic employees who are a major part of this success story. In the detail, you have a lot of wonderful experiences. One of the things Megger has done for me is open up certain parts of the world. I have never run a company before that had a large sales and presence in the Gulf region. If you look at the building sector in Dubai, you have a lot of wiring; if you look at Saudi Arabia, with its petrochemical complexes and huge cities and the challenges involved in operating that infrastructure, there is tremendous market opportunity for us. Our shareholders would like me to continue to build the company. If I am going to do that, we are going to have to expand the activities, and maybe we will do that. How do you propose to further increase Megger’s market share?

First of all, our global market share is probably around 25%. I would ignore China because it is a very special case, but if you look at everything else, we probably represent a quarter of the market. Look at it the other way: within our existing product range, 75% is someone else’s. So there is a lot of scope to advance and gain market share, but this in itself is a slow process because this is a business of niche products. So it is something that happens over time. Why did you describe China as a “special case”?

which wasn’t of much use to anyone other than engineers. Mechanical calculators were useless. When the digital calculator arrived, it became more or less the perfect product. To think of it, nobody has improved the pocket calculator since 1990. I think it is going to be the same for the test and measurement industry; we will soon come to pretty perfect products. Of course, you will see some enhancements like touch screens, for example. We had them on our big instruments for some years; now, our customers want it on the small ones as well. But we are heading to a point where, more or less, the product or function is well defined and that’s it. What are your favourite recollections from your long innings with Megger?

November 2014

China is rather special because it is an enormous country which has been industrialising at a fantastic rate. Therefore, the construction of electricity infrastructure has been enormous. I suspect China accounts for more than half of the global investment going into electric infrastructure in recent years. This has created a home-grown test and measurement industry in that country. They design and use their own products that are similar to Western products. We can’t compete with those products on price. We prefer to sell our customers in China some of the highly sophisticated products in our portfolio that they can’t get locally. I haven’t made an effort in China, because it is too difficult. But we did make a big effort in India, which turned out to be a good decision.

NOW IN RIYADH

2015 Distinguished Speakers Include:

H.E. Abdullah Al Hussayen

H.E. Dr. Mohammed Al-Saud

H.E. Dr. Saleh Alawaji

H.E. Dr. Abdullah Al-Shehri

Paddy Padmanathan

Dr. Maher Alodan

Minister Ministry of Water & Electricity

Deputy Minister for Water Ministry of Water & Electricity

Chairman of the Board of Directors Saudi Electricity Company & Deputy Minister for Electricity Ministry of Water & Electricity

Governor Electricity & Co-Generation Regulatory Authority (ECRA)

President & Chief Executive Officer ACWA Power

Head of Research, Development & Innovation KA CARE

Utilities

PRIMARY POWER

Broader Baseload New nuclear technologies promise to deliver cheap, secure and resilient power. By Dr Colin Elcoate uclear energy, combined with other power generation technologies, plays an important part in ensuring secure, reliable power supplies for future generations. It offers a long-term, low-carbon base load that is sustainable, economic and independent of the external variations of fossil fuel prices and availability. Nuclear energy offers countries that invest in it a long-term legacy of independent, sustainable, economic, low-carbon power. Although the initial investment is higher than for fossil fuels, there are clear benefits that offset the higher build costs: ongoing lower electricity prices and the security of energy for the future without relying on oil, coal or gas. Although this article does not advocate the sole use of nuclear energy – a broad base load of energy sources is the smart choice – it is probably the most secure and reliable power source available today.

Renewable energy is the fastest growing source of primary energy production in this region, and technology is making it more viable. However, many of the most promising technologies depend on natural occurrences such as the sun shining or the wind blowing, making availability more unpredictable than other fuel sources.

Reliance on impoRts

Gas and coal power stations in many countries rely on fuel supplies from outside their borders. In Europe, Russia is the biggest supplier of oil, coal and natural gas. In the UK, over 50% of gas is imported. Although significant investment in pipeline infrastructure has ensured available import capacity exceeds needs, the UK is increasingly reliant on imports as local North Sea gas reserves decline. Indeed, according to Eurostat statistical findings, the UK’s production of primary energy has fallen by more than 12% in the last decade. Countries that rely on fuel from abroad are vulnerable to changes in policies or politics over which it has no control. Disputes with countries through which fossil fuels are transported pose a risk to the availability and price of imports. The changing geo-political environment means there is always some level of threat to the security of external supply.

INFRASTRUCTURE MIDDLE EAST

impRoVing nucleaR saFety

Dr colin elcoate, Vp Business Development–power, spX Flow technology

secuRing gReateR pRimaRy eneRgy pRoDuction

In Europe, nuclear power is the biggest contributor to primary energy production. With a single fuel reactor pair generating power for many years, it offers stable pricing and independence from external fuel supply.

‘one of the most important safety functions on a nuclear power plant is the continued operation of cooling systems, to maintain core cooling and ultimately reduce the risk of core damage and potential fuel melt’

November 2014

There is significant investment in nuclear research and development. The current Generation III and III+ reactors are based on standardised designs to reduce capital investment and construction time. They are designed to be safer, less vulnerable to power interruption or extreme external events and easier to operate, and have a lifetime of about 60 years. In these reactors, passive safety systems do not require operator intervention and make the plant resilient in the case of prolonged station blackout. Generation III and III+ reactor designs significantly reduce the risk of failure of reactor cooling during abnormal operating conditions. Generation III reactors have been in operation in Japan since the 1990s and III+ designs are currently under construction across the world. One of the most important safety functions on a nuclear power plant is the continued operation of cooling systems, to maintain core cooling and ultimately reduce the risk of core damage and potential fuel melt. At Fukushima, the reactors shut down automatically and emergency cooling systems operated from back-up generators. When the tsunami hit, however, power and cooling were lost and the reactors overheated. The result was fuel melts, hydrogen explosions and, ultimately, large radiation leaks. Relatively simple mechanical equipment, such as pumps and valves, are key components in reactor safety systems. As well as reducing the dependence on mechanical equipment for reactor safety in new passive safety designs,

CMY

The future of technology is more secure than ever.

Intel® Security combines the expertise of McAfee® with the performance and trust of Intel to deliver secure computing to consumers and businesses worldwide. We believe that as technology becomes more deeply integrated into life, security must be more deeply integrated into technology. Because when everyone has the conﬁdence to use technology to its full potential they can achieve their full potential. Visit intelsecurity.com.

McAfee is now part of Intel Security. 2014 © McAfee Inc. McAfee and the M-shield are trademarks or registered trademarks of McAfee, Inc. The Intel logo is the trademark of Intel Corporation in the U.S. and/or other countries.

Utilities

emeRging maRkets

Distributed power smaller modular reactors producing 300mW and less are being developed and tested

equipment manufacturers are working closely with the industry to supply more reliable equipment and address failure modes experienced in extreme events. the FutuRe

Smaller modular reactors with output typically less than 300MW are also being developed and tested. These would be suitable for inland plants with more restricted local availability of cooling water, and also for situations where full-scale 1GW+ plants are not required. Such plants would also need less initial investment and would offer the opportunity of creating a distributed nuclear power network. International research into six types of Generation IV reactors is ongoing, with input from many countries and high investment from established nuclear nations. The designs claim to offer advances in sustainability, economics, safety, reliability, shorter waste half-lives and proliferation resistance. Technology can also produce higher energy levels from a fuel source and offer the possibility of using existing radioactive waste as fuel. The significant investment in nuclear technology could bring greater security to power supplies, with some of the Generation IV reactor designs possibly in operation before 2030. Of course, the long-term storage of legacy waste needs to be addressed locally, but volumes are small; and with some of the SMR and Generation IV reactor technologies being researched and developed, this waste may have future potential as a fuel. Further into the future, nuclear fusion is another area of research that has the potential

INFRASTRUCTURE MIDDLE EAST

to make nuclear energy more appealing by reducing the risks involved. To support long-term investment in secure nuclear energy supply, the industry also needs confidence in the longevity of a supply chain with qualified and experienced manufacturers. A focus on supporting the nuclear power industry requires ongoing research and development and an effective, reactive, global support network that works alongside operators with common knowledge and nuclear expertise. The use of common designs in the Generation III, III+ and (in the future) Generation IV reactors enables

â&#x20AC;&#x2DC;international research into six types of generation iV reactors is ongoing, with input from many countries and high investment from established nuclear nationsâ&#x20AC;&#x2122; centres of excellence and better sharing of knowledge and experience between countries. Historically, nuclear plant construction has proven expensive, with a tendency to over-run timescales and budgets. The support of experienced, global manufacturers in the supply chain can only improve the safety and reliability of nuclear plants, as well as making on-time, economic delivery of this technology a reality.

November 2014

Most new-build opportunities for nuclear power stations are in countries that have already invested in nuclear technology. There are, however, countries like Saudi Arabia and Turkey where nuclear power is an emerging technology. Saudi Arabia in particular is faced with huge increases in electrical demand because of rapid industrial and urban expansion, and needs to use more of its vast oil and gas resources to support domestic need. This reduces the amount available for export and threatens the countryâ&#x20AC;&#x2122;s principal source of revenue. Saudi Arabia is taking proactive action and developing a broad base load of energy sources to support its power grid, including increases in solar energy and a comprehensive local plan to engage in a nuclear program incorporating operators, regulators and full lifecycle management. It plans to build 16 nuclear reactors, coming into use between 2022 and 2030. Manufacturers are also looking to support emerging nuclear markets such as Saudi Arabia, with phased plans to invest in local people, manufacturing and aftermarket services to provide long-term support for the growth of the industry. secuRe electRicity FoR all

SPX continues to support the energy market across all its facets. There are still many people without daily electricity supplies, and there is a real need to reduce global carbon emissions. Developing nations need support to develop infrastructure, and access to the knowledge and experience of energy providers, construction experts and manufacturers throughout the supply chain. There is still much work to do to secure energy supplies for the future. As in Saudi Arabia, the best strategy appears to be to develop a broad base load of energy sources. Ongoing research throughout the power generation industry is developing low-cost, economic, safe, low-carbon energy, and all technologies have their place in providing a secure, stable, reliable power grid. The investment in new nuclear power, however, is a real opportunity to increase its contribution to primary power generation and to increase energy security. Once installed, it offers a low-cost, environmentally sustainable and resilient energy supply that will last for decades.

onstruction Intelligence eport

An industry in words The construction Intelligence report will offer an in-depth analysis of the Middle east construction market, covering a broad range of topics from property development and megaprojects to infrastructure and finance. The report will feature an exclusive survey on regional salaries and industry trends, as well as interviews with key executives, sector updates and country reports. This annual report will serve as a one-stop guide for industry professionals, enabling them to make more informed business decisions. Sponsor logo

Premium positions DISPLay

Sponsored by

rate

Front cover Sponsorship*

*your logo on the front cover with associated status, two-page profile interview format and a full page advertisement

$40,000

country Sponsorship**

**your logo on the section divider of country with associated status, two-page profile interview format and a full page advertisement

$20,000

outside Back cover

$14,400

Inside Front cover

$12,000

Inside Front cover DPS

$21,600

First right Hand Page

$9,600

Bookmark

$11,250

Infrastructure Us molenderio te nienihiciae quae sinveni as apel iusanda ndicae sum fuga. Luptas aut acil issus acea possum volorporro iliquibust re occae voluptae. Ut doluptatibus sinvendicte plic totaspide prorrorit, inciis estibus. 82

The right workflow and processes defined, BIM enables organisations to improve the quality of building design

Dolor Sitamet

Run of page advertising PUBLISHING DIrector RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 eDItorIaL DIrector vIjAyA cheRIAn vijaya.cherian@cpimediagroup.com +971 4 375 5713 aDVertISING coMMercIaL DIrector MIchAeL STAnSFIeLD michael.stansfield@cpimediagroup.com +971 4 375 5497 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

DISPLay

rate

Double Page Spread

$14,400

Full page

$8,000

Half page

$5,000

example of section divider

BIM – Business Enabler or Technology Red Herring? Lorem Systems' Dolor Sitamet explains why it is so important for BIM providers to create systems that will push forward the concepts of simple and effective cooperation between all stakeholders involved in a project Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? The UK government’s decision to require that all suppliers involved in public sector construction projects use Building Information Modelling (BIM) tools and techniques by 2016 is to be applauded. The intention is to drive better value from capital investment and realise a 20% reduction in lifetime costs, whilst supporting environmental commitments by facilitating a more integrated approach to design. It is also about changing the culture between the client and the rest of the supply chain, replacing the traditional, rather adversarial business practices with a collaborative approach that should also drive innovation. However, misinformation is rife. BIM is not just about 3D data but about creating a holistic information resource that also includes 2D data sources, documents, spreadsheets, and more. I believe the key to realising the government’s BIM vision is to create simple, effective cooperation among the design, construction and operation aspects of the infrastructure lifecycle. Overcoming these traditional silos

provides a chance to reduce duplication, minimise errors, streamline processes and facilitate collaboration. However, while the majority of new bids now demand some level of BIM compliance, requirements are often opaque at best. Let’s set the record straight: BIM, when done correctly, is about information sharing enabled by information mobility (across engineering disciplines and the infrastructure lifecycle). It provides contractors and owner operators with access to key design data that can be used to transform effectiveness throughout the construction and operations processes. Yes, it drives better use of 3D across the industry, but not only 3D. 2D data remains important, as does information held in documents, spreadsheets, and other databases, all of which contribute to a holistic BIM approach. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? BIM is ultimately about creating an asset model from day one that can be used consistently throughout the project to drive efficiencies

and improve collaboration. Indeed, BIM also encompasses information management as much as information modelling. It enables a contractor to feed design information into project planning tools and resolve potential conflicts before arriving on site. It also empowers the sharing of space information with facilities management teams before the building goes live to drive effective up-front planning, as well as the sharing of other crucial design, engineering, and construction information that can later be used to help drive cost-effective operations decision making and renovations work. Leveraging a collaborative platform and technology to share and integrate information, within an incremental approach that accommodates all of the specialised design simulation and analysis software best suited for each project role, will best enable the industry to achieve the desired widespread adoption of BIM. The government’s stance on BIM is to be commended. Demanding Level 2 compliance by 2016 is pragmatic and achievable and promotes the very real promise of intelligent infrastructure that is better performing in terms

of its energy efficiency, resilience to natural and man-made disasters, safety, and cost-efficiency. However, while industry adoption and interest are positive, it is essential that organisations take a step back and truly assess information requirements. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? BIM is a business process not a technology. With the right workflow and processes defined, BIM enables organisations to improve the quality of building design, reduce costs and achieve the collaborative workflows required to drive true innovation. However, misinformation is rife. BIM is not just about 3D data but about creating a holistic information resource that also includes 2D data sources, documents, spreadsheets, and more. I believe the key to realising the government’s BIM vision is to create simple, effective cooperation among the design, construction and operation aspects of the infrastructure lifecycle. Overcoming these traditional silos provides a chance to reduce duplication,

minimise errors, streamline processes and facilitate collaboration. However, while the majority of new bids now demand some level of BIM compliance, requirements are often opaque at best. Let’s set the record straight: BIM, when done correctly, is about information sharing enabled by information mobility (across engineering disciplines and the infrastructure lifecycle). It provides contractors and owner operators with access to key design data that can be used to transform effectiveness throughout the construction and operations processes. Yes, it drives better use of 3D across the industry, but not only 3D. 2D data remains important, as does information held in documents, spreadsheets, and other databases, all of which contribute to a holistic BIM approach. BIM is ultimately about creating an asset model from day one that can be used consistently throughout the project to drive efficiencies and improve collaboration. Indeed, BIM also encompasses information management as much as information modelling. It enables a contractor to feed design

information into project planning tools and resolve potential conflicts before arriving on site. It also empowers the sharing of space information with facilities management teams before the building goes live to drive effective up-front planning, as well as the sharing of other crucial design, engineering, and construction information that can later be used to help drive cost-effective operations decision making and renovations work. Luptas aut acil issus acea polvolorporro iliquibust re occae dimitis dolor? Leveraging a collaborative platform and technology to share and integrate information, within an incremental approach that accommodates all of the specialised design simulation and analysis software best suited for each project role, will best enable the industry to achieve the desired widespread adoption of BIM. The government’s stance on BIM is to be commended. Demanding Level 2 compliance by 2016 is pragmatic and achievable and promotes the very real promise of intelligent infrastructure that is better performing.

two page profile

$12,000

example of two-page profile advertisement

Distribution, circulation and readership

50,000

copies will be printed and distributed across the GCC in January 2015 with issues of:

OIL & GAS

THREAT VECTOR

Perils of convergence

Oil & gas companies are increasingly concerned about securing their businesscritical operations against cyber-attacks. By Anoop K Menon

ritical industries like oil & gas, petrochemicals and utilities that rely heavily on industrial automation systems to run their operations are increasingly finding themselves vulnerable to cyber-attacks. But this vulnerability takes on a serious dimension in the oil & gas industry, which accounts for more than 30% of the GCC’s GDP. “The threat of cyber-attack in the oil & gas sector is real,” says Tim Wood, Director, Middle East, BAE Systems Applied Intelligence. “Over the last few years, we have seen cyber-attacks specifically designed to garner information from industrial control systems or actually sabotage them, two well-publicised examples in this regard being Havex and Stuxnet.”

INFRASTRUCTURE MIDDLE EAST

‘Over the last few years, we have seen cyber-attacks specifically designed to garner information from industrial control systems or actually sabotage them’ TIM WOOD, DIRECTOR, MIDDLE EAST, BAE SySTEMS APPLIED INTELLIgENCE According to the US Department of Homeland Security, 53% of the critical infrastructure security incidents brought to the notice of its Industrial Control SystemsCyber Emergency Response Team (ICS-CERT)

November 2014

in 2013 were in the energy sector. In fact, in the US, the energy industry is subject to the most cyber-attacks, followed by defence. Historically, the control systems network and the enterprise network were kept completely separate. The enterprise network connected business systems like email, finance, payroll and HR. Operational networks connected specific systems like DCS and SCADA that operated the physical assets, whether oil pipelines or power transmission grids. There was no consideration for IP networking between industrial network components and different sites. The reasons for the separation were two-fold: one, they were different types of technology; second, there were good security reasons for keeping them apart. Thus, the majority of malware, which

Oil & GAS

made use of IP, could not propagate in the core of industrial systems. However, with top management pushing for greater productivity, profitability and efficiency, it became necessary for the two networks to exchange data and information. Wood says: “The leadership of oil & gas companies are always looking to drive efficiencies by enhancing automation, getting management information on what’s happening in the field and achieving real-time monitoring. To drive efficiencies, you require connectivity; and with connectivity comes vulnerability.” COmmOn platfOrm

With Ethernet/IP providing a common communications platform for the two networks, the industrial network is now exposed to the same security vulnerabilities

as its enterprise counterpart. “The business systems always are connected to the internet, where the bad stuff comes from,” explains James Clark, Director of Energy & Utilities, BAE Systems Applied Intelligence. “The usual attack vector for an adversary is to come in through the internet. If that network is connected to the control system which operates the pumps, valves, switches, turbines, you’ve now got a connection from the bad guys in the internet all the way to the control system operating a pump.” Moreover, cyber attacks prefer to target the weakest links they can find. In fact, in a convered network, legacy industrial systems that were were built without considerations for the internet or cyber security uniwittingly become the weakest link. Business requires that data be shared, but security requires that the data be shared in a secure manner. Clark explains: “For example, imagine where a control roombased production engineer is trying to make a decision on an oil field which may have multiple assets – assume he is trying to identify which asset has got the best artificial lift. He is looking at several of these and wants to identify, based on data, what is working optimally to improve the optimisation of others. He needs assurance that if he makes an engineering decision and sends the command back to the platform, it is trusted, vindicated and won’t disrupt the production.” BAE System’s new IndustrialProtect product uses ‘whitelisting’ to ensure that only “the known and the good” can pass the boundary between enterprise and operations networks. “One of the key differences between the enterprise network and the control system network is the deterministic nature of the latter. You can therefore identify the type of activity that you would expect to cross that. Anything that is not on the in numbers

30%

Oil & gas industry’s share of GCC region’s total GDP

53%

Percentage of cyber security incidents targeting the US energy sector in 2013

whitelist is discarded,” says Clark. The two networks differ in other respects as well – enterprise networks carry mainly data, voice and video; industrial networks handle data, information, control, safety and motion, and are more sensitive to latency and speed. In the case of a real threat, with IT networks, it is possible to isolate the threat and trouble-shoot. This is not the case with industrial networks, as it is not possible to shut down the plant. The facility has to keep operating with the detected threat, which must be dealt with later. On the autOmatiOn side

Standards like ISA 95 and ISA S99 help drive commonality, consistency and standards of operation within control systems at risk. Both ISA-95 and the Purdue Reference Model for Control hierarchy segment industrial devices into hierarchical levels of operations within a manufacturing facility. ISA 95 segments industrial control devices into hierarchical levels of operation within an industrial facility. Levels 0, 1 and 2 are the levels of process control. Level 3 is the level of MES (manufacturing execution system) activities. Levels 4 and 5 include traditional enterprise IT networks, business applications such as email and enterprise resource planning (ERP), and wide area networks (WAN). To preserve smooth plant-wide operations and functioning of the systems and network, the industrial zone requires isolation and protection from the Enterprise Zone via security devices (network firewalls) within the DMZ. In industrial networks, addressing the physical security of the port is extremely important. The enterprise and industrial networks can be segregated through device hardening, where unused or infrequently used USB ports and Ethernet ports are blocked to prevent people plugging devices into these ports. In the end, it is important to understand that merely installing firewalls doesn’t guarantee security of industrial assets. For the converged network, the risks are not necessarily in how an attack may be perpetrated, but that at some time or other either the IT or the operational network will be attacked. Only a comprehensive security model using multiple layers of defence, both physical and electronic, through the application of policies and procedures that address different types of threats, can protect industrial assets.

November 2014

INFRASTRUCTURE MIDDLE EAST

CONSTRUCTION

TECHNOLOGY

Design deadlines Dar Al-Omran met the tight project deadlines for Jordan’s Zarqa water network restructuring and rehabilitation project by reducing the CAD modelling time he Zarqa Governorate is northeast of Amman, in the Central Region of Jordan, with an area of 4,761 sq km and a population of 871,600, projected to grow to 1,690,000 by 2030. To meet the needs of the growing population, as well as to address the limitations of the current water network, the Millennium Challenge Corporation is funding a major restructuring of the network, including the development of water supply areas (WSA), distribution areas (DA), and district metering areas (DMA), with a transition away from direct pumping into supply. The project will install and replace approximately 35km of primary and secondary trunk mains and approximately 550km of tertiary distribution mains. The joint venture of Hazen & Sawyer and Dar Al-Omran, together with Nicholas O’Dwyer, was commissioned to progress the detailed design of the works. The team used Bentley’s WaterCAD for all hydraulic modelling, including the development of extended period simulations (over 24 hours) for a variety of hydraulic scenarios representing both intermittent and continuous supply arrangements.

Major Issues

The existing water supply scheme, which consists of approximately 3,500km of water mains with associated pumping stations and reservoirs, has major shortcomings. Because of inadequate water resources and high levels of leakage, supply is available to consumers on an intermittent basis only. At present, water is supplied approximately 37 hours per week on average (22% of the time). There are also high levels of water leakage, particularly in the tertiary pipe network. Most of the network is supplied by direct pumping from low-level sources and pumping

INFRASTRUCTURE MIDDLE EAST

stations rather than by gravity from elevated reservoirs, which is a more efficient system. There are serious deficiencies associated with the distribution network, including pipes laid over the ground and corrosion in steel piping. Finally, there are hydraulic capacity inadequacies throughout the system, as well as supply and water pressure imbalances across the distribution system, with some areas experiencing excessively high pressure, while other areas, at higher elevations, have minimal supply due to low pressure. The main objective of the Zarqa Governorate water system restructuring and rehabilitation project is to improve the hydraulic efficiency and performance of the water supply network, including reducing water loss, which will reduce the water that needs to be pumped. The goal is also to provide greater access to clean, potable water in areas serving impoverished population groups. In addition, the project will reduce operation and maintenance costs for the water supply network, increase revenue

November 2014

due to improved availability of supplied water, and provide health benefits related to improved hygiene among populations constrained by low consumption of water. A fast-track project strategy was adopted to enable the completion of all construction and commissioning works before December 2016, an immovable client deadline. Emran Hammoudeh, head of the Water & Wastewater Design section at Dar Al-Omran,

Project objective: • Improve the hydraulic efficiency and performance of the water supply network • Reduce high rates of water loss in the water supply network • Provide greater access to potable water, particularly in areas serving impoverished population groups

CONSTRUCTION

explains: “WaterCAD was instrumental in ensuring that extremely tight deadlines and project milestones were met by the project team, and facilitated the development of cost-efficient solutions for a very complex water supply system.” WaterCAD helped Dar Al-Omran meet the project design deadline in a number of ways: •Interoperability between WaterCAD, AutoCAD and ArcGIS allowed the efficient transfer of existing GIS and network data into the model, as part of the model-building phase. • WaterCAD’s TRex functionality allowed the efficient integration of survey data and the allocation of elevations to specified nodes based on data from a digital elevation model (DEM), which was developed from site survey work. Furthermore, the combined use of DEM and TRex ensured that there was no discrepancy between the individual submodels progressed by the modelling teams. WaterCAD’s TRex functionality was used extensively for this project; it is estimated that this feature alone resulted in a 10-15% saving in time and resources. • The Thiessen Polygon Creator in WaterCAD’s LoadBuilder module facilitated the efficient allocation of demand across the nodes in all models. • Extended period simulations (over 24 hours) were required for both the continuous and intermittent supply arrangements and for both average day demand and average day peak week demand. As such, four scenarios with two additional child scenarios were developed, so as to ensure robust hydraulic design of the works. WaterCAD allowed the efficient development, management, update

Color-coded map showing pressure and pipe diameters

and recall of these scenarios within the same overall model framework, using WaterCAD’s Scenario and Alternative tools. One WaterCAD model was developed for the primary and secondary networks, and 32 models for the tertiary network.

“WaterCaD was instrumental in ensuring that extremely tight deadlines and project milestones were met by the project team” EMRAN HAMMOUDEH, HEAD OF WATER & WASTEWATER DESIGN, DAR AL-OMRAN

streaMlIneD tenDer DraWIng

Since this project involved the design of approximately 600km of new and replaced pipeline, the development of detailed design and tender drawings was a major challenge. For example, the preparation of tender documents for five network contracts included the production of 1,371 drawings and five sets of specifications. WaterCAD facilitated the migration of designs from the models to the detailed design and tender drawings. The interoperability between WaterCAD and AutoCAD was an important benefit, as it enabled efficient generation of drawings based on the water model and minimised data transfer issues, resulting in about 20% time saving compared to more traditional processes. Hammoudeh says: “In overall terms, WaterCAD is a key factor in the achievement of the project and programme goals, which will result in a sustainable improvement in the Zarqa water supply scheme for the benefit of the local community.”

Fast Facts • The existing water supply was available to consumers on an intermittent basis only • The project proposes to replace about 600km of water mains • WaterCAD was used for all hydraulic modelling work Hourly pattern for intermittent supply, shown in WaterCaD’s pattern management

November 2014

INFRASTRUCTURE MIDDLE EAST

EXECUTIVE INSIGHT

Aki Maenpaa

“We have received orders for small and mediumsized PV solar inverters for rooftop plants in Dubai”

Acting on the solar vision Aki Maenpaa, Cluster Head, Discrete Motion, ABB, on how rooftop solar can help the region achieve renewable energy goals he traditional image of solar power has been that it’s expensive compared to conventional energy sources. However, times may be changing. In fact, events this year show that renewables are on their way to making a difference in energy production and even rendering other energy sources uneconomical. First, Bloomberg reported in March that energy cost in the spot market had turned negative in California, due to combined high production from both wind and solar power plants. Then the Guardian in Queensland, Australia reported the same thing in July. The main reason was the energy produced by solar rooftop installations, which have become the biggest power plants in these states. For me, it’s interesting to read news like this from outside the Middle East – it’s a taste of what could be the future of renewable energy in the UAE and other sunny Gulf countries. Both Queensland and California have tariffs in place to enable wide public investment in renewable energy production. Regulators have been able to convince the market that it’s a

INFRASTRUCTURE MIDDLE EAST

profitable business to be in, creating substantial installed power for both wind and solar power plants. As both places are favourable for solar, the electricity generated is matching total consumed power when the conditions are right. This is truly great news, showing that renewables are not just a complementary solution, but rather a major source of power. This is an opportunity for sustainable growth through reducing the CO2 emissions of new power plants. This is still in the future for the Middle East, but we do have a lot of encouraging signs in many Gulf Cooperation Council (GCC) countries, who have recognised the need for sustainable energy production by reducing dependency on oil & gas through setting targets

‘Despite ambitious plans, it will be hard to reach a substantial share of power production through centralised major photovoltaic plants only’

November 2014

for the share of renewables. So far, there has been a lot of planning and vision-setting, but real implementation has been limited to a few large plants and pilot installations of decentralised rooftop plants. Despite ambitious plans, it will be hard to reach a substantial share of power production through centralised major photovoltaic (PV) plants only. In California and Queensland, small and medium-sized rooftop installations play a major role. To enable this, private investors need to be motivated to put their money into this business. This motivation can be created by implementing feed-in tariffs, or at least net metering, and easing the approval process for grid-connected PV plants in GCC states. It now looks like Dubai at least is taking real steps in this direction, as we have received new orders for small and medium-sized PV solar inverters to be installed in rooftop plants in the city before the end of 2014. This is great, and Dubai is taking the lead in implementing a long-term sustainable development strategy. It may also open the way for consumers to limit their energy costs, even as pressure to raise the price of conventionally produced electricity mounts.

Multidiscipline Support Systems for Infrastructure Projects Oglaend System has supplied the oil and gas industry with multidiscipline support systems for more than 35 years. In addition we also have an extensive track record with infrastructure projects.

Road and railway tunnels

We deliver integrated Multidiscipline support for cable ladders and cable trays in HDG and SS including all fixtures for light installation, radio cable, CCTV and detectors. Support for road signs, ventilation and piping.

Powerplants

Heavy duty cable ladders and trays, high voltage cable cleats, racks and instrument stands. We have a proven track record and can deliver multidiscipline support systems for all electro & mechanical disciplines. We recommend using stainless steel or fibre glass to avoid magnetic attraction.

Road and railway bridges

Solutions for cable support both inside and underneath the bridge, for concrete or steel bridges with or without cable ladders. We can customize solutions for all kind of supports to suit your project.

Airports

Systems for cables in culverts, with concrete insert rails or bolted. Cable management systems for terminal buildings, airplane docking equipment, carparks etc.

For projects in the Middle East please contact: Oglaend Industries Middle East LLC P.O. Box 90456 Dubai U.A.E. DIRC Offices, Plot 597-201, Office G-9, Dubai Investments Park DIRC Warehouses, Unit W9-C2 Tel: + 971 4 887 8134 Fax: + 971 4 887 8143 E-mail:sales@oglaend.ae www.oglaend-system.com

Norway · Sweden · Denmark · Holland · UK · Dubai · Korea · Singapore · Malaysia · Russia · USA · China

8 – 10 DECEMBER 2014 DUBAI INTERNATIONAL CONVENTION AND EXHIBITION CENTRE

With 150 local & international exhibitors and over 3,000 visitors set to attend, can you afford to miss out?

+971 4 336 5161 SUPPORTED BY:

info@gulftraffic.com

Be part of the region’s leading

traffic & transport Event

www.gulftraffic.com ORGANISED BY:

EvENTS

mark your diary... ADIPEC 2014 10–13 NOVEMBER, 2014, ABu DHABI The 17th edition of the Abu Dhabi International Petroleum Exhibition & Conference (ADIPEC) 2014 will be held at the Abu Dhabi National Exhibition Centre (ADNEC). The event expects to welcome more than 60,000 visitors and over 1,800 exhibitors this year. Contact: dmg events Tel: +971 2 444 4909 Email: clairepallen@ dmgeventsme.com www.adipec.com

HAPPENING IN 2015

SAUDI WATER AND PoWER FoRUM 12-14 January 2015, Riyadh audi Water and Power Forum (SWPF) returns to Riyadh next year at a new location in Al Faisaliah Hotel. The 2015 edition also marks the 10th anniversary celebrations of SWPF, an annual forum and exhibition for water and power stakeholders in the Kingdom of Saudi Arabia. SWPF is held under the patronage of the Ministry of Water & Electricity and produced by CWC Group in partnership with Moya Bushnak. The event is supported by key industry stakeholders such as Saudi Electric Company (SEC), Saline Water Conversion Corporation (SWCC), the National Water Company (NWC) and K.A. CARE. SWPF is renowned for uniting Saudi and global stakeholders to debate policies and strategies which determine the future of the power and water sectors in the Kingdom. The 2015 event will focus on achievements attained in the past 10 years for both water and power sectors. It will bring together the key stakeholders involved in these sectors to enable

discussions, which will assist in shaping the Kingdom’s power and water agenda. The list of distinguished speakers includes HE Abdullah Al-Hussayen, Minister of Water and Electricity; HE Dr Saleh Alawaji, Chairman of the Board of Directors, Saudi Electricity Company (SEC) and Deputy Minister for Water, Ministry of Water & Electricity; HE Dr AbdulRahman Al-Ibrahim, Governor, SWCC; Dr Loay Ahmed Al-Musallam, CEO and member of Board of Directors, National Water Company (NWC); Paddy Padmanathan, President & CEO, ACWA Power; Phillipe Cochet, President, Alstom Thermal Power & Executive Vice-President, Alstom, and Dr Fareed Al Yagout, President, National Power Company (NPC). The Annual SWPF Awards 2015 will take place during the inauguration ceremony on 12th January and will present the SWPF Award for Innovation alongside the Marafiq Award for Sustainability. Contact: Chris Hugall Tel: +44 20 7978 0084 Email: chugall@thecwcgroup.com www.ksawpf.com November 2014

THE BIG 5 2014 17–20 NOVEMBER, 2014, DuBAI he Big 5 is the largest building and construction event in the Middle East, bringing together every year over 74,000+construction professionals. Contact: dmg events Tel: +971 4 438 0355 Email: sampatel@ dmgeventsme.com www.thebig5.ae Gulf TRAffIC 2014 08–10 DECEMBER, 2014, DuBAI Gulf Traffic Exhibition & Conference 2014 will showcase the latest in road infrastructure, traffic management systems and technologies for safe and efficient mobility. This year’s edition will also host the region’s largest parking conference. Contact: Richard Pavitt Tel: +971 4 4072606 Email: richard.pavitt@ informa.com www.gulftraffic.com

INFRASTRUCTURE MIDDLE EAST

INFRASTRUCTURE MILESToNES

#009 Bahrain International Airport

The Gulf region’s first-ever international airport and erstwhile transit hub is currently executing a billion-dollar comeback strategy istorically, Bahrain has served as a gateway between the East and the West, providing a natural transit destination for early trade routes. The arrival of the first scheduled commercial flight in October 1932, en-route from London to Delhi, helped advance that status into the 20th century. The aircraft only carried 24 passengers and had taken several days of flying to reach Bahrain but with the commencement of these regular services, Bahrain became established as the Gulf’s first international airport. Prior to that, Imperial Airways, the forerunner of BOAC and later British Airways had operated several flights through the Gulf in the late 1920s. According to records, the first Imperial Airways flight to Bahrain occurred in August 1927, when a local pearl merchant chartered an aircraft from

INFRASTRUCTURE MIDDLE EAST

Baghdad to Bahrain. In 1937, Bahrein Marine Airport was launched to accommodate long-haul passenger seaplanes. In 1950, BOAC decided to revert to traditional aircrafts with the launch of passenger flights to Muharraq using Argonauts, a four engine aircraft capable of carrying up to 60 passengers. That year also saw the launch of Gulf Aviation Company, the forerunner of Gulf Air. Bahrain Airport’s then excellent infrastructure compared to its peers in the Gulf attracted other carriers such as Middle East Airlines, Air India, Air Ceylon and Iran Airways. In 1954, its position as the region’s premier airport was enhanced with the establishment of a new Flight Information Region to cover the navigation of aircrafts in transit through Gulf airspace. This also saw the installation of modern navigational and communications equipment. The dawn of the jet age and the growing transit traffic between Europe

November 2014

Fast facts Year of establishment: 1920 Upgrade cost: $1bn Number of flights a week: 724 Passenger capacity after upgrade: 13.5m Completion of upgrade: 2018

and the Far East led to the opening of a new passenger terminal in December 1961. To accomodate the Boeing 747 Jumbos, Bahrain Airport opened new passenger facilities and an apron area that could accommodate four B747 aircrafts in December 1971. Bahrain’s rocketing popularity as a transit stop for these Jumbos fuelled another round of expansion, completed in 1976. That year also saw the inauguration of a regular British Airways Concorde service between London and Bahrain, making it the first airport in the region to receive the world’s first and only supersonic passenger plane. These achievements notwithstanding, Bahrain had to eventually yield its hub status to Dubai and Qatar as the national carrier Gulf Air failed to keep pace with its local rivals. In a bid to get some of its lost glory back, Bahrain International Airport has embarked on a $1bn upgrade to double its capacity to 13.5m passngers, while once again positioning itself as a gateway–but this time to Saudi Arabia.

I need floorIng that’s hygIenIc, slIp-resIstant, and durable. Ucrete® can become a valued part of your facilities daily operation. The food packaging and processing industry places particularly high demands on personnel safety, hygiene and production up-time. Through our global network of trained installers, Master Builders Solutions by BASF delivers the world’s toughest floor: Ucrete®. No other urethane concrete supplier has a longer track record of being a part of a facilities protection – for your products as well as for your employees. Make your projects more cost-effective and predictable – with Master Builders Solutions by BASF. For more information, go to www.master-builders-solutions.basf.ae

OIL AND GAS SUPPLEMENT 2014

PUShING ThE bOUNDArIES Technology is reshaping the hydrocarbon landscape

INTRODUCTION

GROUP GROUP CHAIRMAN AND FOUNDER DOMINIC DE SOUSA GROUP CEO NADEEM HOOD GROUP COO GINA O’HARA

PUBLISHING DIRECTOR RAZ ISLAM raz.islam@cpimediagroup.com +971 4 375 5471 EDITORIAL DIRECTOR VIJAYA CHERIAN vijaya.cherian@cpimediagroup.com +971 4 375 5713 EDITORIAL EDITOR ANOOP K MENON anoop.menon@cpimediagroup.com +971 4 375 5473 CONTRIBUTING EDITOR ASHISH SARAF ashish.saraf@cpimediagroup.com +971 4 375 5495 ADVERTISING COMMERCIAL DIRECTOR JUDE SLANN jude.slann@cpimediagroup.com +971 4 433 2857 SENIOR SALES MANAGER JUNAID RAFIqUE junaid.rafique@cpimediagroup.com +971 4 375 5716 MARKETING MARKETING MANAGER LISA JUSTICE lisa.justice@cpimediagroup.com +971 4 375 5498 DESIGN ART DIRECTOR SIMON COBON JUNIOR DESIGNER PERCIVAL MANALAYSAY CIRCULATION AND PRODUCTION DATABASE AND CIRCULATION MANAGER RAJEESH M rajeesh.nair@cpimediagroup.com +971 4 440 9147 PRODUCTION MANAGER JAMES P THARIAN james.tharian@cpimediagroup.com +971 4 440 9146 PRODUCTION MANAGER VIPIN V. VIJAY vipin.vijay@cpimediagroup.com +971 4 375 5713 DIGITAL DIGITAL SERVICE MANAGER TRISTAN TROY MAAGMA Published by

REGISTERED AT IMPZ PO BOX 13700, DUBAI, UAE TEL: +971 4 440 9100 FAX: +971 4 447 2409 WWW.CPIMEDIAGROUP.COM A supplement of Infrastructure Middle East Printed by Printwell Printing press LLC © Copyright 2014 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.

Technology reboot he global oil & gas industry is experiencing a new wave of productivity thanks to gamechanging technologies. Directional drilling and hydraulic fracturing have helped unlock resources that were labelled unconventional and made them commercially viable. New advances in Enhanced Oil Recovery (EOR) techniques are helping revive old oil fields, while 3D simulations and data-driven decisions are helping optimise yield and throughput of existing ones. Improvement in sub-surface imaging has enabled significant discoveries, like Brazil’s giant offshore fields. The single biggest impact of these technological advances has been to increase the known resource base of hydrocarbons. Ultimately recoverable resources have more than doubled since the early 1980s, from just 1.7tn barrels to more than 3.8tn barrels, possibly pushing the spectre of peak supply further into the future. On the flip side, the oil & gas industry is confronting a human resource challenge as young people give the industry a miss for jobs in the knowledge and service sectors. The question on everyone’s mind is: how and where are we going to find the skilled people who know how best to use these technologies? For Gulf nations looking to create job opportunities for their youth, this presents a fantastic opportunity in capacity building.

Upstream 04

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

Top 10 Oil & Gas projects 26

18 Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

ROUND UP

Upstream Total has installed advanced LIPS (Laser Induced Pyrolysis System) technology at the Total Research Centre Qatar (TRC-Q) at the Qatar Science and Technology Park (QSTP). LIPS uses a high-powered laser directed at the surface of rock samples, or ‘petroleum cores’, to obtain a high resolution analysis of the organic carbon present in those cores, which indicates the presence of oil and gas. It is mainly used for the evaluation of new unconventional oil and gas resources and to gauge well productivity. “LIPS will bring additional data to Qatar,” said Daniel Dessort, Geochemistry Senior Project Leader at TRC-Q and LIPS designer. “Broadly speaking, the organic carbon in sediments is difficult to locate and requires using logging techniques. Tarmats [in reservoirs], oil shale and shale gas vary widely in thickness, from a few centimetres to several decametres. Their common feature is their rich organic carbon content.” Abu Dhabi Marine Operating Company (ADMA-OPCO) and British Petroleum (BP) have signed agreement to develop a new technology for Enhanced Oil Recovery (EOR). The new agreement entails Carbonate Ionic Design EOR technology similar to the LoSal EOR technology, which BP is deploying at the Offshore UK Clair Ridge field but which, applied to carbonate reservoirs, “will be a significant step forward,” said ADMA-OPCO. Under the agreement, BP will provide support to ADMA-OPCO

INFRASTRUCTURE MIDDLE EAST

Qatar Science & Technology Park Total’s QSTP research centre was set up in 2009

in conducting a Single Well Chemical Tracer Test (WCTT) and carrying out laboratory tests to evaluate Carbonate Ionic Design EOR potential in ADMA-OPCO’s fields. Saudi Aramco has signed a contract with the Shandong Electric Power Construction Corporation (SEPCO) to design and build a Master Gas System Booster Gas Compression Station. The massive project will help to deliver sales gas produced in the Eastern Province to customers in the western region of the Kingdom, such as King Abdullah Economic City, the growing petrochemicals complex at Petro Rabigh and the Independent Power Plant on the west coast. The Master Gas programme is part of Saudi Aramco’s strategy to diversify the

company’s portfolio of local energy consumption and reduce reliance on liquid fuel. The Master Gas System Booster Gas Compression Station project will greatly expand the capacity of the East-West Pipeline system to deliver sales gas around the Kingdom, from its current capacity of 8.4bn standard cubic feet per day (SCFD) to 9.6bn SCFD by the end of 2016. By 2018, that capacity will have increased further to 12.5bn SCFD. Japan Oil Development (JODCO), a wholly-owned subsidiary of INPEX Corporation, Japan, recently announced that it had commenced oil production from the Umm Lulu Oil Field offshore Abu Dhabi. INPEX has jointly developed the Umm Lulu Oil Field with Abu Dhabi National Oil Company (ADNOC), BP and Total.

Khazzan Project in Oman The compressor station on the LR5 Drilling Rig

Oil & Gas Supplement 2014

Full field development of the Umm Lulu Oil Field is currently in progress, and after completion, the field is expected to produce oil at a peak rate of 105,000 barrels per day (bpd). The oil produced from the Umm Lulu Oil Field in the first development phase is transported via an existing subsea pipeline to Zirku Island, and eventually supplied to customers in Japan and other Asian countries as Upper Zakum Crude. JODCO owns participating interests in the producing oil fields of Umm Shaif, Lower Zakum, Umm Lulu, Upper Zakum2, Umm Al-Dalkh and Satah. In addition, INPEX owns interests in the Nasr Oil Field under development. BP Oman has awarded two longterm drilling contracts for the Khazzan project in Block 61. KCA Deutag has been awarded $400m worth of contracts for the construction and operation of five new build land rigs for Khazzan. The rigs are being assembled in Nizwa to help maximise employment opportunities in Oman. Additionally, Oman’s Abraj Energy Service has been awarded more than $330m in contracts to supply three drilling rigs for the full field development of the Khazzan Project. Sanctioned in December 2013, the Khazzan Project represents the first phase in the development of one of the Middle East’s largest unconventional tight gas plays. The full field development of the Khazzan Project will involve a drilling programme of around 300 wells over 15 years to deliver plateau production of 28.3m cubic metres of gas per day. This volume is equivalent to an increase of around a third in Oman’s total daily domestic gas supply.

AnAlysis

PRICE IMPACT

Keeping the faith According to Moody’s, continued growth in oil demand will check any precipitous long-term fall in oil prices ince demand for oil will continue to grow, the recent sharp drop in oil prices is unlikely to be followed by a precipitous longterm fall, according to Moody’s Investors Service. The rating agency hasn’t changed the price assumptions for oil it uses in its ratings analysis, it says in its report ‘Drilling and Services Companies Most Vulnerable to Tumbling Oil Prices’. In September, Moody’s announced that it had lowered the Brent crude price assumptions used for rating purposes to $90/barrel (bbl) through 2015 – a $5/bbl drop from the ratings agency’s previous assumptions for 2015. Moody’s also reduced its price assumptions for WTI crude to $85/bbl from $90 through 2015. Despite growing supply, particularly in the US, longer-term pricing should remain above $80 a barrel, given growth in global demand. That said, Moody’s cautions that prices could easily dip into the $70s/bbl range in the next several months. Oil prices dropped during the summer of 2014, reflecting slower economic growth in some of the world’s major economies, a strengthened US dollar and growing non-OPEC supply. Concerns about a slowdown in the pace of growth in China, and weaker economic conditions in Brazil, Russia and much of Europe – including Germany and France – point to a slight retreat in crude demand as well. Moody’s Managing Director Steve Wood says it is hardly shocking that oil prices have weakened in the face of growing supply. “The large movements in oil prices in 1973, 1979, 1986 and 1990 were all in response to supply shocks. It wasn’t until about 10 years ago that we saw prices rise because of spiking demand. In that sense, we’ve gone back to the future – supply is driving oil prices. In other words, excessive supply is driving prices down.” Wood attributes the sharp drop in midOctober to expectations of weaker demand

US is the largest producer of petroleum and natural gas in the world US IS THE LARGEST PRODUCER OF PETROLEUM AND NATURAL GAS IN THE WORLD estimated US, Russia, and Saudi Arabia petroleum and natural gas production quadrillion Btu million barrels per day of oil equivalent United States Russia Saudi Arabia

natural gas

petroleum

2008

2009

2010

2011

2012

2013

2014e

Source: U.S. Energy Information Administration Note: Petroleum production includes crude oil, natural gas liquids, condensates, refinery processing gain, and other liquids, including biofuels; barrels per day oil equivalent were calculated using a conversion factor of 1 barrel oil equivalent=5.55 million British thermal units (Btu)

growth in China and Europe at the same time that Saudi Arabia has threatened to defend market share rather than acting as OPEC’s – and the world’s – swing producer. The other significant factor is the strengthening US dollar. Because oil is denominated in dollars, a stronger dollar leads to lower oil prices. Moody’s research note noted that lower prices will hurt Exploration and Production (E&P) companies’ revenues immediately, with most of the drop falling straight to the bottom line because of their high operating leverage. The impact of lower oil prices in the oil and gas sector will be most felt by producers, including integrated oil companies and national oil companies. Some of the drop will be mitigated by hedges and offset by lower operating costs. If lower prices persist and E&P companies reduce capital spending and their demand for services, drilling and oilfield services companies will definitely come under pressure.

“Drillers and service companies will feel the most pain as producers react quickly to cut their costs,” says Wood. “Even if we don’t see a dramatic drop in rig counts or activity, we would expect to see pushback on prices and day-rates that service companies are able to charge producers. Drillers and service companies without contracts or that work on a ‘call out’ basis will be hurt the most.” Wood points out that if lower oil prices persist, production growth could slow in North America. He continues: “Shale wells typically have high initial decline rates, so a slowdown in activity would reduce throughput volumes for mid-stream companies. Gathering and processing companies with percent of proceeds contracts will see lower revenue. Retail fuel prices tend to be sticky on the way down, so refiners’ margins will benefit in the immediate term until pump prices catch up with lower feedstock costs.”

Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

SpoTLIghT

pLANTpAx

A modern DCS for your CapEx If you’re using a large, cumbersome legacy DCS system to run your production, you face low flexibility, integration difficulties and higher TCO. With PlantPAx from Rockwell Automation, this no longer needs to be the case. By Alain Hermans f you’re building a new production facility or migrating legacy systems, you need to prepare for the future with a modern DCS – one that is adaptable to your needs, both now and in the future. The alternative is to stay with what you have and accept that you will have to adapt your new installation to your existing system’s limitations. Modern production facilities in the oil and gas industry require much higher flexibility

I 04

INFRASTRUCTURE MIDDLE EAST

through modular design and significantly higher levels of integration. PlantPAx from Rockwell Automation provides just such a solution, in the form of a modern DCS that allows you to optimise your production while helping reduce your risk and lower your total cost of ownership (TCO). When building up your plant, you want to ensure that all skid-based systems and builders, such as metering, GOSP, boiler and turbines, can be easily connected to your DCS even if they have their own embedded process control systems.

Oil & Gas Supplement 2014

PlantPAx provides a scalable and modern DCS that allows the small systems used for small skids to be easily integrated. Using the same programming tools and faceplates for small, medium and large process control systems significantly reduces engineering and commissioning, while optimising operator experience. PlantPAx is already running production facilities around the world and helping to reduce TCO, while providing integrated reporting to production managers, quality managers and plant managers.

SPOTLIGHT

safety and users can stay in control of unplanned shutdowns at all times. The standalone AADvance and TMR solutions from Rockwell Automation integrate into PlantPAx through EtherNet I/P, which allows operators to check system status at any time.

Do you want to stay dependent on your DCS supplier for maintenance contracts and possible planned upgrades – and as a result pay a premium price?

Rockwell Automation believes you should have a choice of partner for your project implementation and services at no extra cost. PlantPAx is an open platform available from either systems integrators or the Rockwell Automation solutions group. This gives you a choice of partner and will help lower TCO, as all PlantPAx components are standard, off-the-shelf products. The core of PlantPAx, the Logix hardware and software solution, is used today in virtually all industry sectors across the globe for both discrete and process control applications. Applications demanding a redundant solution are addressed with the same controllers as simplex solutions – the system is that powerful. As process control systems provide more and more options, information is key to translating this to meaningful information for the operators. PlantPAx can provide advance diagnostics and PID information to operators in order to reduce MMTR and improve production outputs. PlantPAx on a virtual machine allows users to quickly reinstall an OWS or EWS and reduce their risk when running PlantPAx on one of our Industrial Data Centres. Running your production with a modern DCS allows you to optimise your facility while reducing your TCO, but what if you need to shut down in a controlled way?

Rockwell Automation provides an ICSS to help towards production facility

Why keep paying a premium price when you want to add small applications onto your DCS system?

PlantPAx is a scalable solution that allows you to extend your system to match your needs, without paying for extra licences. What’s more, you can make changes or additions without interrupting production. Do you want to reduce energy bills without having to go through multiple standalone solutions?

Alain Hermans is Process Automation Manager, EMEA, Rockwell Automation

Saving energy is key to improving your bottom line; with the energy management tools embedded in PlantPAx, energy management is no longer a futuristic concept. Instead, it is something you can deploy today. Providing reports on the correlation between gas, steam, electricity fuel consumption at your production facility, in real time, allows you to quickly react and adjust your key process control loops. So the question is simple! Are you looking for a next-generation DCS to help reduce your engineering and commission, while improving your operator experience and improving your bottom line? If the answer is yes, discover more at: www. rockwellautomation.com/rockwellautomation/ industries/oil-gas/overview.page

“As process control systems provide more and more options, information is key to translating this to meaningful information for the operators” ALAIN hERMANS, pRoCESS AUToMATIoN MANAgER,EMEA, RoCKWELL AUToMATIoN

Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

AnAlysis

DYNAMIC CHANGE

World liquid fuel use to rise 38% Asia and the Middle East to account for 85% of global liquid fuel use by 2040 orld petroleum and other liquid fuel consumption will increase 38% by 2040, spurred by increased demand in developing Asia and the Middle East, according to projections in International Energy Outlook 2014 (IEO2014), released by the US Energy Information Administration (EIA). “The growth outlook for liquid fuels use will be largely driven by demand in the developing world, especially in Asia and the Middle East,” said EIA Administrator Adam Sieminski. “Those two regions combined account for 85% of the total increase in liquid fuels used worldwide over that period.” World markets for petroleum and other liquid fuels have entered a period of dynamic change in both supply and demand. The changes in the overall market environment have led the EIA to reassess its outlook for longterm global liquid fuel markets in IEO2014. Key IEO2014 findings include: World liquid fuel use is projected to grow from 87 million barrels per day (MMbbl/d) in 2010 to 119 MMbbl/d in 2040. The potential for growth in demand for liquid fuel is focused on the emerging economies of China, India and the Middle East, while liquid fuel demand in the US, Europe and other regions with wellestablished oil markets seems to have peaked. After a long period of sustained high oil prices, efficiency and fuel switching have reduced or slowed the growth of liquid fuel use among mature oil-consuming countries. Developing Asian countries (including China and India) account for 72% of the world increase in liquid fuel consumption, with Middle East accounting for another 13%. OPEC oil producers are the largest source of additional liquid fuel supply between 2010 and 2040. OPEC crude and lease condensate accounts for 14 MMbbl/d of the 33 MMbbl/d increase in total liquid fuel supply. The IEO2014 Reference case assumes

INFRASTRUCTURE MIDDLE EAST

Middle East power sector still accounts for 12% of total liquid Middle east PoWer sector still accoUnts fuel consumption in 2040 For 12% oF total liQUid FUel consUMPtion in 2014 Middle East liquid fuels consumption by end-use sector million barrels per day Other Electric Power

Transportation

Industrial

Source: EIA, International Energy Outlook 2014

CMY

OPEC producers invest in incremental production capacity that enables them to maintain a share of between 39% and 44% of total world liquid fuel production throughout the projection. Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production. Non-OPEC crude and lease condensate production increases by 10 MMbbl/d. Rising world oil prices attract investment in areas previously considered uneconomic. Middle east scenario

Liquid fuel demand in the Middle East grows substantially in the IEO2014 Reference case, by 4.4 MMbbl/d from 2010 to 2040, as a result of strong population growth rates, second only to those in Africa, and rising incomes. Liquidintensive industrial demand also plays a major role, with consumption in the chemical sector leading the growth of industrial demand. Delays in petroleum subsidy reforms

Oil & Gas Supplement 2014

(outside of Iran) and strong growth of income per capita support significant expansion of transportation sector demand for liquid fuel in the region. In the later years of the projection, it is likely that some subsidy reform will occur, and the resulting higher prices will begin to slow the growth in demand for liquid fuel. Demand for liquid fuel in the electric power sector declines from 2010 to 2040 in the Reference case, as many countries increasingly turn to lower-cost natural gas and, to a lesser extent, nuclear and renewable fuels, in an effort to increase the volume of petroleum available for export. The timing of the shift from reliance on liquid fuel for power generation remains uncertain, however, as the region faces delays in improving infrastructure and there are limits on the supply of alternative fuels for power generation. For instance, Saudi Arabia has been unable to meet rapid growth in electricity demand with power generated from domestic natural gas, and has had to import fuel oil for power generation.

CPI 23x27.5cm.pdf

9/23/14

4:34 PM

The future of technology is more secure than ever.

OIL FIELD SERVICES

Do you think the downward trend in oil prices will have a negative impact on upstream projects in the region, and by extension the oil field services business?

From our experience, historically, oil prices have always tended to fluctuate. However, a lot of our business is based on long-term contracts related to upstream projects, where investments are huge and companies making these investments aren’t going to cancel projects because of a short-term spike or drop in oil prices. But we will definitely be worried if there are extreme movements in oil prices, as we have experience with some of these roller coaster-type scenarios in the past. Oil field services companies have played a key role in enabling the rise of National Oil Companies (NOC) to global prominence. But in AlMansoori, you also see a strong, regional player in the oil field services sector. Are there some lessons from your experience?

LOCAL LEADER

Standing tall Ibrahim Al-Alawi, Deputy CEO, AlMansoori Specialised Engineering, speaks to Anoop K Menon on how his home-grown oil field services company has learnt to thrive in an industry dominated by Western companies 8

INFRASTRUCTURE MIDDLE EAST

Oil & Gas Supplement 2014

Worldwide, the oil field services sector has traditionally been dominated by Western companies. They pioneered a lot of the technologies since the beginning of the industry 100 years ago. Oil companies – IOCs or NOCs – have always turned to them in order to access these cutting-edge technology and services. We started the company in the late 1970s, and established ourselves during the boom of the early 1980s. In fact, we were one of the pioneers of the indigenous service sector globally. Even today, you won’t find too many home-grown companies in this sector. While we have been fortunate in this regard, the same cannot be said for the local oil field services sector. The local sector has not really developed the capacity it should have if one looks at the long heritage of the oil and gas industry in our region. We are very happy with the position we are in now, but there is always room for improvement. Given the expansion in the upstream sector throughout the region, there is enough work to go around. Our growth will not come at the expense of our competitors and vice-versa. In fact, in some countries, there is a shortage in terms of equipment and people that we or our competitors can put on the ground. There isn’t enough of both to satisfy the demand. Moreover, we have always looked to the future; we have always wanted to grow our

OIL FIELD SERVICES

business, develop our technologies and our people, which puts us in a unique position compared to other indigenous service companies. We can compete head-to-head with the Western majors and win contracts on our own merit, which is something we are very proud of. What is the biggest advantage you bring to the table?

The biggest advantage we bring to the table is our network of contacts within the region. We are established throughout the Middle East & North Africa [MENA] region, where we have local offices and people working for us. Being from the region, I am very proud to say that in most of the countries we work in, the majority of the workforce is local, which gives us an edge over major Western competitors. We also have a long-term growth strategy in place. As we evolved and reached a certain size, we realised that growth for the sake of growth isn’t healthy. We needed to have a strategy to grow and put resources where we could achieve the best returns. Every year, we do our budget and forecasting with a major focus on the next calendar year but then we also have a long-term view, through five-year plans, to keep an eye on the future. Is AlMansoori’s long history in the region an important consideration for customers when it comes to contracts?

Customers who look at price tend to give contracts to the lowest bidder. But those who look at the value proposition don’t go with the cheapest; rather, they prefer to go with those who will give them the best value for money. In such a scenario, our history and reputation gives us a good advantage. Our tagline says “Always AlMansoori”, because once they work with us, they always ask us to come back thanks to the high quality of our services. Again, the big players in our industry sell technology; we sell service. The big boys will go in, see what the customer’s problem is and tell them how they are going to solve it technically. We go in, listen to our customers and try to give them what they are expecting to receive, which is why they always come back to us. Do the local oil companies, with their accumulated years of experience, still need IOCs?

Local oil companies have tremendous operational experience spanning some 40

Tough oil Problematic reservoirs are going to become more frequent in the future

“Being from the region, I am very proud to say that in most of the countries we work in, the majority of the workforce is local, which gives us an edge over major Western competitors” IbRAhIM AL-ALAwI, DEpUTy CEO, ALMANSOORI SpECIALISED ENgINEERINg

years, and they don’t need any help producing the easy oil. Where they will need IOCs are the problematic reservoirs that are going to become more frequent in the future. The challenge for the next 30 years is going to be water cuts, decreased productivity, aging facilities, smaller and more complex reservoirs – the kind of problems they never had in the region but something that IOCs have frequently tackled in other parts of the world. IOCs will bring their expertise to fields where we need highly technical solutions. In the oil & gas industry, you see companies

competing and partnering at the same time. Is this philosophy being embraced by oil field services companies too?

Oil companies have always been competitors and partners. For example, in Abu Dhabi, the ADCO concession was developed by a consortium of BP, Shell, Exxon-Mobil and Total. When it comes to development, they join forces, though they also compete in other sectors. In the last 10 years, we have seen IOCs partnering with the NOCs, examples of this trend being India’s ONGC Videsh and Malaysia’s Petronas Carigali. In the oil field services sector too, we have ‘friendly’ competition where though we compete for contracts, we also do business with each other. For example, if we have a shortage of equipment or cannot deliver, we make an agreement with our competitors to rent people or equipment from them. In the end, we all want to satisfy our customers, and it doesn’t pay to be antagonistic because tomorrow, we may need each other. Technology has always been a crucial differentiator for the oil field services industry. Where does AlMansoori stand in this regard?

We are not so big as a Schlumberger or a Halliburton, and we don’t have access to a lot of capital, so we have to be very careful where we deploy our capital. Where technology is concerned, we understand

Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

OIL FIELD SERVICES

Secure business Abu Dhabi, Saudi Arabia and Oman are expected to stick to their long-term spending plans

that if we sit still, we will be left behind. In the absence of an R&D department, we seek out and partner with small companies that offer niche technologies and bring those technologies to the region as a value-added service for our clients. One of the new technologies we are introducing here is called multi-phase flow meter, which measures individual water, oil and gas flow rates in simultaneous flow. This is very unique and provides huge advantages for our customers because they can get the information they need in real time. At the same time, it is important to remember that you can always get the technology but the main challenge is applying it locally. That’s where local experience counts. The region’s oil & gas industry has been praised for its high safety standards. But when oil companies contract work out to the oil field service companies, aren’t they also outsourcing the safety aspect as well?

At AlMansoori, we are very proud of all the international certifications we have achieved for safety, environment and quality. When we completed the certification goals we set for ourselves, we found that we are actually ahead of our customers. At the same time, if it wasn’t for them, perhaps we wouldn’t have

INFRASTRUCTURE MIDDLE EAST

“In the near term we see huge potential in East Africa, so we have set up base in Uganda” IbRAhIM AL-ALAwI, DEpUTy CEO, ALMANSOORI SpECIALISED ENgINEERINg

achieved that. They demand high standards from us, which forces us to upgrade ourselves to meet and exceed those expectations. From a business standpoint, are you content to stay focused on the Middle East?

Right now, the majority of our growth comes from Abu Dhabi, Saudi Arabia and Oman. Given their robust long-term spending plans, we are pretty confident that our business is secure for the immediate future. But we are not ignoring other areas either. In fact, in the near term we see huge potential in East Africa so we have established an operations base in Uganda. We have also worked in Ethiopia and Somaliland. At the moment, we are working in 27 countries but have a permanent presence – an office or a base – in only 15 of them. In the

Oil & Gas Supplement 2014

rest, we have people and equipment on-site, because as an industry we don’t have a very large footprint. It is easy to ship equipment in and out, the most difficult logistics piece being customs clearance and formalities for crossing borders. What are your plans for the future? Are you planning any acquisitions? Are you interested in exploring service opportunities in the region’s rapidly growing downstream industry?

We are always searching for ways to add value to our customers; we are always listening to their concerns and their challenges and trying to find ways to help them. If there is a shortage of a certain service, we will definitely study whether we should be getting into it; if there is a technology missing, we will go out and source that technology. For us, an acquisition is always a strategic decision, not a commercial one. Being a private company with limited resources, we have to think twice before we spend money. We don’t want to buy a company just to make money from it. When we acquire companies, it is to gain technology or some other value add. As for developing downstream service capabilities, in the oil & gas business there is a clear-cut divide between upstream and downstream. We have never worked in the latter so we don’t understand it.

Worldwide Suppliers of Specialist Electrical Equipment Are exhibiting at

Come and visit us on the IDC Stand, Hall 2 - Stand 2310 R&M Wholesale Electric LLC was set up to revolutionise the distribution and supply of Industrial and Hazardous Area electrical equipment and cables to major oil and gas projects in the region. R&M Wholesale Electric is a fully fledged joint venture between the UK’s R&M Electrical Group and Wholesale Electric Supply of the USA, combining the geographic strengths and capabilities of two of the world’s leading electrical distributors to offer a service and capability that is unique in the Middle East. Operating out of Dubai and Abu Dhabi our operations in the region have recently been expanded with the launch of a new joint venture partnership with Siraj Naybur in Basra – Iraq.

R&M Wholesale Electric LLC (Dubai) M-03 Al Joud Centre , Al Quoz 1 PO BOX 282566, Dubai Tel: 00971 4 346 8240 Fax: 00971 4 346 8241 Email: sales.uae@rm-electrical.com

R&M Wholesale Electric LLC (Abu-Dhabi) Office No. 11 Mussafah MW5 / 14, Abu Dhabi Tel: 00971 2 550 3370 Fax: 00971 2 550 3220 Email: sales.uae@rm-electrical.com

Siraj Naybur (Iraq) Manawi Basha, Basrah Iraq Tel: 00964 781 1125188 Email: info@sniraq.com

Digital OilfielDs

WELL PERFORMANCE

The data advantage

Andrew Dennant, Oil & Gas Director MEA, Emerson Process Management, speaks to Infrastructure ME about the smart oil fields of the future

hy is automating upstream becoming increasingly important?

The main factor driving digital oilfields is that easy oil is more-or-less finished, and operators need to make better production decisions. These decisions must be data-based, and implemented quickly, if they are to yield real benefits. Automation addresses both of these requirements – more instrumentation generates more, better, validated data on which to base the decisions; it also provides the networks and control hardware to implement those decisions in real time. Automation forms the foundation on which the digital oilfield is built. Without good data and the ability to implement decisions, the higher-level applications of the digital oilfield cannot generate actionable information. What are upstream production areas where automation delivers the greatest impact?

In many cases, the benefits of automation are cumulative. At the very least, an instrumented wellhead will allow operators to understand when fundamental characteristics such as temperatures and pressures change. If an operator installs wellhead monitoring and control, for example, then not only are they are able to ‘see’ what they are producing, but they can react when production characteristics change unexpectedly. These changes could be an increase in corrosion or sand production.

INFRASTRUCTURE MIDDLE EAST

If automated well testing is also installed, then testing at the appropriate intervals allows decisions to be made about optimising choke positions or ESP speeds, together with the ability to go back after the change has been made to validate that it was effective. Traditionally, well testing has taken a long time, with test separators needing time to stabilise, and has required a great deal of manual intervention as personnel had to travel to remote locations to change valve positions. With multiport flow selectors and multiphase flowmetres, all of this can be automated with reduced footprint, weight and capital cost. What are the biggest benefits of digital oilfields?

Although the financial rewards can be immense, the greatest savings are in reducing risk to personnel. With automated fields, people spend far less time in harm’s way in the oil field. Most operational decisions can be implemented remotely, and maintenance travel can be rationalised. Greater access to diagnostics of the devices, the hardware and the well conditions allow technicians to be better prepared when they do visit the field, often halving the travel requirements as there is no need to go once to diagnose the problem and then again to fix it. What’s more, a mobile worker in the field can stream video to a remote expert in a collaboration centre, who can give instructions in real time. In addition to this, Emerson’s customers usually measure their payback

Oil & Gas Supplement 2014

Andrew Dennant

periods on investments in digital oilfields in weeks or months rather than years. What are the digital oilfield technologies – hardware and software – supplied by Emerson Process?

At Emerson, we create, customise and support applications with the goal of allowing operators to run their fields to maximise profit per day, rather than barrels per day. We have applications like Gas Lift Optimisation, which monetises the costs and profits associated with gas lift, and optimises the value of the gas used to enhance production. We have static and dynamic reservoir modelling software, permanent downhole gauges, and wellhead monitoring and control equipment. Emerson manufactures the broadest range of wireless devices in the industr as well as traditional wired devices and RTUs. We make choke control valve positioners, control and shutdown valves, actuators and positioners, as well as multiport flow selectors and single and multiphase flowmeters. We manufacture watercut meters, corrosion meters and sand meters. In fact, our control system, with electronic marshalling and smart SIS, changed the way that projects are executed.

Road and railway tunnels

Powerplants

Road and railway bridges

Airports

Systems for cables in culverts, with concrete insert rails or bolted. Cable management systems for terminal buildings, airplane docking equipment, carparks etc.

Norway · Sweden · Denmark · Holland · UK · Dubai · Korea · Singapore · Malaysia · Russia · USA · China

SPOTLIGHT

Demand positive Gates Engineering executives Joe MacGillicuddy & Garnett Bazley elaborate on their company’s go-to-market strategy for the region’s fast expanding oil & gas services sector ates Engineering & Services is part of the Gates Corporation, which has its headquarters in Denver, USA. As leaders in fluid engineering for the oil & gas market, Gates Engineering & Services delivers premium products and services that include the supply, installation and commissioning of hydraulic and industrial hoses, hydraulic solutions, filtration and flushing systems, chemical cleaning, onsite maintenance, pumps and power transmission products. Main activities are directed at the oil & gas, marine, offshore and industrial sectors. Gates Engineering & Services’ footprint extends across the GCC, with operational locations in the UAE, Oman, Bahrain, Qatar and Saudi Arabia. The distribution network expands into Turkey, Iraq, Egypt, Jordan and Africa. The oil & gas sector has always been a key market for Gates Engineering & Services. Based on rig count data in the region, market intelligence reports and our relationship with key oil & gas service providers, we predict further growth in the market. We are also seeing an increase in the number of new builds and rig refurbishment projects, which has contributed to a higher demand for our products and services. Our product supply into this expanding sector includes our premium range of Gates oilfield hose and couplings, which is made

INFRASTRUCTURE MIDDLE EAST

up of high pressure mud hose, blow-out prevention systems and BlackGold hydraulic hose. We also offer onsite mobile workshop containers, which allow the assembly of standard hydraulic hose in the field. To complement our product range, Gates Engineering and Services also offers hose management, including the tagging of hoses and creation of a database to track individual hoses. We feel that this ongoing scheduled maintenance is crucial in preventing downtime. In addition to standard products, we are also able to design, manufacture and install spooler systems and other equipment required in the market. Our customers also have the option to rent equipment such as filtration skids, HPUs, PODs and centrifugal pump skids. Although not a requirement, we recommend our own manpower as well as equipment, which gives customers the opportunity to use our expertise and the benefit of having qualified technicians on-site to ensure that equipment is operating at optimum levels. Our top customers include service companies and rig owners. Fast-moving products in the region include high-pressure mud hose, transfer hose and our newly launch rubber BOP hose. As political stability returns and projects come online, we expect further revenue from these products. In terms of the services we offer, flushing and chemical cleaning (pickling and passivation), remain in high demand from both local government-owned companies and private

Oil & Gas Supplement 2014

entities. We are seeing growth in these areas, especially in Qatar, Oman and Saudi Arabia. Exciting futurE

This is an exciting time for Gates Engineering & Services as we have just launched our 16C hose throughout the US. This product has passed the most stringent fire, flex and exposure tests in the industry. Gates is the first company to offer cut and couple technology – what this means for the customer is that our lead time is reduced to weeks instead of months as has been the industry standard. Our faster response time will allow customers to downsize their inventories and the replacement product can be with them within the month, decreasing costly downtime. Gates places a lot of importance on Research & Development (R&D). We want to stay ahead of the crowd when it comes to launching innovative products that the market needs. We will continue to work on expanding our hydraulic range in order to offer a more complete hose and coupling rig package, including high-temperature, low-temperature and transfer hoses. We will also continue to offer the high quality services and engineered products that our customers expect from the Gates brand. Joe MacGillicuddy is Divisional Business Development Manager, EMEA & Garnett Bazley is Senior Business Development Manager – Engineering & Services, EMEA, Gates Engineering & Services

FINISHED PRODUCTS › Oilfield Hose & Couplings › Hydraulic Hose & Couplings › Industrial Hose & Couplings › Hydraulic Components › Filtration Products › Pumps › Belts

HYDRAULIC TUBING & PIPING › Design, Bending, Installation › Hot Oil Flushing › Chemical Cleaning › Hydraulic Pressure Testing › Filtration Services › Flushing for District Cooling › Rental Equipment

DESIGN & BUILD › Special Builds › Integration › Maintenance Planning › Hydraulic Skidding Systems › Filtration Systems › Air Dryer Packages › Drill Line Spoolers

HYDRAULIC SYSTEM REFURBISHMENT › Troubleshooting › Commissioning › Component Refurbishment › Retrofit & Upgrades › Technical Surveys › Certification

HOSE & BELT MANAGEMENT › Audit & Survey › Inspection, Maintenance & Recertification (IMR) › Sentry ID › Training › Heavy-Duty Belt Service › Supply & Installation

The world's most trusted name in belts, hose and hydraulics. GATES ENGINEERING & SERVICES MENA Headquarters, Jebel Ali Free Zone Dubai, United Arab Emirates Telephone +971 4 886 1414 Fax +971 4 886 1413

To minimise downtime and maximise equipment integrity, contact Gates today. mena@gates.com <> Gates.com

CYBERSECURITY

DEFENCE STRATEGY

Tackling the threat

Hamed Diab, Regional Director-Middle East, McAfee speaks to Anoop K Menon on the significance of cybersecurity for critical national industries generation of security. We call it McAfee Threat Intelligence Exchange.

ith critical infrastructure becoming the target of cyber-attacks, there is a feeling that cybersecurity for these assets needs a lot of more focus and spend than has been the case so far. Why have we become increasingly vulnerable to cyber-attacks?

Thanks to the explosion of connectivity, it is expected that by 2020, there will be 50 billion IP addresses in the world. This equates to nine different IP addresses per head for a global population of six billion. We think we have seen the explosion of the Internet but with the Internet of Things (IoT), which is the new wave, you will also have to deal with the problem of big data and information flows going over the Net. The dimension of the problem, it goes without saying, is big. All this connectivity was built without considering the security of the information. It was architected without considering the security aspects of these information flows. The next question is: how does security really work? If I have a firewall and antivirus on my end-point, am I secure? The reality is that the attacks are increasingly getting sophisticated. Unless you are really cohesive, and able to connect, correlate and check all the data that comes into your enterprise network, you will not able to make sense of the attacks or the threats. Security is important because when you are attacked or under attack, the time taken to respond to it becomes critical. Whether it is banks, oil & gas assets or even the government, the cost of stoppage of work due to cyber-attacks can run into billions. Where these sectors are revenue earners for the country, the impact is much higher. Security thus becomes important because of the need for business continuity. Thatâ&#x20AC;&#x2122;s where McAfee, as part of Intel Security, can play a major role because of the breadth and depth of technologies at our disposal. You can correlate and understand

INFRASTRUCTURE MIDDLE EAST

In your view, are traditional industries like oil & gas more aware of the risks posed by cyberattacks than before?

Hamed Diab

what is happening, whether it from end point, data centre or cloud on a real time basis. The important thing is to have all of this information talk to each other, cohesively, on a real-time basis.

As a matter of fact, we have seen innovations from the region especially around digitising the security around the oil & gas industry. For example, the operations network supporting SCADA and DCS systems were always kept separate from the enterprise networks, and still are but with more attention being paid to how to architect that into a new way utilising security to their advantage and make sure they are enabling this. This is important because of the nature of the attacks. For example, the Night Dragon attack systematically targeted the enterprise networks of major energy companies in the US and Europe and stole proprietary data, over a period of three years. Whatever the reason for these attacks, the intention is definitely malicious. The bottom line is how to protect the network. Are they giving it the priority it deserves?

Could you elaborate on how McAfee and Intel Security can help key economic sectors like oil & gas secure themselves against cyber-attacks?

Intel Security is driving the trend in terms of coming up with new ways of correlating all the information. We are building new infrastructure for the Internet to work in a bus architecture. Today, there are bottlenecks in Internet connectivity because a lot of people build APIs to connect or make adjustments to connect different devices or foreign devices. With bus architecture, you are helping everybody dump all the information in a way that they understand the same language. If the threats came through the end point, then the end-point can correlate the information in the same language that your network device can understand, whether it is an Intrusion prevention system (IPS), Firewall. That type of information flow is important in the next

Oil & Gas Supplement 2014

In fact, it is no longer an option. They have to have factor cybersecurity into their priorities. Most of the Chief Information Officers (CIO) are changing their attitudes towards security and approaching in a more holistic way. Rather than focus on the technical, it is about how important security is, what is most critical and what can keep him or her awake at night. Thatâ&#x20AC;&#x2122;s where McAfee, as an Intel Security company, has built a broad portfolio, not only from a technological standpoint but also from consultancy and people perspectives to help customers enhance their security operations based on best practices. You can bet that we will be always ahead in the game. The more accessible the devices, the more the vulnerabilities. With the wave of mobility, you will have a major gap because of the prevalence of open source applications that are most vulnerable to attacks.

SPOTLIGHT

CRITICAL VARIABLE

Temperature innovations Okazaki Manufacturing Company continues to push the envelope on temperaturerelated products for the global oil & gas industry ounded in Kobo, Japan in 1954, Okazaki Manufacturing Company (OMC) has grown into a multinational manufacturer of temperature related products. With a turnover in excess of $110m, OMC is one of the largest manufacturers of Mineral Insulated (MI) thermocouple and RTD cable, which constitutes the initial building block of industrial temperature sensors. Today, OMC designs and manufactures a wide range of reliable, high quality, high accuracy temperature measurement products. The company operates from a

F 18

INFRASTRUCTURE MIDDLE EAST

series of specialist sales support offices worldwide, backed up by a team of local representative companies with specialised instrumentation departments. OMC’s 13,120sqm Main Manufacturing Factory, established in 2012, is the company’s flagship facility for sensor production and

A unique design, VortexWell thermowell incorporates a helical strake design, rather like car aerials or cooling tower fins

Oil & Gas Supplement 2014

incorporates manufacturing innovations like laser and robotic welding and the latest machining and deep hole drilling centres. OMC also has manufacturing sites outside Japan in the US and Taiwan. Innovation has always been OMC’s strength, as can be seen in its products for the oil & gas industry. VortexWell

The VortexWell Thermowell offers a solution where the standard thermowell profile fails to meet the industry standard ASME PTC 19.3 TW 2010. A unique design, VortexWell Thermowell incorporates a helical strake design, rather like car aerials or cooling tower fins. After

SPOTLIGHT

extensive R&D using the latest CFD software, as well as independent evaluation, OMC was able to visualise and accurately compare the flow behaviour of the VortexWell helical strake design with a standard tapered thermowell. During analysis, the standard tapered thermowell showed classic shedding behaviour as expected, whereas the VortexWell demonstrated no signs of regular flow behaviour. The VortexWell helical strake design disturbed the flow sufficiently to interrupt the regular formation of vortices. While a small vortex was observed in the wake of the VortexWell, this was a localised stagnation point and didn’t shed. However, the most significant comparison made was with regard to the pressure fields. For the standard tapered well design, an oscillating pressure field was observed around the structure. The VortexWell displayed a constant and stable pressure field, presenting no dynamic variations. As this pressure is the source of vortexinduced vibrations, it can be assumed that the VortexWell would experience a significant improvement in operation compared to a standard thermowell design.

and STATOIL, the Fan Tip thermocouple is ideal for any process burning or heating applications, including hazardous area oil and gas, chemical and petrochemical installations. The Fan Tip is suitable for gas-fired, light fuel oil and heavy fuel oil heaters. The sheath can be supplied in either 316 stainless steel for gas-fired heaters, Hastelloy-X for light fuel oil, or dual sheath HR-160 version for arduous, heavy fuel oil applications. The design of the FanTip thermocouple is such that it can be used in all process heater applications. The length of the sheath can be increased by up to 30 metres. The sheath can be bent in a cold state to meet any fixture and exit point on the heater tube. Working With epC ContrACtors: A suCCess story

OMC, as a part of its proactive sales activity, approached an Engineering, Procurement and Construction (EPC) company in Houston and held a ‘Lunch and Learn’ programme on thermowell design compliant

with ASME PTC 19.3 TW 2010 and on engineering a thermowell design upon the failure of this calculation process. Several weeks after the exercise, our Houston sales office was approached by an instrument engineer from the EPC, which then was working on an ethylene oxide project related to a new build in Texas. The project was well into the build stage and ready for commissioning, but was now running behind due to delay in the specification and supply of five relatively inexpensive temperature assemblies. A purchase order had been placed well in advance for the supply of over 180 temperature assemblies with a regular supplier to the EPC and an approved listed vendor (not OMC) of the end user. But at the eleventh hour, there still was no solution coming from this supplier to engineer the five thermowells that had failed the calculation while maintaining an OD to fit into the connection nozzle and immersion length to ensure the thermocouple tip was in the process pipe. Okazaki was approached to offer a solution, and within a few hours of carrying out a review of the process data, we submitted a detailed quotation and technical proposal with GA drawings and calculations based on our VortexWell design. The items were ordered and delivered within a time frame of four weeks as requested. The EPC noted that its engineer had spent over 60 man hours trying to find a solution before he contacted OMC. His only comment was: why didn’t we visit him sooner? The comment from the client engineer was: why wasn’t OMC used from the very beginning?

FAntip

The FanTip skin thermocouple is used in the measurement of the Tube Metal Temperature (TMT) within process-fired heaters and furnaces. The FanTip has a unique fan-shaped head that enables it to be easily welded to any type of process heater tube. This means the user gets a more accurate temperature measurement on the surface of the tube. Construction and tip profile accuracy is now between +4 and +6 degrees Celsius of the true tube temperature. Currently used by BP, Esso, Exxon Mobil Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

TEN GCC OIL & GAS PROjECTS

OIL & GAS PROJECTS In the GCC, oil & gas projects are underpinned by strategic long-term plans that seek to preserve the competitiveness of member countries in hydrocarbon production. Infrastructure ME presents the key projects that matter 20

INFRASTRUCTURE MIDDLE EAST

Oil & Gas Supplement 2014

HEAvy OIL PRODUCTION FACILITIES PROjECT – RATQA OIL FIELD

OWNER: Kuwait Oil Company (KOC) BUDGET: $4.3bn PROGRESS: Under construction The Ratqa Field development is part of Kuwait’s efforts to meet its target of producing 4mbpd of oil by 2020. The project involves an Engineering, Procurement and Construction (EPC) contract to build new heavy oil production facilities with capacity to produce 60,000bpd in the first phase. The scope of work includes steam injection and production of heavy oil along with tank farms and a 270,000 bpd pipeline. Petrofac has emerged as the lowest bidder for the scheme, followed by South Korea’s SK Group. By 2020, KOC expects production from the oil field to touch 120,000bpd. KOC recently invited BP, Total, Royal Dutch Shell, ExxonMobil and Chevron to bid for enhanced technical service agreement for the project.

PROjECTS TEN GCC OIL & GAS PROJECTS

SATAH AL RAAz BOOT (SARB) FIELD DEvELOPMENT PROjECT

OWNER: Abu Dhabi Marine Operating Company (ADMA-OPCO) BUDGET: $3.5bn PROGRESS: Under construction The development project is part of the overall scheme of ADMA-OPCO to add 300,000bpdof additional production from its new offshore fields, with about 100,000bpd coming from the SARB oilfield to be developed through seven packages. Last year, Petrofac was awarded the Engineering, Procurement, Installation and Commissioning (EPIC) contract for offshore package three of this development, while Hyundai Engineering was awarded onshore package number 4. Bids for the onshore utilities and infrastructure package are still under evaluation. When completed in April 2017, SARB will be the first Offshore Digital Intelligent Oil Field Development in the UAE.

IDD AL SHARGI NORTH DOME OIL FIELD ExPANSION PROjECT PHASE 5

OWNER: Occidental Petroleum Qatar BUDGET: $3bn PROGRESS: EPC award stage Idd-Al-Shargi is the largest crude oil field in Qatar, with 150m barrels estimated in 2008. The EPC contract comprises five packages: upgrading the Halul Island facilities, central processing platform, 40km flowline, 40km export pipeline and two wellhead platforms. In May this year, the owner released two packages for the scheme – process platforms including living quarters accommodating 206 beds, two wellhead platforms and 12 wells. Bidders include South Korea’s Daewoo Shipbuilding & Marine Engineering, Hyundai Heavy Industries; McDermott from the US; the UAE’s National Petroleum Construction Company; Italy’s Saipem; and South Korea’s Samsung Industries. The majority of work will be offshore.

KHURAIS OIL FIELD ExPANSION PROjECT

OWNER: Saudi Aramco BUDGET: $3bn PROGRESS: EPC award stage Using the most advanced intelligent field applications, the Khurais facilities are designed to produce 1.2m bpd of Arabian Light crude oil across three oil fields: Khurais, Abu Jifan and Mazalij The objective of the Khurais Oil Field Expansion Project is to increase production capacity at the Khurais Central Processing Facilities (CPF) by 300,000bpd as well as to enhance production from the Mazalij and Abu Jifan fields by installation of a satellite Gas Oil Separation Plant (GOSP) by 2017. In October 2013, contracts for the Front End Engineering Design (FEED) were awarded to Foster Wheeler. The project has been divided into five EPC contracts: CPF expansion, sea water pipeline, Mazlij-Abu Jifan pipeline, offsite and utilities and site preparation. Italy’s Saipem is the front runner for the CPF facility while, Athens’ Consolidated Contractors Company is the front runner for the pipeline packages.

Oil Oil&&Gas GasSupplement Supplement2014 2014 INFRASTRUCTURE INFRASTRUCTURE MIDDLE MIDDLE EAST EAST 21

TEN GCC OIL & GAS PROjECTS PROJECTS

AL-DABBIyA OIL FIELD DEvELOPMENT PROjECT PHASE 3

ABU DHABI SOUTH EAST FULL FIELD DEvELOPMENT PROjECT

NORTH EAST BAB FIELD DEvELOPMENT PROjECT PHASE 3

OWNER: Abu Dhabi Company for Onshore Operations (ADCO) BUDGET: $1.5bn PROGRESS: EPC Award Stage

OWNER: ADCO BUDGET: $1bn PROGRESS: Invitation to Bid (ITB) stage

OWNER: ADCO BUDGET: $1bn PROGRESS: EPC contract awarded

The South East Full Field Development project related to Asab Sahil, Qusahwira and Mender crude oil fields is part of Abu Dhabi’s plan to reach 3.5m bpd production by 2018 to maintain 40% market share of the global oil production estimated at that time. The project involves an EPC contract to increase the oil field’s production capacity by 143,000bpd to 1.8m bpd by 2017. ADCO selected Australia’s WorleyParsons to perform the FEED for the scheme. The scope of work includes oil lines booster pumps, water alternating gas wells, separators, gas injection compressors, water injection pumps, water disposal pumps and flow-lines. CH2M Hill has bagged the project management consultancy. ITB is slated for the fourth quarter of this year.

Following the completion of the FEED stage in the second quarter of 2013 by Technip Abu Dhabi, the EPC contract for the development of the NEB phase three was awarded in April to a consortium of GS Engineering and Construction of South Korea, and Dodsal Abu Dhabi. The EPC completion date is scheduled for the fourth quarter of 2016. ADCO’s plan is to expand oil production from the Rumaitha and Shanayel oilfields, part of the NEB group of fields, from 46,000 barrels of oil per day (BOPD) to 85,000 BOPD by the first quarter of 2017. The project scope includes additional wells and flow lines, the replacement and modification of existing facilities and the building of new surface facilities that will sustain production targets from 2017.

This project involves an EPC contract for the third phase development of Al-Dabbiya onshore oil field, about 31km from Abu Dhabi city. The Al-Dabbiya field forms part of Adco’s North East Bab (NEB) asset, which also comprises Rumaitha and Shanayel. Al-Dabbiya is considered an offshore field as most of the wells are on lowlying natural and artificial islands. The phase 3 expansion project will double NEB’s production capacity. FEED was completed by Technip. In June, Daewoo of South Korea, GS Engineering & Construction of South Korea, Petrofac of UK, Saipem of Italy, Tecnicas Reunidas of Spain and Technimont of Italy submitted commercial bids for the EPC contract. An award is expected before the end of the year.

INFRASTRUCTURE MIDDLE EAST

Oil & Gas Supplement 2014

PROjECTS TEN GCC OIL & GAS PROJECTS

ABU BUTABUL GAS FIELD DEvELOPMENT PROjECT

OWNER: Oman Oil Company Exploration and Production (OOCEP) BUDGET: $1bn PROGRESS: Commercial operations stage Abu Butabul gas field in Block 60 has the distinction of being Oman’s first tight gas project. Last month, the Oman Daily Observer reported that OOCEP, the upstream subsidiary of the Sultanate’s energy investment arm Oman Oil Company, is preparing to bring the gas field into commercial production, thereby becoming the first Omani operator to add unconventional tight gas to the nation’s expanding gas base. The gas processing plant is expected to reach a plateau production of 70m standard cubic feet per day by the end of this year. Along with gas, the facility will also produce condensates averaging 6,000bpd. Block 60 is a roughly 1,580 sq km concession spread across the wilayats of Ibri and Haima.

SAUDI ARABIA - BAHRAIN CRUDE OIL PIPELINE PROjECT

OWNER: Saudi Aramco BUDGET: $350m PROGRESS: FEED study completed The project involves an EPC contract for the installation of a 115km, 24-30-inch diameter crude oil pipeline between Saudi Arabia and Bahrain. The 350,000bpd crude oil pipeline will replace the existing 230,000bpd line. Australia’s WorleyParsons executed the FEED work. The new link is a key pre-requisite for Bahrain Petroleum Company’s (BAPCO) planned Sitra refinery expansion up to 500,000 bpd total capacity, which is estimated to cost upwards of $6bn. Crude oil will flow from Saudi Aramco’s Abqaiq facility via the pipeline, 74km of which will run overland and the rest under the Gulf. The Abqaiq Plants facility is Aramco’s biggest oil processing and crude stabilisation facility. The EPC tender is slated to be announced by the end of this year, and the pipeline is expected to be commissioned by the third quarter of 2016.

MIDyAN GAS FIELD DEvELOPMENT PROjECT

OWNER: Saudi Aramco BUDGET: $300m PROGRESS: Under construction The project involves an EPC contract for the development of non-associated gas from the onshore Midyan field to produce 75m cubic feet a day (cf/d) of gas and 4,500bpd of condensate for a period of 20 years. The project also includes building two 98km pipelines to deliver gas and hydrocarbon liquids to a power plant near the western city of Duba. This will enable efficient generation of power and avoid the burning of high-value diesel. The FEED was carried out by Mustang Engineering from the US. The EPC contract was awarded to India’s Larsen & Toubro (L&T) in May 2013. Construction work is underway, and the project is scheduled to be online in mid-2016. Midyan is the first large offshore non-associated gas field developed by Saudi Aramco in the Red Sea.

Oil & Gas Supplement 2014

INFRASTRUCTURE MIDDLE EAST

ENHANCED OIL RECOVERY

PRODUCTIVE WELLS

Solar aids crude recovery GlassPoint promises to decrease the region’s EOR gas utilisation By Anoop K Menon

lassPoint Solar, a leading provider of solar steam generators to the oil & gas industry for Enhanced Oil Recovery (EOR), recently raised $53m in equity funding to accelerate the deployment of its technology in the region. Apart from existing investors like Chrysalix Energy Venture Capital, Nth Power and RockPort Capital, this funding round also saw participation from the State General Reserve Fund (SGRF) – Oman’s largest sovereign wealth fund – and Royal Dutch Shell. GlassPoint’s pilot project in southern Oman with Petroleum Development Oman (PDO) has been operating successfully since late 2012. The system, which generates an average of 50 tonnes of steam daily, is an operational baseline for large-scale projects in Oman and throughout the region. Rod MacGregor, President & CEO of GlassPoint, says: “Looking beyond the benefits of the cash infusion, what makes this round special is the support from the government of Oman through SGRF and from Shell, a leader in the EOR field. In my opinion, the strategic focus and value we get from their participation is more important than the dollars.” In fact, Oman was the first Gulf country to implement EOR, after its oil production peaked in 2000. Oman successfully used EOR to arrest the decline in production and restore it to 2000 levels. Recently, Kuwait announced that it would begin significant EOR projects in Ratqa

INFRASTRUCTURE MIDDLE EAST

oil field in the north and in the neutral zone with Saudi Arabia in the south. Bahrain has also announced plans for EOR implementation. “Currently, only Oman, Kuwait and Bahrain are doing heavy oil production using EOR. But at some point, every country in the region will start doing EOR; it is not a question of if, but when,” says MacGregor. So how does GlassPoint’s solar EOR technology compare with other EOR techniques like polymer injection or CO2 flooding? The oil producer has two decisions to make, explains MacGregor. One: should he use thermal EOR, and specifically steam? If it is steam, the second question is: which fuel should he burn to produce steam? Should he burn gas, oil or diesel? Or should he use solar? “From our point of view, it is all about saving gas,” says MacGregor. “Most countries in the Gulf are gas-constrained, so they would rather use the gas for generating electricity, desalinating water or industrial development than EOR. By replacing gas-fired steam generation with solar, we can reduce EOR gas consumption by up to 80%. In the case of Oman, 23% of the Sultanate’s gas supply is consumed by its oil fields, and most of that is for steam generation. The gas saved through EOR can also be redirected to LNG export.” However, the GlassPoint chief points out that there cannot be a one size fits all approach when it comes to EOR. An oilfield needs to be screened thoroughly to arrive at a suitable EOR technique. “In general, if it is shallow and thick, thermal is the best; if it is shallow and

Oil & Gas Supplement 2014

Rod MacGregor, President & CEO, GlassPoint

towards the lighter end of heavy, you can use thermal or polymer; if it is light oil, you can use CO2 injection or something similar. For solar EOR to work, we need three things: heavy oil, sunshine, scarce or expensive alternative fuel. If either of these conditions are not met – for example, Canada has heavy oil but no sunshine – solar EOR will not make sense.” Interestingly, the oil company pays for the steam, not the equipment. “They pay us to build the solar field, and once we are done, they own and operate the field,” says MacGregor. “Sometimes, we take up operations and maintenance contracts, though our main business is engineering, procurement and construction (EPC).” So will the weakening oil prices impact the economics of EOR, and solar EOR in particular? “Producing oil using EOR techniques generally costs more than producing them otherwise,” says MacGregor. “If oil prices were to drop low enough, then EOR won’t make sense; but again, that actual number will differ from field to field. However, historical evidence always points to volatility in oil prices; therefore, it is something that you keep your eye on because you never really know what is going to happen.”

Looking to maximise your assets and reduce your operational costs? For you, business improvement could be increased efficiency and productivity. In an industry where downtime costs more than in any other, it requires tighter asset management and condition monitoring. We can help you reduce your cost, upgrade legacy systems or make better use of the data your generate.

Visit us at ADIPEC 2014 on stand 1320 and learn how to maximise your assets, increase productivity and lower your operational costs.

SECONDRY IMAGE AREA