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Thirst for energy

Firms are flocking for a piece of Qatar's development boom

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Current power plants will meet projected electricity demand in the country until at least 2015.
Current power plants will meet projected electricity demand in the country until at least 2015.
Power projects in Qatar are currently focused on boosting grid reliability and efficiency.
Power projects in Qatar are currently focused on boosting grid reliability and efficiency.

Like a modern-day gold rush, firms are flocking for a piece of Qatar’s development boom. Utilities Middle East looks at how the World Cup 2022 and the National Vision are driving utilities in the country

The recent release of BP’s Statistical Review of World Energy 2012 provided a very striking (if not actually surprising) report on Qatar’s growing demand for energy. The country, with its population of around two million and a land area of only about 11,500 km2, recorded a 14.1% increase in energy consumption through 2011. This increase, which saw the country’s total energy consumption reach 29.4 million tonnes of oil equivalent, was not only the highest in the Middle East, but the highest percentage change of all countries BP reported on. For a country of such modest proportions, this is an incredible leap, and one that seems likely to continue.

For example, if you compare the maximum daily load on Qatar’s grid, as reported by Qatar General Electricity & Water Corporation (KAHRAMAA), on the 15th June this year with the same date last year, maximum demand on the network jumps from 4700 MW in 2011, to 5160 MW this year, whilst temperatures on both days were the same.

Even accounting for the country’s healthy population growth rate (9.6% annual change according to the World Bank), the increase in consumption is impressive, and is indicative of a country undertaking some substantial development.

In water too, demand is similarly rising and multiple projects are underway to meet rapidly increasing pressures on the current systems. A recent report from Beltone Financial found that Qatar’s total desalination capacity now stands at 327 million imperial gallons per day, and forecast that demand for water is set to grow by 11% per year for the next five to seven years. With such substantial investment underway, it is intriguing as to what exactly is driving this growth.

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Boom times
“The government of Qatar has a clear vision of what is required in terms of short to medium term investment and it is aggressively developing plans for the future needs of both the indigenous and transient populations. Clearly the country’s ability to fund the investment, as a result of its revenue from the oil & gas sector, is key to realising the vision of the future,” says MWH Qatar director Lesley Desport.

These plans for the future, which are formalised in the government’s Qatar National Vision 2030 plan, are also very much centred around the World Cup 2022. Standing as something of a monolithic driver for development in the region, and an inevitable talking point for anybody involved in almost any part of the country’s economy, the World Cup has provided infrastructure projects with a unique motivation for development.

“The World Cup 2022 is really setting the timeline for the development of a lot of the projects that are a part of the National Vision. Preparing for 2022 is really putting pressure on everything. It is not a question of things being achievable, but things need to be done right now, not in the future,” says Juha Alopaeus, global power firm ABB’s country manager and CEO in Qatar.

MWH agrees, saying that with wet infrastructure services the short-term demands of hosting such a prestigious global sporting event are a key driver of development. At the same time, however, there are present pressing needs in the water sector that also need addressing.

“For the Public Works Authority, Ashgal and MWH, the Integrated Drainage Masterplan – which has a 50-year horizon for foul water, treated effluent, ground water and storm water infrastructure – is a high priority project as this will guide future investment in these sectors. The pace of development and population growth has been significant over the past five years and, at this stage, it is fair to say that the priority for Qatar is to provide appropriate infrastructure to meet its current needs,” says Desport.

MWH is currently engaged on both the Qatar Integrated Drainage Master Plan and the 5-year Drainage Asset Management Programme for Ashgal. The latter will see the company work as management contractor on the programme, managing the full operation of assets such as wastewater treatment and collection systems.

Alopaeus also believes that water projects will be a big focus for large-scale investment in the near future.

“With utilities generally, I see a lot of water projects coming. Water reserves for reservoirs are very small – the country has reserve for maybe two or three days and it plans to increase this to one week. “Then, all civil development will also increase pressure on water systems and require development. With World Cup stadium development too, there will be a big need for district cooling projects,” he says.

This greater need for immediate water development is reflected in Kahramaa’s recently announced $19.2 billion investment in electricity and water through until 2021, with at least $6 billion being targeted at water projects within the next decade.

Alopaeus reports that Qatar is currently in surplus as far as electricity production goes; a fact confirmed by Kahramaa, who has previously stated that Qatar currently has sufficient capacity until at least 2015.

The major development in the power sector will be the Qatar Facility D IWPP project, which is slated for completion in the same year, and will have a generating capacity of 2 GW, together with a desalination capacity of 60 million gallons of water per day. An announcement on tender for the project is expected later this year.

ABB is currently engaged in a number of smaller, though still sizeable, substation projects around the country, including the $140 million Al Rayyan village development which involves work on 10 substations. The projects, operated on a turnkey basis, are aimed at providing a more reliable, efficient and high-quality electricity supply.

Being such a focus of activity can present its own challenges; a consequence, Alopaeus says, of Qatar being a fast developing market that is still limited in size and resources.

“On certain projects we are facing more challenges regarding how construction works can proceed due to the fact that there are many construction sites around them. In some projects, we even have constraints about how to get all materials on-site, with limited space around your own project.

“Another related issue is that getting a talented workforce can sometimes take longer, causing minor delays or forcing you to reshuffle projects to optimise resources,” he adds.

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Oryx Engineering Solutions on supporting Qatar’s industry
Buoyed by massive gas revenues, Qatar has reached out into private investment across the globe, in everything from charitable foundations to Libyan banks. The tiny emirate’s sovereign wealth fund, the Qatar Investment Authority, is looking to spend $30 billion this year, and holds assets worth $85 billion.

Private investment at home remains a different story. For Qatar’s domestic upstream sector to thrive without distorting a nation’s economy, private sector involvement and innovation at home is vital, and this means going beyond the well-worn model of joint ventures established after guaranteed contracts and market shares have been doled out. It’s time for Qatar’s upstream sector to get entrepreneurial.

Eschewing the established model of local joint ventures, Abdulla Mannai has set up Oryx Engineering Solutions (OES), Qatar’s largest integrated engineering services operation.

OES is designed to support large scale industries from a state-of-the-art facility at the heart of Qatar’s energy and industrial sectors in Ras Laffan Industrial City. After years of conception and planning, OES is launching onto Qatar’s engineering services market, and is targeting the region’s energy, utilities, downstream and marine sectors.

“The OES service offering is the first of its kind in Qatar and the region,” says Mannai. “We have a 14,700m2 facility, uniquely designed to meet the needs of our customers, for large-scale industrial maintenance, service and asset management of large-scale equipment, from rotating to electrical motors and generators to mechanical equipment.”

Mannai says that having a ‘One Stop Shop’ concept to service customer needs - whether it is mechanical seals, generators or motors - will help bring value to customers by being “brand agnostic”.

“One of the opportunities we saw was that there was a lot of equipment going out of country,” says Mannai.

“Equipment was going back to Europe, Asia and the US, because there was not the competency, infrastructure or know-how available domestically. That was a market we wanted to capture.”

When it came to a site, Ras Laffan Industrial City was the obvious choice. “Ras Laffan is the fastest-growing industrial city, and it has a diverse offering, from energy generation to GTL and petrochemicals. It’s a question of critical mass. Whilst we see other industrial cities coming up in Qatar, Ras Laffan is best positioned.

“With three major power plants located in Ras Laffan, producing around 50% of power and 40% of the potable water in Qatar, we are positioned close to our customer base. Being able to respond to our customers’ needs quickly will enable us to keep them up and running effectively. And although we are located in Ras Laffan, our service market is the whole of Qatar and we are geared to provide effective response times accordingly.”

OES expects to grow sustainable revenues in core areas of maintenance and repair that will allow the company to expand its business alongside the government’s ambitious downstream and industrial initiatives.

The power and water sectors are expected to contribute around 15% of total business, with further expansion expected as infrastructure growth continues and the country develops.

“When you have been through so much growth, you need to digest it all, and as part of that there will be more focus on brownfield related work than we have seen in the past.

“We’ve just started our journey,” beams Mannai. “And it’s not going to end soon, neither for Oryx nor for Qatar.”

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