New money comes out to pay (2 of 2)

25 July 1997
SPECIAL REPORT CONSTRUCTION

Olaya is the focus for much of Riyadh's new growth and the location for two of the most prestigious commercial projects to be tendered in recent years. The King Faisal Foundation and the Kingdom Holding Company are both in the early stages of building separate high-rise developments in the corridor between Olaya Street and the King Fahd Highway. The two new complexes will literally tower over all else in the city.

A $253 million contract for the construction of the Sir Norman Foster- designed Al-Faisaliah Center was signed in April with the local Saudi Binladin Group and excavations are now well underway. The centrepiece of the complex, due to be delivered by 1 April 2000, will be a 260-metre high tower with 30 floors of office accommodation, a hotel, apartments, conference facilities and a shopping centre.

Contractors have also mobilised on the site of the planned Kingdom Centre, where the local Saudi Pan Kingdom for Contracting (Sapac) is carrying out excavation work for a 300-metre-high tower block and adjacent commercial complex. International contracting groups submitted proposals in late May for the main construction work, based on preliminary designs by Ellerbe Becket of the US. Prices are understood to be in the range of $307-347 million.

A third major project in the capital made headway in April with the announcement that a $139 million contract to build a national museum in the Murabba district had been awarded to local firm Saudi Oger. A significant element of the scheme involves landscaping an extensive public park in the surrounding area.

Historic mud buildings on the 350,000-square-metre site will also be renovated. The client, Arriyadh Development Authority, is understood to have secured a special budget for the scheme from the Finance Ministry.

Elsewhere in the country, a steady stream of large projects continues to emerge from industrial giants Saudi Aramco and Saudi Basic Industries Corporation (Sabic). The state oil company, Saudi Aramco, is set to press ahead this year with the biggest expansion of the master gas system for more than a decade.

The Parsons Corporation of the US was appointed project manager late last year on the scheme to build a grassroots gas processing plant at Hawiya. Bids for the first contract, for site preparation and infrastructure, have recently been submitted by four local firms. More than 30 international companies have been solicited for the estimated $900 million engineering, procurement and construction (EPC) package. Six shortlisted companies are expected to be invited to bid by the autumn.

The estimated $2,000 million scheme will also involve installation of a pipeline from Hawiya to the PP9 power station outside Riyadh, as well as a large number of flow lines and trunk lines. The pipeline work alone is expected to be worth at least $100 million.

De-bottlenecking and upgrading of Aramco's existing gas plants will also provide more opportunities for local firms this year. The bid package for the construction subcontract at the Berri plant was due to be released by July, with a similar contract for Shedgum to follow by the end of the year.

Leading petrochemicals producer Sabic is continuing to expand rapidly in Jubail and Yanbu. One of the biggest opportunities for contractors this year is the $2,500 million olefins expansion planned by Saudi Yanbu Petrochemical Company (Yanpet). The largest element of the scheme, an 800,000-tonne-a-year (t/y) ethylene unit, was the first to go to tender with bids received from US-based ABB Lummus Global, Snamprogetti of Italy and Toyo Corporation of Japan.

Tenders have also been submitted for the first off-site contracts with further packages for underground facilities and foundation work expected to be released soon. Bid packages for the four other production units comprising Yanpet-2 are due to be released later this year.

UAE

AFTER promising so much for so long, Abu Dhabi National Oil Company (ADNOC) is starting to deliver the goods on its multi-billion dollar investment programme. The award of contract work worth over $900 million to Italy's Snamprogetti in late June has provided a shot in the arm for the entire market, raising hopes that several other major public sector projects will now go ahead.

The two contracts awarded to Snamprogetti cover the construction of condensate processing trains at the Ruwais refinery and the building of production facilities on the Asab Gas Development (AGD). Both schemes will yield more work for international contractors. Tender documents are expected to be issued in August for a second engineering, procurement and construction (EPC) contract on the Ruwais refinery upgrade programme, involving the installation of new units to produce unleaded petrol. On AGD, Abu Dhabi Company for Onshore Oil Operations (Adco) is in the final stages of bid evaluation for the field gathering and injection facilities' package.

As part of its plans to substantially boost gas handling capacity and establish a petrochemical centre at Ruwais, ADNOC is pushing ahead with several other projects. The main EPC package on phase two of the onshore gas development (OGD-2) has now gone to tender, with bids due back in October. Basic engineering has begun on another $1,000 million gas development, aimed at exploiting gas reserves in the offshore Khuff reservoir. In September the joint venture of ADNOC and the Copenhagen-based Borealis is expected to issue the ethylene package on the planned $900 million Ruwais petrochemical complex.

Beyond the emirate's hydrocarbons sector, prospects for the next six months are more mixed. The government's decision to set up a new utility privatisation committee is expected to result in long delays on power and water projects. Two industrial projects - a new steel rolling mill for General Industry Corporation and new facilities for Abu Dhabi Shipbuilding Company - will remain stalled until a final decision is taken on their location. In contrast, several new building developments are expected to start, including a $200 million residential and commercial development besides the Beach hotel and new headquarters for the Abu Dhabi Chamber of Commerce & Industry and the National Bank of Abu Dhabi.

It is a similar story in Dubai. Delays have hit several public sector schemes including the planned $70 million expansion of the Al-Awir sewage treatment plant and the proposed Jebel Ali-to-Sharjah ring road. At the same time, the prestigious buildings' sector continues to offer welcome opportunities for the international contractor. The two largest construction packages are out to bid on the $530 million Dubai International Airport expansion programme, while tendering is underway on the Emirates towers development.

In the northern emirates, contracts have been awarded on the $85 million Van Ommeren tank terminal project in Fujairah. A question mark still hangs over the $65 million contract for the Ministry of Electricity & Water for construction of five 1.5 million gallon-a-day desalination units.

Several emirates are also considering build-operate projects in the utility sector. The most advanced is in Ajman where a joint venture of the US' Black & Veatch International and the local KEO International Consultants is working on a $120 million wastewater development.

YEMEN

INVESTORS, financiers and reporters on 17 June converged on London's Four Seasons hotel to witness an event many had thought would never take place. After months of uncertainty, Yemen Investment & Development International (Yeminvest) signed a contract with the Port of Singapore Authority (PSA) for the engineering, procurement and construction (EPC) of the new container terminal at Aden port. The project is still in its early days, but it is gradually demonstrating that private projects can succeed in Yemen.

The contract is worth almost $187 million. PSA has also signed a memorandum of understanding to operate the upgraded port, and has an option to take a 20 per cent equity stake in the project. The EPC contract calls for the construction of two berths and 213 metres of sea walls, due for completion by March 1999.

The first phase of the scheme includes the construction of a free zone adjacent to the port. However, Yeminvest says the work, expected to cost some $40 million, will only be carried out 'in line with customer demand.' It has invited prospective tenants of the 1,550-hectare industrial estate to apply for leases by 15 August.

The second phase of the Aden scheme includes the upgrade of the international airport at Khormaksar. The Netherlands Airport Consultants (Naco) has been awarded a contract to carry out designs and supervise the construction. This will involve replacing the air traffic control tower and refurbishing the terminal building, which was damaged during the 1994 civil war.

Yeminvest is currently trying to amend its concession agreement with the government to include responsibility for overseeing the construction of a new 130-MW power plant in Aden. Wartsila NSD Corporation has begun work on a new 40-MW power plant in Mukalla at a cost of about $50 million. The Netherlands has provided a grant to cover 60 per cent of the financing.

Yemen is largely dependent on such aid to meet its pressing infrastructure requirements. Dumez of France has signed a contract with the National Water & Sanitation Authority to build a new wastewater system in Sanaa. The work is due to begin soon at a cost of more than $30 million. The finance has been secured mainly in the form of concessionary loans from aid agencies including the OPEC Fund for International Development and the Arab Fund for Economic & Social Development.

New hope has recently been held out for Yemen's many other requirements, from health to communications. Donors who attended the Brussels Consultative Group meeting for Yemen in June pledged a total of $1,800 million in aid over the next three years, the World Bank says. The bank will sponsor a series of smaller meetings in the months ahead to consider Yemen's infrastructure requirements sector by sector.

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