Infrastructure report
Energy And Utilities Infrastructure - Outlook And Overview
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- Bu səhifədəki naviqasiya:
- Latest Updates
- Structural Trends
- Electricity Supply Not Meeting Demand
- Oil And Gas Ambitions Driving Need For Power Plants
- In The Pipeline
- Water In Need of Investment
Energy And Utilities Infrastructure - Outlook And OverviewBMI View: A combination of a rapidly growing population and current under-capacity will ensure that demand for additional investment into power infrastructure will remain robust. Water infrastructure will also be a key contributor to growth in Iraq's energy and utilities sector, as the government seeks to accommodate growing demand for potable water. Latest Updates
Structural Trends2017-2026: Planning Finally Moving ForwardYears of conflict have severely weighed on Iraq's infrastructure, especially its utilities. Illustrating this, the Iraqi government and the US embassy issued an urgent warning of the potential for an imminent catastrophic collapse of the Mosul dam, highlighting the chronic weakness of infrastructure and utilities management, as well as the risks posed to utilities by IS. Since government forces have retaken the city, the risk of collapse has somewhat declined, but it has minimal impact on our view of Iraq's utilities infrastructure being in need of a significant upgrade. A series of power projects is slated to drive value creation in Iraq's energy and utilities segment in the short term, while high-valued water projects in the planning phase offer long-term upside. However, the full potential for project activity in Iraq's energy and utilities space will remain constrained for the foreseeable future by security concerns, government mismanagement and a difficult financing environment. A 2015-2020 electricity plan laid out the government's intentions to focus on improving existing infrastructure - such as increasing productivity at power plants by transforming open cycle generators to closed cycle generators, and rural electrification programmes to connect more of the population to the grid. In addition, it was seeking to address some of the more fundamental issues facing the sector, such as improving technical skill levels of employees through training courses. It was also planning for renewables, with USD200mn allocated in the 2013 budget to get projects off the ground - targeting an initial 50MW of renewable capacity. Within three years, the government was targeting 400MW. Eventually, it was hoped renewables would account for 2% of total electricity generation. And while such moves intentions are a step in the right direction for a long-term strategy, the sector would also benefit from greater regulatory structure. Improving knowledge and efficiency at the government level, while establishing a separate entity to distribute electricity and collect revenues is essential in creating a self-sufficient electricity sector. All the above plans and strategies have been virtually paralysed by the security situation over 2015-2017, as well as falling oil prices severely denting government revenues and therefore ability to finance projects. Positively, the battle to regain all the land occupied by IS is underway following the regaining of Mosul. This will free up government resources in time to support rejuvenated investment interest as oil prices rise throughout the year and the economy improves. Power Demand Driving Power Plant Surge Utility Subsector Value By Construction Status, USDmn 
Source: BMI Key Projects Database Electricity Supply Not Meeting DemandOne of the biggest obstacles to Iraq's reconstruction and a return to normal economic activity has been the country's unreliable and insufficient electricity generating and transmission infrastructure and water supply. Estimates for average daily peak demand for electricity vary at around 16,000MW, which is up significantly compared with the last few years. Conversely, electricity supply to the national grid currently stands at around 12,000MW, including electricity imported from Iran and purchased from independent power producers (IPPs). Improvements to this disparity have been notable, however, with a record production of 8,000MW per day achieved over the summer months of 2013 - still some way below demand, but a significant increase from an average of just 4,500MW in 2008. This trend is likely to continue over the coming years as a number of new contracts to build power plants have been awarded and are set to be tendered out - although there will still be a power deficit for the foreseeable future. Some estimates put energy consumption at 42GW by 2030. Below we highlight a variety of power projects moving through the pipeline:
Total nameplate capacity at Iraq's power plants is 15,527MW. Of this, 44% is from combustion turbines, 35% from thermal power plants, 16% from hydropower and 5% from diesel. Despite theoretically having sufficient capacity to meet demand, power plants operate at limited capacity major issues with feedstock limit output. Major Power plants such as Nainawa (6×125MW), Al-Mansurya (4×182MW) and Rumaila (5×290MW) are idle because of lack of fuel. Hydropower plants are the worst offenders, operating at particularly low capacity due to water shortages in the country, in large part due to Iraq's upstream neighbours and through over-extraction for agriculture. Oil And Gas Ambitions Driving Need For Power PlantsWe expect 2017 to continue to represent something of a changing era for new capacity in Iraq. As a result of the significant number of power plants projects awarded between 2011 and 2014 we were expecting an expansion in new capacity coming online - in excess of 6,000MW in 2013 and 2014 - the vast majority of which is gas. This was being supported by a much delayed ramp up in gas production, from the South Gas Project and new non-associated fields expected to come on-stream over the near term. Financing is currently the major obstacle to project progress in the country, with the government budget battered by low oil prices and inflated spending on security. With this in mind, the Iraq Ministry of Oil will launch a new project for the development and production of 12 small- and medium-sized oil fields, the first oil field offer since the fourth licensing round in 2012. This round will however, be somewhat different from previous licence awards in Iraq given the smaller size of the fields and the potential flexibility change in contract terms. The companies bidding for the projects will also be markedly different from the majors developing Iraq's giant oilfields, bringing in a new stream of foreign investment. Contracts will be awarded through direct negotiations between the companies and the Ministry of Oil. Major project activity in this space includes:
While most of these projects are piecemeal developments, gas gathering systems will need to be extended to Iraq's largest oil fields as oil output - and with it associated gas production - grows. We expect Iraqi gas production and consumption will both increase after practically no progress over the previous five years. Other projects include contracts worth a total of USD1.7bn to Samsung Engineering and Hyundai Heavy Industries to build two power plants, awarded by the Iraqi government in February. Samsung secured an USD894.5mn contract to build a 330MW power plant in the northern city of Mosul, according to electricity ministry spokesperson, Musab Al-Mudarres. Hyundai was awarded an USD818mn contract to construct a 230MW plant in the town of Yousifiya, south of Baghdad. French conglomerate Alstom won a contract, worth about EUR400mn (USD551.46mn), with Eni Iraq, to build the 740MW Zubair gas-fired power plant near Basra. Alstom will be responsible for engineering, construction and commissioning of the plant as well as supplying equipment including four GT13E2 gas turbines. The power plant will support the expansion of the Zubair oil field. Not all projects are new builds - much work is needed to upgrade and reinvigorate existing capacity. Mitsubishi Hitachi Power Systems won an order in April 2015 to refurbish and upgrade the 200MW unit 4 of the Hartha Thermal Power Station. The work will require large-scale component replacements to improve the facility's degraded generation capability. In The PipelinePipelines are set to become increasingly important to growth: The Iraq-Jordan (-Egypt) pipeline remains stalled, despite renewed promises from Iraqi, Jordanian and Egyptian officials. In September 2013, Iraq shortlisted 12 international companies to build the new USD18bn oil export pipeline, which will run 1,040 miles from Basra to the Jordanian port of Aqaba. The ministry hopes to use a build-own-operate-transfer agreement, the first of its kind in Iraq, coupling construction with a 20-year operational concession. However, a tender has yet to be issued. Positively, in February a consortium comprising China Petroleum Pipeline Bureau (CPP) and Mass Global announced it intended to build the pipeline. The proposed pipeline will run through Iraq's Anbar province, which is largely controlled by Islamic State rebels. The companies plan to export 1mn barrels per day (b/d) of Iraqi crude to Jordan, of which 150,000b/d will be supplied to the Zarqa oil refinery in Jordan. 'The two companies will submit their investment offer to the oil ministry in March,' said Assim Jihad, an Iraqi oil ministry spokesperson. Our Oil & Gas team, meanwhile, believes that Iraq needs to diversify its oil export routes away from the Persian Gulf in order to reduce export disruption risk and achieve long-term oil growth ambitions. To this end, Saudi Arabia holds the most attractive proposition to transit large volumes of Iraqi oil to the Red Sea. Iraq's southern fields have the most production upside compared to other areas of the country and will require a new outlet if they are to produce at potential. Currently around 3.2mn b/d is being produced from six of the largest fields in southern Iraq. However, long-term plateau production agreed between companies and the Iraq Ministry of Oil are targeting more than 7.0mn b/d of output. There is already a 1.6mn b/d pipeline connecting Basra with Yanbu on the Red Sea, though it will likely need substantial renovation given that the Iraqi part has not operated since 1990. Yanbu is already equipped with substantial storage capacity and is well served with jetty space. The Red Sea port also provides a more direct route to European markets. Meanwhile, as Turkey seeks to diversify away from a reliance on Russian energy supply, a plan has been proposed between the country and Iraq for a 181km gas pipeline between Turkey and the Kurdish Regional Government (KRG), with a pumping capacity of 10bn cubic metres of gas a year.
The oil sector generally remains the focus of infrastructure investment as highlighted by the update in October 2015 on the USD10bn Common Seawater Supply Facility (CSSF), which will be two 150km pipelines providing 12.5mn barrels of seawater daily to the country's southern oil fields. The seawater will be injected into the deposits at the oil fields as a secondary extraction measure to enhance overall oil recovery. The project will be implemented in phases, with work due to start in Q116 and completion expected in Q218. The Ministry of Oil and state-run South Oil Company (SOC) own of the project. SOC has appointed ILF Consulting Engineers to provide the front-end engineering design (FEED) for the pipelines of the Common Seawater Supply Project (CSSP). Water In Need of InvestmentGrowing populations and limited water resources in Iraq will increase the demand for better water and utilities infrastructure in order to manage scarce resources. To meet this rising demand, we expect desalination projects to continue to proliferate in the region and believe that international companies offering new technology and innovation in delivering these projects will play a key role. The US Department of State estimates 21.2mn people in Iraq have access to potable water. This is a substantial increase on the 5mn estimated to have access to potable water in 2003. Iraq's water sector is to benefit from a huge push on the part of the government to improve water access and quality across the country. That said, years of reconstruction efforts have seen few tangible improvements for the majority of Iraqi citizens, with corruption, poor coordination and bad planning severely inhibiting project development. Through five-year strategic water plans, the first of which is currently running, the Iraqi government hopes to improve access to water and better manage its consumption and quality. Iraq's water currently fails both national and international water quality standards, and consumption stands at 392 litres per capita per day which is far above the international standard of 200 litres. Key to the future development of the sector will be the involvement of international private companies, as there is a lack of domestic capability within Iraq. We have begun to see this play out for international construction companies as they have gained traction at the expense of domestic firms in the building of new infrastructure, as Iraqi companies have become known for delays and cost overruns. It is with the operation and maintenance of assets in which international knowledge is really needed. However, miniscule water tariffs and their poor enforcement raise very little money to incentivise private water companies to enter the Iraqi market. The lack of investor appetite and the inability of the government to provide widespread water services are compounded when water consumption forecasts are taken into consideration. The Iraqi government hopes to attract foreign contractors to build projects coming from an annual investment of USD1.5bn in water projects for the next two to three years. While visas are expected to be granted quickly and favourable lines of credit granted, we do not expect that these sums of investment will be fully realised in light of the risks in Iraq's water sector and wider business environment. Below we highlight some of the main projects and initiatives moving forward:
scope of work consists of EPC of a 300,000 cubic metre a day pumping station, together with construction of watch towers, on-site roads and ancillary facilities. The project is scheduled to be completed in December 2018. Table: Top Five Major Projects - Energy and Utilities Project Name Sector Value (USDmn) Size Unit Companies Time- frame Start Time- frame End Status Status Notes Common Water 10000 290,15 mn m3 Coffey 2018 2021 At April 2017 - Seawater per year
International[Feasibility] planning Talks Supply Facility {Australia}, Parsons Brinckerhoff[Design/ Architect]{United States}, South Oil Company[Operator]{Iraq}, CH2M HILL Constructors[Consultant/ Project Management] {United States}, ILF Consulting Engineers Polska sp. z o.o. [Construction]{Poland} stage ongoing with Exxon on construction of project, if the talks conclude successfully, phase one of project will be completed by 2020, project capacity was downsized to 5 mn b/d from 12.5mn b/d in total, split in two phases; Project includes 426kms of pipeline with eight interconnecti ng stations and 10 delivery stations Common Water 10000 South Oil 2016 2018 At October 2015 Seawater Company[Operator]{Iraq} planning - The project
Supply Facility Project stage
is currently in design phase; Work on the project is estimated to start in Q116; Work involves building water injection plant with capacity of 12.5mn barrels of water daily Top Five Major Projects - Energy and Utilities - Continued Project Name Sector Value (USDmn) Size Unit Companies Time- frame Time- frame Status Status Notes
Where blank = not available. Source: BMI Key Projects Database Yüklə 406,76 Kb. Dostları ilə paylaş:
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