Transcript Document

IPR in the Middle East
January 2006
1
Introduction
Mark Williamson
2
Middle East . . . in the IPR portfolio
Our commitment to the region
Contract Type - IPR Group
(by net MW)
PPA
MW
ME Net MW
Al Hidd
Bahrian
2,500
Net MW
2,000
Net MW
under
construction
1,500
1,000
500
(short/medium
term contracted)
0
2001
2002
2003
2004
2005
34%
Merchant
Ras Laffan B
Tihama
Qatar
Saudi
Umm Al Nar Arabia
UAE
35% Al
Kamil IPO
Set up in Shuweihat,
UAE
region
Al Kamil,
Oman
2000
66%
2006
Creating value through core skills
• Project development and
construction
• Offtake contract design and
execution
• Project financing
• Plant operation - both power and
3
Middle East . . . in the IPR portfolio
Contribution to IPR from the region
Middle East EBIT (£m)
85
EBIT
54
Equity
22
29
23
9
-1
2001
1
2002
2003
2004
Only includes equity from operating assets 4
Overview
Ranald Spiers
5
IPR in the Middle East
•
Six projects in six years with an enterprise
value of US$6.5 billion
~ current IPR equity commitment of
nearly
US$400m
•
Creation of new region - £29m PBIT by
2004
•
Existing assets performing well
•
Construction is the other major
regional activity
•
•
Power and desalination
~ IPR largest private supplier of
desalinated water in the world
Pipeline of future projects
Al Hidd
Bahrain
Ras Laffan B
Qatar
Tihama
Shuweihat
UAE
Saudi
Arabia
Umm Al Nar
UAE
Oman
Al Kamil
6
IPR in the Middle East
Middle East
EBIT (£m)
Name
Country
% of
ownership
Al Kamil
Shuweihat
Umm Al Nar
Tihama
Ras Laffan B
Al Hidd
Total
Oman
UAE
UAE
KSA
Qatar
Bahrain
65
20
20
60
40
40
IPR
Share
(MW)
Net Desal
Capacity
(MIGD)
Net Steam
Capacity
(m lbs / hr)
185
300
310
645
410
364
2,214
20
20
24
36
100
2.7
2.7
Fuel
Type
End of
Power
Contract
Gas
Gas
Gas
Gas
Gas
Gas
2017
2024
2026
2026
2033
2028
29
23
9
2002
2003
2004
7
The Middle East - a growing asset portfolio
MW
8,000
6,870
6,995
910
910
600
900
1,025
Ras Laffan B
1,075
1,075
1,075
Tihama
1,550
1,550
1,550
Umm Al Nar
extension
1,500
1,500
1,500
Shuweihat
7,000
6,570
6,000
910
Al Hidd
5,000
4,000
3,355
3,000
2,000
1,000
0
2,655
700
1,500
1,500
1,155
870
870
870
650
650
285
285
285
285
285
285
285
2002
2003
2004
2005
2006
2007
2008
285
650 (1) Umm Al Nar
(1)
Al Kamil
650 MW retires at the end of 2008
8
The Middle East Team
•
Abu Dhabi Development Office
~ project selection, bidding, negotiating, project
development and management
•
Project companies
~ construction, asset management, client and partner
relationships, operations and maintenance
•
Operating companies
~ operations and maintenance, owner and partner
relationships
9
Key markets
Primary target markets:
•
UAE
•
Qatar
•
Saudi Arabia
•
Oman
•
Bahrain
•
Kuwait
10
Macro environment
•
Stable Governments, low country risk rankings and good credit
ratings
•
Massive oil and gas reserves
•
Petrodollar economies
•
Strong economic growth driven by high oil prices and
diversification away from oil
•
Growth rates between 5% to > 10% pa
•
Drivers for power and water demand
~ infrastructure development / tourism
~ replacement vs incremental demand
11
Regulatory overview
•
Pragmatic regulation, primary method of control via
long-term contracts
•
Markets unlikely to liberalise in the short or medium term
•
Environmental regulation
~ most new plants gas-fired
12
Commercial structure
•
Long-term contracts which set in stone all major revenues and
costs
•
Major risks laid off wherever possible
•
PWPAs, PPAs, ECAs, NGSAs
•
EPC costs fixed with LDs for delays in construction and poor
performance
•
Long term operations and maintenance service agreements with
OEMs
•
Interest rates and currencies hedged
13
Return on investment
•
Return profile similar across the region
•
UAE local shareholder return 13%
•
Seek to enhance returns by O&M, success fees and TSAs
•
Cash generation, use of Equity Bridge Loans
•
Scope to increase return once project has been
commissioned, for example by refinancing
14
Financial structuring
•
Projects structured using project finance
~ carried out in conjunction with London-based project finance
team
•
Maximise use of senior debt
•
Availability of local capital and international debt with international
MLAs /JBIC
•
High leverage is not a problem
15
Competitive environment
•
Projects becoming increasingly competitive but IPR
still winning regularly
•
New players from Japan, Korea, Malaysia
•
Traditional competitors (Suez/Tractebel, AES,
Marubeni)
•
Fewer EPC contractors tends to limit competition
•
Competitors or partners (eg Mitsui)
16
Partnerships
•
Partnering is a key element of risk diversification and
gaining local knowledge
•
ADWEA, CMS, Saudi Oger, QEWC, Mitsui, TEPCO,
Sumitomo, Chubu, Suez
•
We choose the right partners to help us win the deal
•
Each partner brings something different to the table
17
Desalination
•
Strong power demand and even stronger water demand
•
Most Gulf projects are designed to offer both power and
water
•
Increases the overall efficiency of the plant
•
Uses waste heat from the steam
•
IPR has assets with the major thermal desalination
processes
18
Agenda
Contract Structures
Financing our Growth
Desalination
Coffee Break
Oman
Abu Dhabi
Saudi Arabia
Qatar
Coffee Break
Bahrain
Summary
David Wadham
Peter Barlow
Jaideep Sandu
Tom Mackay & Kevin Cox
David Barlow & Ed Metcalfe
David Barlow, Jeff Wright & Steve Pedrick
Tom Mackay
John Hurst
Ranald Spiers
19
Contract structures
David Wadham
20
Similarities across contracts
•
Part-owned in conjunction with other international or local
partners
•
Financed on a highly leveraged, project finance (limited-recourse)
basis
•
Operate with the security of a long-term power (and water) offtake
contract for the plant’s available capacity and output
•
Contract with sovereign/quasi-sovereign counterparty
~ state’s single buyer of power and water
21
Differences across contracts
•
PWPAs structured on an energy conversion basis (ECA) or
fuel supply agreement (FSA)
•
Most projects are BOO, some BOOT
•
Sub-contracted O&M or combined owner/operator structures
•
Government interest in some projects
22
PWPAs and PPAs
•
Project company responsible for:
~ ownership
~ design
~ operation
~ construction
~ commissioning ~ maintenance
•
Offtaker obligation to provide connections to power and water grid
and purchase available capacity and output
•
Flat tariff with capacity charge to recover debt service, fixed O&M
and equity return; pass-through output charge to cover variable O&M
and fuel
•
Payment is in local currency (except Tihama) but includes exchange
rate protection
23
PWPAs and PPAs (cont.)
•
Capacity or termination payments guaranteed by the host
government
•
Revenue protection for offtaker defaults and political force majeure
(war, change in law, government action/inaction)
•
Commercial documents subject to local law but international
arbitration
•
Finance and construction documents subject to English law
24
PWPAs and PPAs (cont.)
•
Energy conversion (Abu Dhabi, Tihama) or separate fuel
supply arrangements (Oman, Qatar, Bahrain)
•
BOO (Abu Dhabi, Oman, Bahrain), BOOT (Tihama and
Qatar), with a transfer to the offtaker
•
Accounting treatment: always an operating or finance lease
•
Terms vary from 15 years (Oman), through 20-23 years
(Tihama, Abu Dhabi and Bahrain) to 25 years (Qatar), but
without market liberalisation renegotiation clauses
25
Operation and maintenance
Abu Dhabi
•
Requires a separate operator owned by foreign investors
•
Payment on a fixed price basis
•
Ability to generate Operator fees and bonuses against a lower
equity stake (e.g. Umm Al Nar, 20% stake in the generator, but a
70% stake in the operator)
Others
•
More flexibility (e.g. Al Kamil, Ras Laffan)
•
Advantages of a combined owner/operator
26
Gas turbine maintenance
•
Long-term arrangements with the OEM (Al Kamil, Umm Al
Nar, Tihama with GE and Shuweihat and Ras Laffan with
Siemens)
•
For one or two maintenance cycles
The benefits of an LTSA include:
•
All scheduled maintenance sub-contracted for a fixed price,
with a degree of unscheduled outage cover provided within
the price
•
Based on a term warranty concept, i.e. OEM guarantees to
replace all program parts as needed
27
Shareholding structure
The advantages of a government shareholding and the need to
generate local investment opportunities
•
Abu Dhabi IWPPs have 60% holding retained by the
government
•
Al Kamil initially 100% owned by IPR, now 65% owned
following a mandatory IPO on the Muscat Stock Market
•
Ras Laffan has no direct state involvement, although QEWC
holds 55% and is in turn listed on the DSM
•
Tihama and Bahrain owned entirely by private investors
28
Umm Al Nar Shareholders’ Agreement
•
Foreign shareholder has the ability to manage the project
and enjoys significant minority protection
~ coupled with government partner with shared goals as an
investor
•
Board of 7 directors (4 ADWEA and 3 foreign investors)
•
Foreign investor appoints the Executive Managing Director
~ Ed Metcalfe
•
Voting on all significant matters at board and shareholder level
requires approval of both ADWEA and the foreign investor
•
Government IPO provisions (Taqa was listed on the ADSM in July 29
Conclusion
•
Long-term off take arrangements with single state buyers,
guaranteed by sovereigns with investment grade ratings and a
strong economic future
•
Robust contractual terms offering secure future returns with
revenue protection for supplier and offtaker defaults and for political
force majeure events
•
Projects are embedded in the region, with governments
participating as co-investors or encouraging direct public ownership
•
Key cost risks (financing and gas turbine parts and maintenance)
well mitigated through long-term hedging and supply arrangements
•
Upside remains through refinancing opportunities, the ability to
reduce costs over time and merchant tail on BOO projects
30
Financing our growth
Peter Barlow
31
Project finance
•
Fundamental part of IPR’s financial strategy
•
Objective is to finance on a non-recourse basis at the asset
level
32
Structure of Middle East IPPs/IWPPs
•
Assets backed by long-term (20yrs+) Power (and Water)
Purchase Agreements (PPAs/PWPAs)
•
Contractual Structure designed specifically for
non-recourse financing
•
Clients’ obligations backed by Government guarantees
•
Predictable, long-term cashflows allow high leverage without
sponsors’ support
33
Lenders’ view on IPP/IWPP risk/
country risk
•
No merchant risk
•
Excellent track record of project financed IPPs/IWPPs:
‘success stories’ / accepted model in the banking market
•
Loan syndication allows diversification of lending across
different projects/countries: lower risk
•
Project financed IPPs/IWPPs include security on assets and
stricter covenants than corporate loans
•
ME countries hydrocarbon-rich, financially sound and
politically stable: country risk acceptable to most international
PF lenders
34
International and regional debt providers
•
IPR’s approach: mix international and regional lenders’
expertise
•
International lenders particularly active in most countries in
the region: UAE, Oman, Qatar and Bahrain
•
Predominantly regional lenders in the Kingdom of Saudi
Arabia (KSA) so far
•
Recent improvements in KSA (e.g. entry in WTO) suggests
increased role of int’l lenders there
•
Islamic financing further source of liquidity, of which IPR has
experience through Umm Al Nar and Shuweihat
•
Export Credit Agencies being increasingly used
35
IPR capabilities in debt capital raising
•
Core skill - IPR takes lead role in every project financing
•
To date 5 IPPs/IWPPs project financed in the region
•
Raised $3.9 billion in non-recourse bank debt
•
IPR successfully financed first large scale IPP in Saudi
Arabia
•
Financing also achieved in potentially adverse market
conditions
(e.g. Shuweihat syndication launched on 12 Sept.2001; Umm Al Nar
financing arranged at start of 2nd Iraq war)
•
In 2004 successful IPO of Al Kamil on Omani stock exchange
36
IPR capabilities in debt capital raising
Non recourse long-term debt
• Al Kamil: $100m
• Shuweihat: $1.2 billion (of which $100m Islamic Tranche)
• Umm Al Naar: $1.1 billion (of which $250m Islamic
Tranche)
• Tihama: $510m
• Ras Laffan: $663m
• Al Hidd $1.0 billion (in negotiation)
37
Lenders appetite for future deals
•
Competitive pricing and increasing level of interest suggest
large appetite for future IPP/IWPP deals in the region
•
Virtually all major international project finance lenders
present in the region and display appetite for more deals
•
More regional players are becoming familiar with project
finance through participation in loan syndications
38
Case study:
Umm Al Nar
•
•
•
•
•
Largest IWPP in the world:
~ existing net capacity: 870 MW (power) + 162 MIGD (water)
~ after construction net capacity: 1,550 MW (2,200 MW for 2 years during
construction) + 95 MIGD
23 year PWPA with ADWEA: proven contractual structure (4th such deal in
Abu Dhabi, but longest tenor to date);
Largest ever project finance deal at the time, when lenders appetite in the
region
was limited;
Financing plan structured to maximise liquidity and included use of Islamic
financing,
short and long term conventional debt;
Long-term debt tenor: 20 years;
39
Case study:
Umm Al Nar
Debt Facilities
Amounts
US$ million
Main Features
1) Equity Bridge Facility
Of which: Islamic Tranche
Of which: Conventional Tranche
441
291
150
Tenor / Repayment: Bullet repayment on July 2008
2) Short Term Facility
Of which: Islamic Tranche
Of which: Conventional Tranche
232
Nil
232
Tenor / Repayment: July 2006 to July 2008
3) Long Term Facility
Of which: Islamic Tranche
Of which: Conventional Tranche
1,105
250
855
Total Debt Facilities
Other: 100% guaranteed by Shareholders
Other: Ranking Pari-Passu with Long Term F.
Tenor / Repayment: Door-to-door 20 years; Profiled
repayments: Jan 2009 to Jul 2023
Other: "True-Up Advance": Drawdown at end
of availability period to repay part of
EBF and achieve 80:20 gearing (subject
to cover ratio covenants)
1,778
40
Case study:
Umm Al Nar
Amounts
US$ million
Capital Structure
Total Funding Requirements:
2,116
Of which: Acquisition Purchase Price
Of which: EPC Contract
Sources of Funds
Short Term Facility
Long Term Facility
Equity Bridge Facility
Equity Injection
Cash Flow From Operations
Total Sources of Funds:
Before
"Refinance"
US$m
%
231 10.9%
978 46.2%
440 20.8%
0
0.0%
468 22.1%
2,116
1,000
736
After
"Refinance"
US$m
%
0
0.0%
1,102
52.1%
0
0.0%
14.9%
315
698
33.0%
2,116
2,116
41
Desalination
Jaideep Sandhu
42
Introduction
•
Removal of salts from seawater
~ suitable for human consumption, agriculture or industrial
use
•
Desalination Processes
~ Thermal Distillation Processes
- Multi Stage Flash (MSF)
- Multi Effect Distillation (MED)
~ Membrane Processes
- Reverse Osmosis
- Electro Dialysis
~ Hybrid Plant (Thermal with RO)
43
IPR Middle East Desalination portfolio
Shuweihat S1 IWPP
MSF (Fisia)
Umm Al Nar
MSF & MED (Fisia, IHI, Sidem,
Doosan, Hitachi Zosen)*
2006
2008
100
100
181.5
95
-
60
Ras Laffan Facility B
MSF (Doosan)
Al Hidd, Bahrain
MSF & MED (Fisia, Sidem)
Total Desalination capacity
Potential opportunity:
Abu Dhabi Reverse Osmosis Plant
30
90
311.5
345
52.5 Assume
construction
44
Typical Power/Water Revenue Split
•
Dependant on power and water capacities and load factors
•
Power/Water capacity ratio of 15:1 (1,500 MW/100 MIGD)
~ e.g. Shuweihat, water contributes around 40% of the revenue
and profit
•
Power/Water capacity ratio of 5:1 (1,000 MW/100 MIGD)
~ e.g. UAN, water contributes around 68% of the revenue and
profit
45
Multi Stage Flash Technology - 1
Vacuum
Seawater
Brine
Vapour
Vapour
Steam
Power
Condensing
Desalinated
Water
Vapour &
Brine Droplets
Vapour &
Brine Droplets
Brine
recirculation
Reject
Brine
46
Multi Stage Flash Technology - 2
•
Well proven track record
•
Large capacity units
•
Low O&M cost
•
High quality product water
•
Used in IWPPs where
adequate steam and power
is available
•
Technology - Doosan,
Hitachi Zosen,
HHI/Sasakura and Fisia
47
Multi Effect Distillation Technology - 1
Seawater
2nd
Vapour
Effect
Vacuum
1St
Effect
Vapour
Steam
Condenser
Condensate
Desalinated
Water
Desalinated
Water
Reject Brine
48
Multi Effect Distillation Technology - 2
•
Well proven track record
•
Mid-size units
•
Low O&M cost
•
High quality product water
•
Used in IWPPs where
adequate steam is available
but may be some constraints
on power
•
Technology - Sidem, Weir
Techna, IDE and Doosan
49
Reverse Osmosis Process - 1
Chemicals
Chemicals
Desalination
Water
Potable
Water
Post
treatment system
Membrane
Racks
High
pressure Pre treatment
pump
system
Reject Brine
50
Reverse Osmosis Process - 2
•
Preferred option for stand
alone water plants
•
Low capacity units
•
Easy O&M
•
Lower installation cost
•
Higher O&M Cost
•
Standardisation of
membranes
51
Integrated Power and Water Plant
Combined Power and Water Plant
Air
Gas
/Oil
HRSGs
Steam Turbines
G
G
Gas Turbines
Brine Return
MSF/MED
distillers
S/W Intake
52
Growth potential
•
Driven by increasing scarcity of fresh water resources coupled
with increases in population, urbanisation, and industrial
development
•
In parts of the region and around the world, development of
desalination plants essential for survival
•
Currently 75% of Global Desalination capacity in 10 countries,
mainly focussed in Saudi Arabia 17.5%, UAE 16.5%, USA
16%, Kuwait 6.5%
•
The efficient Integrated Power and Water Projects becoming a
standard in the Middle East IPP process
~ sets a good precedent for development elsewhere
53
Middle East IWPP Desalination markets
M IGD
2500
Anticipated Integrated Power
and Water Plant Investment
2005
2015
2000
1500
Abu Dhabi
Oman
Qatar
Saudi Arabia
Bahrain
1000
500
$4 bn
$2 bn
$3 bn
$12 bn
$2 bn
0
Abu
Dhabi
Oman
Qatar Bahrain Saudi
Arabia
54
Oman
Tom Mackay & Kevin Cox
55
Macro environment
•
Ruled by Sultan Qaboos since
1970
GDP growth rate (1)
(3)
•
GDP in 2004: US $24.4 billion
•
Currency: Omani Rial pegged to
US$
•
Codified legal system, existing
alongside a Sha’ria system
•
Oil dominated economy - proven
reserves of 5.5bbl
•
Recent diversification utilising gas
Credit rating
Inflation
3.3%
BBB+
(2)
1.6%
Population growth(2)
2.5%
(1) DOE/EIA database 2005
(2) MEED Dec 2005
(3)
S&P
56
Market structure
•
Electricity and Water Sector deregulated in 2003
~ separation of generation, transmission and distribution/supply
•
Independent Regulator overseas power and water sector
•
Transmission Company (Transco) dispatches plant based on
economic merit order and system requirements
•
Government owned Power and Water Procurer (PWP) is sole
purchaser of power and water - then onsells to Distribution
companies
•
Government owned Electricity Holding Company (EHC) - holds
shares in 100% government owned companies pending
privatisation
57
Power and Water Sector
•
•
Peak demand 2,500 MW in
2005 growing at 6% in both
power and water
Facility
(2004 figures)
Fuel Power Water
Type MW MIGD Owner
Ghubrah
Gas/Oil
527
42
EHC
Market shares :
Rusayl
Gas/Oil
688
0
EHC
Wadi Al Jizzi
Gas/Oil
334
Al Manah
Gas/Oil
280
Al Kamil
Gas/Oil
285
Barka 1
Gas/Oil
427
20
AES
Sohar (in construction)Gas/Oil
585
33
Suez Energy
Salalah
200
0
3,326
95
Other smaller
investments
24%
46%
Dhofar 6%
5%
IPR
13%
Suez Energy
6%
AES
Electricity
Holding
Company
Total
Gas/Oil
EHC
0
Suez Energy
IPR
PSEG
PWP estimates 2004
58
Al Kamil asset overview
Location: Sharquiya region
Gross capacity: 285 MW OCGT
UAE
Al Kamil
Fuel: Gas with oil back-up
Employees: 30 plant and 7 Muscat
office
Saudi
Arabia
Oman
Configuration: Dual fuel plant using GE
frame 9E turbines (3 units)
Operational: Q4 2002
59
Al Kamil commercial overview
•
Publicly listed on Muscat Securities Exchange
•
IPR own 65%, balance held by local shareholders
•
15 year PPA and GSA expiring April 2017
~ backed by Oman Government
guarantees
•
PPA is US$ and PPI linked with
capacity payments based on
availability
•
Original investment of $133m,
funded 80/20 debt/equity
•
O&M subcontracted to an IPR
60
Al Kamil performance
•
Commercial availability of 99.9%
•
No lost time accidents
•
Excellent maintenance and inspection record with 3
inspections carried out on time and within budget
•
Fully compliant with all environmental requirements
•
Successful in exceeding Omanisation targets with 45%
Omani staff
•
Excellent relations with all relevant Governmental agencies
61
Al Kamil creating value
Operation
• Maintenance of high availability and control of direct costs
Financing
• IPO in August 2004 of 35% of equity at 1.7x par value
• Renegotiated Senior Debt in November 2005, extending maturity,
lowering margins and back-ending repayment profile
Medium term
• Expansion of plant as local load grows
• Extension of PPA or exploitation of merchant tail
• Use of non-OEM parts or renegotiation of LTSA terms
• Further potential for future refinancing
62
Future prospects / outlook
•
Regional and international finance available for Omani Power
deals
•
New project opportunities:
~ 685 MW Rusayl / 550-700 MW, 30 MIGD Barka II IWPP, bid
due 27th March 2006
~ future privatisation of Ghubrah (527 MW and 42 MGD) and
Wadi Al Jizzi (334 MW)
~ expansion of Al Kamil
~ standalone IWP programme in Oman
63
Summary
•
Economically and politically stable
•
Committed to privatisation programme
•
Well structured, low risk business at Al Kamil
•
Excellent technical and commercial performance
•
Real potential to enhance returns of existing business and
add additional projects
64
Abu Dhabi
David Barlow & Ed Metcalfe
65
Macro environment
•
•
UAE - federation of 7 Emirates
~ political power Abu Dhabi
GDP in 2004: $103bn
GDP growth rate (1)
(2)
Credit rating
Inflation
•
Currency: UAE Dirham pegged to US$
•
Oil: 98 bbls proven reserves
(3)
~ 8% of proven world reserves
A1
(1)
3.4%
Population growth(1)
•
Gas - 212 TCF proven reserves
- 5th largest in world(3)
•
Codified legal system
~ existing alongside a Sha’ria system
6.4%
6.0%
(1) Source: MEED, 2004
(2) Moody’s, Dec 2004
(3) Oil & Gas Journal, 2005
66
Abu Dhabi Power & Water Sector
•
Abu Dhabi Water & Electricity Authority (ADWEA)
•
Regulation & Supervision Bureau
•
Abu Dhabi Water & Electricity Company (ADWEC)
~ single procurer and seller of electricity and water
•
Abu Dhabi Transmission Company
~ transmission of both power and water
•
Abu Dhabi Distribution Company and Al Ain Distribution Company
•
Generation of IWPPs and ADWEA owned Companies
67
Abu Dhabi IWPPs
•
Middle East’s most successful privatization programme
~ six projects ~ in excess of US$ 5 billion invested
•
Contractual structure
~ 60% government ownership guarantees stability and fair
treatment for the project company
•
Long-term off-take arrangements backed by
~ robust demand growth for power and water
~ significant oil reserves and a strong economy
68
Demand growth
Abu Dhabi Power Demand Forecast 2005-2015
Abu Dhabi Power Demand 1993 - 2004
8000
12000
7000
10000
Power, MW
Power, MW
6000
5000
4000
3000
8000
6000
4000
2000
2000
1000
0
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Installed Power Capacity
2005 2006 2007 2008 2009
2010 2011 2012 2013 2014 2015
Year
Year
Peak Power Demand
Installed Power Capacity
Required Power Capacity
69
Demand growth
Abu Dhabi Water Demand Forecast 2005 - 2015
600
900
500
800
700
400
600
Water, MIGD
Water, MIGD
Abu Dhabi Water Demand 1993 - 2004
300
200
500
400
300
200
100
100
0
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Water Capacity
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Year
Water Demand
Installed Water Capacity
Required Water Capacity
70
Umm Al Nar asset overview
Location: Emirate of Abu Dhabi
Net capacity: Present 873 MW,
162 MIGD: Final 1,550 MW, 95
MIGD
Fuel: Gas (CCGT)/desalination
Employees: Present 500: Final 160
UAE
Configuration (final): 5 GE 9FA gas
turbines; 2 x295 MW Toshiba steam
turbines; 2x12.5 MIGD Hitachi
Zosen, 5x12.5 MIGD Doosan MSF,
2x3.5 MIGD Sidem MED
Saudi
Arabia
Umm
Al Nar
Oman
71
Umm Al Nar
72
Umm Al Nar commercial overview
•
IPR 20%, ADWEA 60%, TEPCO 14%, Mitsui 6%
•
23 year PWPA with ADWEC
•
$2.1 billion investment (80% debt and 20% equity)
•
Financing - $1,100m 20yr loan, $230m 5yr loan, $440m
equity bridge facility: balance from existing plant revenues
•
O&M ownership - 70% IPR and 30% TEPCO
73
Arabian Power Company;
$2.1 billion project
•
Purchase and operation of current Umm Al Nar, Old Existing
Assets and New Existing Assets
•
Construction of Umm Al Nar New Plant Extension and
integration with New Existing Assets
•
Closure of old existing assets in 2008
74
Old Existing Assets
•
Capacity payments - generous availability targets
•
UAN East Station (commissioned in 1979-84);
~ 4 Gas Turbines, total 250 MW
~ 6 MSF Desalination units, total 41.7 MIGD
•
UAN West Station (commissioned in 1981-86) consists of;
~ 10 Steam Turbines, total 790 MW
~ 10 MSF Desalination units, total 53.2 MIGD
•
Decommissioned 2008
75
New Existing Assets
•
UAN West B Station (commissioned in 2002/3);
~ 5 x 12.5 MIGD Desalination plant (MSF)
~ 2 x 3.5 MIGD Desalination plant (MED)
76
UAN New Plant Extension
•
Net capacity
~ 1,500 MW Power
~ 25 MIGD Water
~ Integration of New Existing Assets
•
Full commercial operation 2006
77
Contractor for UAN Plant Extension
•
Mitsui single EPC Contractor
•
Toshiba power plant (Toshiba main sub-contractor)
•
Hitachi Zosen Desalination Plant
•
TM T&D 400kV switchyard
•
COD expected Q3 2006
78
O&M Agreement
•
IPR/TEPCO experienced management team
•
Existing highly skilled staff
•
IT infrastructure implemented to IPR standards
•
Environmental standard ISO 14001
•
12 year Contractual Service Agreement with GE
79
Shuweihat asset overview
Location: Emirate of Abu Dhabi
Gross Capacity: 1,500 MW, 100
MIGD
Fuel: Gas (CCGT)/desalination
Employees: 130 staff
Configuration:
5 x Siemens V94.3A2 Gas Turbines
2 Siemens steam turbines
6 x 16.7 MIGD Fisia Italimpianti
desalination units
UAE
Shuweihat
Saudi
Arabia
Oman
80
Shuweihat
81
Shuweihat commercial overview
•
IPR 20%, CMS 20%, ADWEA 60%
•
20 year PWPA with ADWEC
•
$1.6 billion investment - 80% debt and 20% equity
•
Financed $950m 20 yr commercial tranche, $250m 20 yr
Islamic tranche, $350m equity bridge loan
•
O&M IPR/CMS JV (50:50 ownership)
82
Abu Dhabi - new projects
ADWEA Planned Projects
•
52.5 MIGD reverse osmosis desalination plant
~ IPR and Mitsui in discussion with ADWEA
•
1,500 MW, 100 MIGD Shuweihat S2 IWPP
Potential Projects
•
New Abu Dhabi Island developments
~ potential demand of 4,000 - 7,000 MW
•
IWPP to supply Aluminium smelter - up to 2,000 MW
•
Fujairah F2 IWPP 1,000 MW + 70 MIGD
83
Saudi Arabia
David Barlow, Jeff Wright
& Steve Pedrick
84
Macro environment
•
Saudi ruled by the Al-Saud
family
(1)
GDP growth rate (1)
•
GDP $251bn
Inflation
•
Oil dominated economy: 262
(3)
bbls oil reserves, 25% of
proven world total (3)
•
Gas reserves: 235 TCF
proven, world’s 4th largest
(2)
Credit rating
5.3%
A/Baa2
(1)
0.2%
Population growth(1)
(1)
2.7%
Source: MEED, 2004
(2) S&P / Moody’s
(3)
Oil & Gas Journal, 2005
85
Power and water industry
•
Ministry of Water and Electricity
•
Saudi Electricity and Cogeneration Regulatory Authority
•
Saudi Electricity Company
~ existing power generation, transmission and distribution
~ responsible for new build IPPs
•
Saline Water Conversion Company
~ existing desalination capacity
•
Water & Electricity Company
~ jointly owned by SEC and SWCC
~ responsible for new build IWPPs
86
Power and water industry
•
Country installed capacity (2001, MWE figures)
~ diesel fuel: 450 MW
~ gas fuel: 15,500 MW
~ oil (HFO/crude): 10,000 MW
~ 1,470 MIGD
•
Demand growth
~ 6% forecast growth rate for power, 8% forecast for water
~ peak demand 24.5 GW in 2001, installed capacity 26 GW
~ growth from population increase and industrial
diversification
87
Tihama Power asset overview
Location: Eastern Province
Gross capacity: 4 plants under
construction, total capacity 1,085
MW, 4,400,000 lbs/hr steam
Fuel: Gas (Cogen) supplied FOC
by Saudi Aramco
Employees: 140 total
Configuration:
Tihama
Saudi
Arabia
UAE
Oman
3 sites each: 2 x GE 7FA
1 site: 2 x GE 7EA
88
Tihama Power commercial overview
•
Owner / operator structure 60% IPR, 40% Saudi Oger
•
20 year ECAs with Saudi Aramco
•
$612m investment (80% debt and 20% equity)
•
Lenders
~ Bank Saudi Fransi
~ Samba
~ Arab Bank
~ Riyadh Bank
~ International Banks
89
Saudi Aramco
Saudi Oger
•
The client, off-taker and fuel
supplier
•
•
Owned 100% by Saudi
Government
Established in 1978 Saudi
Oger is an international
construction company based
in Saudi Arabia
•
Number of employees 52,500
•
•
World’s leading producer and
exporter of oil
~ circa 3 billion barrels per
annum
Background in construction
but business diversification
strategy into power and
telecoms well underway
•
Turnover $1.8 billion per
annum
•
World’s top exporter of natural gas • Number of employees
liquids
26,000
90
Saudi Aramco 3rd party cogen program
Project contractual structure
Sponsors
International Power 60%
General
Electric
Saudi Oger 40%
Contractual
Services Agreement
Sub-Contract
Packages
Civil
Mechanical
HHI
Main
Contractor
EPC Contract
Mitsui
Tihama
Facility
Agreement
Electrical
C&I
Fire Protection
Shareholder’s
Agreement
Usufruct Agreements
Energy Conversion
Agreements
Saudi
Aramco
Ancillary Services
Agreements
Banque Saudi Fransi
SAMBA
Arab Bank
Banks
Owner’s Engineer PB
Power
Riyadh Bank
Saudi Hollandi
Etc.
91
Tihama Power O&M arrangements
•
IPR / Saudi Oger Management
•
Experienced staff recruited from Middle East and Asia
•
Extensive staff training
•
IT infrastructure and systems implemented to IPR standards
•
20 year technical services agreement with IPR
•
12 year contractual services agreement with General Electric
92
Uthmaniyah - GE 7FA
93
Shedgum - GE 7FA
94
Ras Tanura - GE7EA
95
Ju’aymah - GE 7FA
96
Tihama Power Generation Company Ltd.
Saudi Aramco 3rd Party Cogeneration Project
NTP
Feb 26 2004
Q2 04 Uthmaniyah 311 MWe Gross
Q1 06
21 months
Q3 04
Shedgum 311 MWe Gross
Q2 06
22 months
Q4 04
Ras Tanura 152 MWe Gross
Q3 06
22 months
Q1 05
Ju’aymah 312 MWe Gross
Q4 06
22 months
97
IWPP structure
98
IWPP and IPP programme
Project
Sponsor
Power
Water
Shoaiba(1)
WEC
900 MW
195 MIGD
Shuqaiq(2)
WEC
700 MW
24 MIGD
Ras Al Zour
WEC
2,500 MW
176 MIGD
Al Jubail
WEC
1,100 MW
75 MIGD
Muzahimiyah
SEC
1,725 MW
Rabigh II
SEC
2,400 MW
Qurayyah II
SEC
3,600 MW
Subukh
SEC
1,725 MW
Yanbu II
SEC
2,400 MW
150 MIGD
Shuqaiq III
SEC
600 MW
23 MIGD
Riyadh PP10 (extn)
SEC
1,725 MW
(1)
Closed Dec 2005(2)
150 MIGD
Ras Al Zour
Qurayyah II
Yanbu II
Subukh
Rabigh II
Muzahimiyah
Shoaiba
Al Jubail
Riyadh
PP10
Saudi
Shuqaiq III Arabia
Shuqaiq
UAE
Oman
Launched Dec 2005
99
Saudi Arabia - other opportunities
•
Marafiq
~ 2,500 MW + 176 MIGD at Jubail (bids due in April 2006)
~ 600 MW Yanbu
•
Aramco
~ possible expansion of existing Tihama assets
~ other cogeneration opportunities
•
Ma’aden
~ IWPP supply for Aluminium smelter, mining extraction projects
•
Saline Water Conversion Company
~ new build desalination driven projects
•
Privatisation of existing SEC and SWCC assets
100
Qatar
Tom Mackay
101
Macro environment
•
Country ruled by the Al-Thani family
following independence from UK
protectorate in 1971
GDP growth rate (1)
•
GDP in 2004: US $28.4 billion
Inflation
•
(2)
Currency: Qatari Rial pegged to US$ Population growth
•
(3)
Credit rating
Codified legal system alongside a
Sha’ria system
•
Oil related economy: 15.2 bbls reserves
•
Gas dominated economy: proven reserves of
910 TCF - 3rd largest proven reserves in the
world
(2)
7.0%
A+
4.7%
2.6%
(1) DOE/EIA 2005
(2) MEED, 2005
(3) S&P
102
Installed capacity
Power Water
MW
MIGD
970
55
Owner
Gas
609
33
QEWC
Gas
376.5
0
QEWC
RAF B2
Gas
567
29
QEWC
Gas
756
40
AES/QEWC/
QP/GIC
Gas
1025
60
4304
217
QEWC/IPR/
Chubu Electric
Current market share is as
follows:
Facility
RAFASAT
•
QEWC at 76% Power
RAF B
•
IPR at 9.5 % Power
RAF B1
Fuel
Type
Gas
(1)
•
AES at 9.6% Power
Ras Laffan A
•
Other smaller
shareholders 4.9% Power
Ras Laffan B
(1)
Total
QEWC
2005 figures from Kahramaa
Under Construction
(1)
103
Power and water sector
•
Installed capacity of some 2,712 MW and 128 MIGD
~ additional 1,592 MW and 89 MIGD under construction
•
Qatar Electricity & Water Company (QEWC) historically
developed all power generation and water projects
•
KAHRAMAA sole purchaser and distributor of all power and
water in country
•
Electricity/water demand has growth historically 6-8% per
annum
104
Attractiveness
•
Projected demand for Electricity and Water in 2006 and 2007
is over 20% and 10% respectively
•
Major Industrial developments in Ras Laffan and Mesaieed in
the Petro-chemical, LNG expansions and Aluminium Smelter
•
New developments worth US$10 billion plus in 2005
~ fuelling new expansion in the electricity and water sector
•
Two IWPP’s in Qatar
~ Ras Laffan A (AES +EMP) 750 MW, 40 MIGD
~ Q Power (QEWC/IPR/Chubu Electric) 1,025 MW, 60
MIGD
105
Ras Laffan B asset overview
Location: Ras Laffan Industrial
City
Gross Capacity: 1,025 MW,
60 MIGD
Fuel: Gas(CCGT)/Desalination
Employees: 86 - 6 IPR, 4 QEWC,
2 Chubu, and during construction
around 4,000
Configuration: V94.3 Siemens
Gas Turbines and 15 MIGD
Doosan Desalination Units
Operational from: 2006
Ras
Laffan B
Qatar
UAE
Saudi
Arabia
UAE
Oman
106
Ras Laffan B commercial overview
•
Q Power (the project company) is owned 55% by Qatar Electricity
& Water company, 40% by IPR and 5% by Chubu Electric
•
Power and water capacity and output sold to KAHRAMAA (stateowned single buyer of power and water)
~ under 25 year “BOOT” Power and Water Purchase Agreement
•
Plant scheduled to enter commercial operation in three phases
between 2006 - 2008
•
$900 investment - 80% debt and 20% equity
•
Long Term LTSA signed with Siemens for Gas Turbine
Maintenance
107
Ras Laffan B construction progress
•
All three Siemens Gas Turbines are on site and are being
installed.
•
220kV switchgear for all gas turbines completed
•
First Doosan Desalination Unit installed and work is
progressing well on its associated pumps and pipe work
•
First HRSG with its associated equipment being erected
•
Progress on connecting to the Seawater intake and outfall
pipework in advanced stage of completion
108
Ras Laffan B
109
Ras Laffan B
110
Ras Laffan B
111
Potential future projects
•
Mesaieed
~ 2,000 MW, 40 MIGD currently in development
~ bids to be in by 15 March 2006
•
Dukhan 1 & 2
~ 3,000 MW, 60 MIGD
•
Availability of regional and international finance
~ eg Ras Gas LNG train 2 needed US $1.5 billion
received US$3 billion in offers
112
Bahrain
John Hurst
113
Macro environment
•
Political
~ stable, liberal, and the most
democratic of the Gulf States
GDP growth rate
Inflation
4.9%
•
Currency pegged to the US$
Population growth
1.5%
•
Legal structure very similar to that
of the UAE
(1)
Credit rating
7%
A-
(1)
S&P
114
Power and Water industry
•
Regulatory framework
~ transmission and distribution is solely Government-owned
~ MEW is the sole offtaker for power and water backed by
Government of Bahrain Guarantee
•
International Power and Suez Energy key players in the
market
•
Demand growth 8% power, 10% water
•
Installed capacity ~2,000 MW (excluding Alba aluminum
smelter)
115
Al Hidd asset overview
Location: Manama
Gross Capacity: 910 MW and
30 MIGD, 60 MIGD under
construction
Al Hidd
Bahrain
Qatar
Fuel: Natural gas
Employees: 2 IPR, 1 Suez, 1
Sumitomo, 198 Seconded from
MEW
Configuration:
Phase I - 2 x 13E2 + 30 MIGD
water Phase II - 3 x 13E2
UAE
Saudi
Arabia
UAE
Oman
116
Al Hidd
117
Al Hidd commercial overview
•
Hidd Power Company : IPR 40%, Suez 30%, Sumitomo 30%
•
22-year PWPA with Ministry of Electricity and Water; 22-year
NGSA with Bahrain Petroleum Company (BAPCO)
•
$1.25 billion investment - 85% debt, 15% equity
•
Lenders - JBIC, 6 MLAs led by Royal Bank of Scotland
•
Combined Owner/O&M structure
118
Prospects / outlook
•
IPR consortium has been operating Hidd plant from 23 Jan
2006
•
Financial close expected in July 2006
~ payment of purchase price in July
•
Immediate earnings
•
MEW / MOF are both pragmatic and fair clients
•
2,000 MW IPP to be released by Government of Bahrain
shortly
119
Summary
Ranald Spiers
120
Middle East Regional IWPP markets
Country
Capacity
New capacity
2004 required by 2014
Demand growth %
(per year)
UAE
8,000 MW
8,000 MW
7%
Oman
3,000 MW
2,000 MW
6%
Saudi Arabia 26,000 MW
30,000 MW
8%
Qatar
2,700 MW
5,000 MW
9%
Bahrain
2,000 MW
2,000 MW
8%
Kuwait
4,000 MW
5,000 MW
6%
121
Middle East Region - growth in IPP projects
1994 - 2000
Al Manah, Salalah, Al Kamil, Barka (Oman)
Taweelah A2, Taweelah A1 (UAE)
TOTAL PROJECT COSTS: $3bn
2001 - 2004
SADAF (Saudi Arabia); Shuweihat, Umm Al Nar (UAE);
Ras Laffan A (Qatar); Sohar (Oman); Al Ezzel (Bahrain)
TOTAL PROJECT COSTS: $6bn
2005 - 2008
Taweelah B, Taweelah RO, Fujairah, Shuweihat S2 (UAE);
Ras Laffan B, Mesaieed, (Qatar), Barka 2, Ghubrah, Rusayl
(Oman); Shoaiba, MARAFIQ , Rabigh, Shuqaiq, Raz Al Zhor
(SaudiArabia) + ?
TOTAL PROJECT COSTS: $15bn+
122
Middle East Region - short term prospects
UAE
• Shuweihat S2 new build
1,500 MW +100 MIGD
• Fujairah F2 1000MW + 70 MIGD
• New Abu Dhabi island development
4,000 MW - 7,000 MW
Oman
• Barka 2 new build 700 MW +
30 MIGD
• Rusayl 685 MW existing
• Ghubrah sale of existing 527 MW
+ 42 MIGD
• Wadi Al Jizzi 334 MW
Bahrain
• 2,000 MW IPP
Qatar
• Mesaieed 2,000 MW, 40 MIGD
• Dukhan 1&2 3,000 MW, 60
MIGD
Saudi Arabia
• Shuqaiq 700 MW, 70 MIGD
• Marafiq 2,500 MW, 176 MIGD
• Ras Al Zour 2,500 MW, 175
MIGD
123
Desalination - growth potential
MIGD
•
•
Scope for further
desalination
projects in the
Middle East
Operating
desalination plants
- a key skill for IPR
2500
2000
2005
2015
1500
Abu Dhabi
Oman
Qatar
Saudi Arabia
Bahrain
1000
500
•
Ability to capitalise
on the ME
experience
elsewhere
(Australia, USA)
Anticipated integrated power
and water plant investment
$4 bn
$2 bn
$3 bn
$12 bn
$2 bn
0
Abu Oman Qatar Bahrain Saudi
Dhabi
Arabia
124
Strategic focus
•
Extract maximum value from current projects
•
Maintain geographic focus on Gulf States and Saudi Arabia
•
Seek selective opportunities in North Africa (Morocco/Egypt
etc) markets with similar commercial and risk profile
•
Target to win one project each year over the next four/five
years
125
Success factors
•
Best-in-class operation
~ assets performing in accordance with contracts
•
World class project finance capabilities
•
High quality people to implement and run new projects
•
Excellent reputation
~ delivered assets on time and within budget
•
Robust relationships with key clients, partners and
contractors
126