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Viewing report
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Saudi Arabia Water Report Q4 2011
Business Monitor International, Sep 2011, Pages: 46
BMI View: Saudi Arabia has emerged as the world’s largest water desalination market, and is now on the radar of major international technology developers like Dow Chemical – which in Q3 announced plans to invest in a major reverse osmosis (RO) manufacturing facility in the kingdom. With a massive pipeline of large projects centred around independent water and power projects (IWPPs) – the bedrock of Saudi Arabia’s desalination drive – it now makes sense for suppliers like Dow to focus their investment activity on the kingdom. For water developers, Saudi Arabia will remain an active source of contracts over the next year, with a substantial slug of state funding made available to keystone infrastructure projects. Though major European players like Veolia and Suez remain active participants in what is a competitive marketplace, some of the more recent project awards have headed east to Korea – with Doosan Heavy Industries and Hanwha picking up some handsome contracts for multi-effect distillation (MED) desalination units in the kingdom.
Key themes to highlight for Saudi Arabia’s water sector:
- The steady stream of investment heading into the kingdom’s infrastructure sector will reap some major dividends in terms of water produced, helping to keep pace with a robust secular demand trend. By 2015, a 200,000 cubic metres (m3) increase in water desalination capacity is expected compared to the 2011 level of 1.206bn m3. That expansion is underpinned both by private sector appetite for Saudi projects and the government’s stated willingness to step in to support project activity.
- BMI expects the number of subscribers to increase 14.5% by 2015 to 1.09mn, by which time overall water consumption is set to reach 10.3bn m3.
- Despite a generally sclerotic financing market, some water-related structures will get progress. In July 2011, Bowarege (International Barges Company for Water Desalination) announced the closing of the SR140mn (US$37.3mn) refinancing of commercial facilities.
The growing maturity of Saudi Arabia’s desalination sector is supported by Dow Chemical’s decision to invest in a new manufacturing facility for RO elements in the kingdom, in July 2011. The proposed facility will deliver local technology supply security for water desalination and the reuse of potable, nonpotable and industrial water serving Saudi Arabia, the surrounding Middle East and North Africa (MENA) region and emerging markets worldwide.
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