Oil Market
Oil prices eased in June from record highs seen in May,though prices remained in a relatively high range.Kuwait Export Crude (KEC) averaged $ 33.1 per barrel during the month, down by more than one dollar from the May average. The trigger for a lower price was the June 3 OPEC meeting in Beirut, where producers agreed to increase their production quotas and ease a perceived shortage of supply in the market. After peaking on the eve of the meeting, oil prices lost about $ 3.0 immediately following the meeting and continued to trend lower throughout the month, as the market adjusted to expectations of higher output in the weeks ahead.
The decline in prices was tempered by ongoing tensions in Iraq, Nigeria and Russia, as markets continued to factor the risk of supply disruptions into prices. Furthermore, despite OPEC’s pledge to raise output levels,the additional crude would take weeks to arrive to consumers, leaving the market with little respite from tight supplies in the US during the summer driving season. As a result, market expectations for prices continue to shift upwards. Prices have gone up to $ 43 per barrel and expectations may see $ 50 per barrel this winter..
Growth in global oil demand reaches record highs
The real force behind strong prices is the strong growth in global oil demand, which caught producers and markets by surprise. Demand growth, driven mainly by economic recovery in the US and surging demand in China and the far east in general, is now expected to top 2.9% in 2004, as forecast by the Center for Global Energy Studies (CGES) and the International Energy agency (IEA), the most rapid seen in years. This follows relatively strong growth the previous year and comes at a time when oil inventories have been maintained at historic lows.
At the Organization’s meeting in June, OPEC Members decided to increase their production quotas by 2 million barrels per day (mbd) beginning in July, pushing their official ceiling to 25.5 mbd. The increase will be followed by an additional 0.5 mbd hike in August. The agreement raises Kuwait’s production quota to 2.046 mbd in July and to 2.087 mbd in August, up from 1.886mbd. Producers also agreed to meet again in to review production targets in light of market developments.
Dorsch/SSH wins Kuwait International Airport Consultancy
A team of Germany’s Dorsch Consult and the local company Salem Al-Marzouk & Sabah Abi-Hanna (SSH) signed in late June the contract to update a master plan and feasibility study for the upgrade and expansion of Kuwait International Airport (KIA). NACO of the Netherlands, which was also one of a number of bidders for the consultancy contract, drew up the original master plan. The Directorate of Civil Aviation is the Client.
The nine-month Contract covers an upgrade of the existing terminal and the construction of a second terminal, which is planned to be implemented on a Build-Operate-Transfer (BOT) basis. The size of the second terminal has still to be determined. The existing runway’s capacity allows for a new terminal of up to 15 million passengers a year. KIA has capacity to handle up to 5 million passengers a year.
Al-Zour North Power Station Pre-qualification announced
The Ministry of Energy (Electricity & Water) has invited companies to pre-qualify in August 2004 for the contract to build the proposed 2500 MW Al-Zour North Power Plant. The estimated $ 2,375 million project calls for the construction of a steam plant based on the installation of five turbines, each with a capacity of 500MW.
A full tender for the engineering, procurement and construction (EPC) package is expected by the Fourth Quarter of the year. The Ministry of Energy will require the pre-qualified bidders to form consortia for the turnkey supply of the plant. The schedule envisages the first unit being commissioned in 42 months. Final commissioning of the plant is expected by 2009.
The Pre-qualification document also states that the Ministry will issue tenders for the project’s Desalination element based on its existing list of pre-qualified contractors. They include Fisia Italimpianti (Italy),Doosan Heavy Industries (Korea), Weir Tecna (UK+),Sidem (France) and Hitachi Zosen (Japan). The
desalination element covers the installation of 100 million gallons a day (g/d) of multi-stage-flash (MSF) desalination capacity, comprising 10 units of 10 million g/d each. The Ministry also plans to issue a second tender for a 25 million g/d Reverse Osmosis Plant,which will lift the capacity at Al-Zour above 150 million g/d.
KUWAIT –A new Causeway Project
Weary drivers in rush hour Kuwait City are being offered light at the end of the tunnel by the Subiya Causeway project. The ambitious and costly scheme is designed both to ease congestion in the capityal and to facilitate development of a new town planned at Subiya,on the northern side of the Bay of Kuwait,
Journeys across the bay will be cut to 36 kilometers from 104 kilometers, with travel times correspondingly slashed. Instead of negotiating their way through the city, drivers will enjoy a smooth ride across a four-lane dual carriageway, with transit points to permit U-turns and restaurants along the route if refreshment is needed.
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