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Rail Plans Spur Middle East Development
By Jonathan Bygrave
When the world’s first railway opened in 1823 between Stockton and Darlington in northeast England, the 40-kilometer track took four years to build.
Compare that to today’s speed of construction; in the next 10 years, the Middle East will essentially become a rail metropolis. From South Sudan to Iraq, rail infrastructure projects are being conceived, designed, financed, tendered and commenced in record time.
Oman has announced a US$10 billion project to build a railway designed to work with the Gulf Cooperation Council regional network. The project will contain 130 flyovers, nine tunnels, 17 kilometers of viaducts and 35 kilometers of bridges.
Qatar has announced a QAR$30 billion (US$8.2 billion) investment in a new metro system for the capital city of Doha. The new project brings planned spending on rail infrastructure in Qatar alone to $US30 billion, with rail links into Saudi Arabia and Bahrain.
In the second half of this year, contracts are expected for more than 33,712 kilometers of mainline routes and 2,000 kilometers of monorail train lines in the region. That’s twice the total length of railway in the entire U.K., the grandfather of the modern railway.
The expansion provides opportunities for logistics providers, project operators, heavy-lift owners and operators alike, as tunneling machines, equipment, rails and power units will be imported.
If the recent past is anything to go by, the Koreans hold a good set of cards. The Arabian peninsula has become South Korea’s largest EPC market overseas.
Top 10 EPCs in the Middle East and North Africa region include Samsung Engineering, Hyundai Heavy Industries, Hyundai Engineering & Construction, and SK Engineering. A plethora of Korean logistics and support companies have sprung up to support this phenomenal growth. Korean EPCs are estimated to control – directly or indirectly – more than half the top 100 regional projects.
As of 2013, US$1.56 trillion in infrastructure development is either planned or underway, up 42 percent over last year. It is likely that more EPCs will enter the region and former heavyweights such as Kuwait Petroleum Co., Fluor, Bechtel and Foster Wheeler will re-emerge. This can only be good news for the project market and for owners and operators.
While the future appears bright, a stubborn cloud won’t immediately be blown away. The Arab Spring in countries neighboring the Gulf has done nothing but enhance the perception in the western world that the whole pan-Arab region suffers from an explosion of militant activity and a fluid political landscape.
The worst-case scenario is that the entire region plunges into turmoil, with each country mistrusting its neighbors and the hidden cold war between Saudi Arabia and Iran intensifying. In truth, this is unlikely to happen.
There is huge pressure on the economies of the United Arab Emirates, Saudi Arabia and Qatar in particular to continue rapid expansion in the traditional oil and gas sectors by developing new infrastructure specialized in producing value-added, refined products rather than just traditional crude oil.
As well, these countries are under pressure to invest in state-of-the-art heavy industry facilities. Particularly in the case of Saudi Arabia, the goal is to create employment for a burgeoning young population. This is a key difference from Egypt or Syria, for example, where the Arab Spring sprung from a dissatisfied youth with few job prospects.
The Center for Arab Unity Studies, a major Arab think tank, acknowledges that the next 10 years will be crucial to the future of the Middle East. It will be essential that the newly “industrialized” status of many nations is solidified. Economic necessity in the west and lessons learned in Libya and Iraq will help the region grow as an industrial and infrastructure development force.
Robert Stephenson, the inventor of “Stephenson’s Rocket,” the winner of the 1823 competition for the first passenger train, could never have envisaged the Middle East as it is today, much less how his invention holds the potential to unite, join and link countries and economies in a way that politics, religion and colonialism have failed to do.
Jonathan Bygraves is regional commercial manager at Kanoo Group – Shipping Division.
He is based in Dubai.