QATAR - Power Cuts & Water Shortage.

However, technical snags at power plants belonging to RLPC, Qatar Power Co (QPC) and Kahraba on May 30 left residents of Doha without power for several hours and highlighted a growing problem for the state as it sought to keep pace with its economic expansion. Demand for water in Qatar grew 16% in 2006 and in the first quarter of 2007, and this pattern shows no sign of slowing. Demand for power in the same period grew 17%. There is a water shortage.

To meet the challenge, Kahramaa has fast-tracked a number of projects and has prepared its 2007 budget with the aim of making a record investment in the sector. Over QR7.56 bn have been alloted to electricity infrastructure and another QR1.3 bn to water distribution and transmission.

One of the biggest 2007 projects has been launched: the power transmission system expansion's Phase-8. Phase-7 has cost about $1.5 bn. Current and future electricity projects foresee the need for up to 100 new substations and twice the number of existing cable circuits over the next four years.

Water demand to 2015 faces a massive rise. The current supply of about 150m g/d will rise to nearly 400m g/d by 2015. A Dutch consortium of Kema and Royal Haskoning is working on a master plan for the state's power and water sectors. In January 2008, the team will present a 30-year forecast for electricity and water demand. MEED on June 1 quoted Kema's Middle East director Jacco Jansen as saying: "The problem is planning for scenarios with enough accuracy and having to continuously adapt the forecasts because in reality no one really knows for certain what Qatar will need 30 years from now. Finding the historical data available from all the ministries and statistical bureaux is also a challenge". The plan will look into alternative energies such as solar and wind technology. Jansen said: "We are open to any feasible alternatives but there has to be a cost estimate".

Doha has little difficulty in attracting power developer teams for its major projects. The Ras Laffan C IWPP is a key element in Kahramaa's plan to more than triple its installed generating capacity by 2015, and has attracted up to four groups of developers. Yet at a time of booming real estate and infrastructure projects across the GCC, finding EPC contractors who are able to take on the work will be increasingly difficult, and much of the planned new capacity in Qatar is still reliant on the private sector to bring it on line. This IWPP will have the capacity of 2,600 MW and 55m g/d.

International Power, Marubeni, Suez and AES lead four consortia pre-qualified for the IWPP. HSBC has been appointed to assist in the assessment of bids and a technical adviser has been appointed. The winning consortium will take 40% in the company with the remainder likely to be split between QP and Kahraba. Unlike previous IWPPs in the region, the developer will not be responsible for the financing, as this will be put together by the local partners.

A 1,350 MW power plant is to be built for an aluminium smelter. This and the smelter venture, Qatalum, will be a 51/49 JV of QP and Hydro of Norway. The smelter's capacity will be 585,000 t/y in the first phase, which will be on stream in late 2009.

Power requirements at Ras Laffan will increase with new industrial projects coming on stream in the next few years. This is why RLEC has been doubling its capacity with the increase expected in 2007. Major clients will be downstream facilities at Ras Laffan for the rapidly expanding QatarGas and RasGas LNG ventures. The main QatarGas and RasGas partners are having a 146,000 b/d condensate refinery built at Ras Laffan as a joint venture (see DT No. 10).

The other big industrial centre in the emirate, at Messaid (formerly known as Umm Said), has been offering incentives to attract foreign investment. Expansion projects are being built there for Qatar Petrochemical Co. (QAPCO), Qatar Steel Co. (QASCO), Qatar Fertiliser Co. (QAFCO) and Qatar National Cement Co (QNCC). One plant at Messaid produces 660,000 t/y of methanol and 550,000 t/y of MTBE, run by the Qatar Fuel Additives Co. (QAFAC). A second QAFAC plant is being built.

Other projects in Qatar include a hot briquetted iron plant and GTL plants being built at Ras Laffan (with the first GTL venture already on stream this year), plus an expansion of the Messaid oil refinery. A new 10m square metre industrial centre is being set up west of Doha (see the petrochemicals sector in DT No. 11).

Qatar and the other five member-states of the Gulf Co-operation Council (GCC) are to link their power networks in a project which could result in savings of up to $3.5 bn per annum. A Riyadh-based GCC inter-connection body has been set up to link the six grids in three phases. The first phase is scheduled to come on line in 2008, with Qatar to receive up to 750 MW through the Doha South power station.

Each GCC state is given a load capacity option and an allocation to buy power. The central body will do the buying and selling on behalf of the six national networks and will handle the payments for them. It will charge a service fee, which will cover its operations, administrative, and capital costs. Saudi Arabia has a load option of 1,800 MW, compared with 1,200 MW for Kuwait, 900 MW for the UAE, 750 MW for Qatar, 600 MW for Bahrain and 400 MW for Oman. Potentially, the GCC grid will provide inter-connected states with the chance to improve the economic and operational efficiency of their local power systems, while strengthening supply reliability and security.

The Nuclear Option: After four successive years of rapid economic and population growth in the GCC region, the frantic battle by state-run utilities to ensure demand does not outpace supply has proved to be a great challenge. In late 2006, the six GCC states announced they would conduct a study into nuclear energy. Hans-Holger Rogner, head of planning and economic studies at the International Atomic Energy Agency (IAEA), says much of the surge in GCC interest is attributed to regional positioning - with Iran openly discussing its nuclear ambitions.

The IAEA is drawing up a preliminary report, which will take into account GCC demand for electricity and fresh water up to 2025. It will consider how an oil and gas downturn could affect the region, and where a nuclear capability would help the GCC state stand. As part of an initial study, the IAEA will look at the manpower, infrastructure and facilities needed to develop a nuclear programme, while also establishing a timeframe and legislative framework. The IAEA says implementation of a country's first nuclear power plant takes about 15 years on average, possibly reduced to 10 years if the case is urgent. After an average lifetime of about 60 years, plans for decommissioning and waste management must also be implemented.

The IAEA emphasises there is a strong economic argument for GCC states to consider nuclear power. Saudi Arabia only receives $5 or $10/b for its crude oil when used domestically, compared with $70-plus on the export market. Rogner explains: "You could say why bother in the short term, but it is to the [GCC's] credit that it is looking to the long term in a passion-free manner. It has come to understand that nuclear power is cheap to operate but expensive to build". (There are about 45 feasibility studies being considered worldwide, compared with just a handful five years ago).

Qatar is also trying to forge its own path, asking Japan for technical support to help it develop a nuclear programme in return for natural gas. During a visit to Qatar earlier this year, Japan's Prime Minister Shinzo Abe steered Doha in the direction of the IAEA, politely suggesting it look into nuclear fuel security and non-proliferation before introducing nuclear energy across the board.