Hoegh Lehovd

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/ 28 May 20151

Benefitting from The Middle East’s Drive to Diversify

Breakbulk Europe21 May 2015

Teresa LehovdHead of Market IntelligenceHöegh Autoliners



Key Topics

2

2Current status

3 Project pipeline

4 Risks and Way Forward

1 Why diversify?

1 2 3 4



The Scope

3

Non-oilsectors

SaudiArabia

UAE

Qatar

Kuwait

OmanBahrain

Morocco

Algeria

Egypt

1 2 3 4



The Region in a Nutshell

4

$73 000Gap between thehighest and lowest

GDP/Person (Gulf

countries)

$380 bn Amount Gulf stateshave lost in

revenue since oil

price fall

80 %Oil and Gas’ share

of the region’s

exports

100mExpected

population growth

between 2014 and

2050

53 %The (MENA)

region’s share of

known world oil

reserves

40 %Saudi Arabia’spopulation

below 15 years

1 2 3 4



Why Diversify?

Reduce oil-related risks

Ensuresustainable

post-oilgrowth

Create jobs

Prestige

5

1 2 3 4



Oil and Gas Dependency

6

Source: Economic Diversification in the GCC; Pascal Devaux

1 2 3 4



Areas of Comparative Advantage

7

Energy-

intensivemanufacturing

Mining and

mineral-basedindustries

Secondary

sectors

Trade and

logistics

Tourism,

hospitality andaviation

Petrochemicals

Downstreamconversion

industries

Plasticsandpackaging

Aluminium

Steel

Fertilizers

Cement

Downstreamindustries

related tometalsproduction

Polysilicon

Automotive

Paper

FoodAgricultureAgro-processing

Biotechnology

Pharmaceuticals

Telecom

Location

Low customsduties

Business-friendlyenvironment

Rapid port

development

Transshipmentservices / FTZ

Location /Climate

Attractive

hospitalityinfrastructure

Attractive globalevents

Expansion ofthe middle classin China, Indiaand Africa

1 2 3 4



Infrastructure: Key to Diversification

8

Catalysts

Transport

Power

Water

Consumergoods

Education

Healthcare

Sports andCulture

Financialservices

1 2 3 4



$1,37 tn Total Project Investment

1,000

224

105

40

0 200 400 600 800 1000 1200

Infrastructure

Oil & Gas

Petrochemicals

Mining & Mineral-based

Projects in Execution, Planned and Un-awardedInvestment $ bn

9

1 2 3 4



$40bn Mining and Mineral-Based Projects (1)

Country Project Status Value

($bn) Award Date

S. Arabia Jubail steel plant Study 2,5 2015

S. Arabia Rabigh steel plant Study 1,7 2015

S. Arabia Waad al-Shamal Phosphate City Feed 1,5 2015

S. Arabia Hail Integrated Steel Complex Study 1,5 2015

S. Arabia Copper and Zink Smelter Study 1,5 2015

S. Arabia Al-Jubail polysilicon plant Design 1,2 2015

S. Arabia Yanbu polysilicon and solar wafer plantMain

contract1,1 2014

S. ArabiaYanbu Integrated Smelter Complex (copper,lead, zink)

Study 1,0 2015

/ 28 May 201510

Projects over 1bn 1 2 3 4



$40bn Mining and Mineral-Based Projects (2)

Country Project Status Value ($bn) Award Date

UAE Abu Dhabi alumina refinery Study 1,5 2015

UAE Aluminium Rolling Mill Study 1,5 2015

UAE Abu Dhabi Steel Plant: phase 3 On hold 1,0 2015

Qatar Ras Laffan Polysilicon Plant Execution 1,0 2011

Oman Duqm cement plant Study 1,0 2015

Oman Sohar aluminium smelter expansion Study 2,4 2015

Oman Sohar iron ore pelletising plant: phase 2 Study 1,0 2015

Bahrain Sitra ammonia/urea plant expansion Prequalification 2,5 2016

Bahrain Alba – Aluminium smelter expansion Study 2,0 2015

Bahrain Hidd Steel Mill Execution 1,32 2010

Egypt Beni Suef factory Execution 1,2 2012

Algeria Bellara Integrated Steel Complex Study 3,2 2015

Algeria Tebessa phosphate plant Study 2,0 2016

Algeria Oued Keberit fertilizer plant Study 2,0 2016

/ 28 May 201511

Projects over 1bn 1 2 3 4



$105bn Key Petrochemical Projects

Country Project Status Value ($bn) Completion

S. Arabia Yanbu Oil-to-Chemicals plant Plan 30 2020

Sadara Chemical Complex (Jubail) Execution 20 2016

PetroRabigh phase 2 Execution 8,5 2016

Satorp phase 2 On hold 5 2019

Kemya elastomers Execution 3,4 2016

Ras Tanura expansion Main contract 3 2018

Sadaf polyurethane expansion Scrapped 3 2018

Qatar Al-Sejeel petrochemicals complex Shelved 7,4 2018

Al-Karaana Petrochemicals Complex Shelved 6,4 2018

Oman Duqm Petrochemical Complex On hold 9 2023

Liwa Plastics in Sohar Feed 3,6 2018

Egypt Tahrir Petrochemical plant Execution/Delays 5 2019

12

1 2 3 4



$ 1 tn Infrastructure Project Investment

0 50 100 150 200 250 300

Rail

Civil construction

Airports

Power & Water

Maritime Infrastructure

Highways/Bridges

Investment $bn

13

1 2 3 4



Saudi Arabia Dominates Current $400bn-worth ofMEGA Infrastructure Project Investment

14

1 Trillion

400 Bn

Project packages excl. Oil/Gas, Chemical and Industrial

Stages: Contracts awarded, in design, study or main contract pre-qualification or bidding

1 2 3 4

0 50 100 150 200

Morocco

Bahrain

Oman

Algeria

Kuwait

Qatar

UAE

Egypt

Saudi Arabia

Top infrastructure projects by country($bn)



Regional Transformation

• Rail: Booming!

• Metro networks in major cities

• First high-speed rail

• Regional rail network

• Construction

• New cities

• Millions of homes

• Healthcare & Education

• Event-driven construction

• Airports

• Airports in major cities

• Cargo hubs

• Maritime

• New ports and transhipmenthubs

• Re-export facilities

• Power & Water: World’s

most attractive market

• Nuclear, renewables

• Pan-Arab grid

• Desalination & Wastewater

• Highways & Bridges

• Expressways and causeways

• Regional network

15

1 2 3 4



Signature Infrastructure Projects (1)

SaudiArabia

• King Abdullah Economic City (93)• Nuclear power reactors (70)• Saudi Housing Project (68)• Sudair Industrial City (40)• Jizan Economic City (30)• Jeddah Economic City (30)

• Jeddah Int. Airport (28)• + 7 domestic airports• Riyadh metro (23)• Metro: Jeddah, Mecca, Dammam• Saudi Landbridge(7)• Haramain HS Rail (13,7) (Medina,

Mecca, Jeddah)• Riyadh – Dammam HS Rail (14)

UAE • Dubailand (147)• Mohammed bin Rashid City (55)• Al-Maktoum Int. Airport (32)• Jumeirah Village (9,2)• Dubai Lagoon (4,5)• Al-Furjan Development (4)

• Dubai Metro (14,4)• Emirates Roads Master Plan (12)• Etihad Railway Network (11)• Kizad Terminal (10)• Expo 2020 Masterplan (9)• Abu Dhabi Metro (7)

• Abu Dhabi Airport Expansion (6,8)• Mall of the World (6,8)

16

1 2 3 4Figures in brackets represent project value (BN USD)



Signature Infrastructure Projects (2)

Qatar • Lusail development (45)• Integrated Transport Project (incl.

Doha metro) (40)• Expressway program (20)• New Doha Int. Airport (15,5)• Local roads and drainage

program (14,6)• Education City (7,5)

• New Port Project (7,4)• Hamad Int. Airport (15,5)

Egypt • Massive energy projects• 1 million homes (40)

• The Ayaat City (24,2)• Cairo Airport City (14)• New Suez Canal (12)• Cairo Metro (12)• Alexandria –Aswan HS Rail (10)• Cairo monorail (1,5)

Oman • Duqm New Town (incl. Duqmport) (20)

• National Rail Network (15,6)• Muscat and Salalah Int. Airport

expansion (5,2)• Sohar, Duqm airports

Kuwait • Al-Khairan City (14)• Kuwait national railroad (10)• Mubarak al-Kabeer seaport (on

Bubiyan Island) (8)• Kuwait City Metro (7)• Kuwait Airport Expansion (6)• Bubiyan Island (6)

Bahrain • Light Rail Network (7,9)• Water Garden City (6,6)• Bahrain Int. Airport Upgrade (4,6)

Algeria • East-West Motorway (11,7)• Tramways (6)• Hassi Messaoud New City (6)

17

1 2 3 4Figures in brackets represent project value (BN USD)



Diversification: Key Success Factors

18

Political stability

Predictable and efficient governance

Stable oil price

Infrastructure

Social and cultural reforms

Education and skills

1 2 3 4



High Vulnerability to Oil Price Trends

90.7

53.3

107.5

73.3

116.4

77.6

111.5

40

50

60

70

80

90

100

110

120

Saudi Arabia Kuwait Oman UAE Bahrain Qatar Algeria

201020142015

19

Source: MEED

Budget Breakeven Oil Prices

USD 79Nov 2014

USD 109Jun 2014

USD/B

USD 63May 2015

OPEC

Basket Price

1 2 3 4



2,5

3,3

4,3

1,5

4,7

4,3

6,1

2,2

2,6

3,9

3,5 3,63,8

4,84,7

6,4

4,6 4,5

Algeria Bahrain Egypt* Kuwait Morocco Oman Qatar Saudi

Arabia

United Arab

Emirates

Real 2015 GDP Growth Forecast Comparison

May 2015 May 2014

Downgraded Growth Outlook

/ 28 May 201520

Source: IHS

% changey-y

* Estimate 1 2 3 4



Current Project Risk Assessment

21

Unchanged• Projects tied to major events (Qatar FIFA 2022, Dubai Expo 2020)

• Mega-projects related to economic diversification

• Infrastructure incl. transport (Power, Water, Rail, Ports, Airports)

• Social infrastructure (housing, hospitals, education)

• Renewables (North Africa)

Downsized, Delayed or Cancelled

• Refining and petrochemical (Qatar, Oman)

• Projects not strategically important, or in early planning phases• Commercial / Retail construction

• High-end real estate projects

• Renewables (S. Arabia, Abu Dhabi)

1 2 3 4



Project Risks by Country(Relative Terms)

/ 28 May 201522

• Qatar• UAE (excl. Abu Dhabi)• Egypt• Morocco• Saudi Arabia

ModerateRisk

• Bahrain• Oman

• Abu Dhabi• Kuwait• Algeria

High Risk

1 2 3 4



Improved Resilience, but Still Long Way to Go

/ 28 May 201523

1 2 3 4

Short term

• Strong currency

reserves• Sovereign wealth funds• Petrodollar assests• Improved investment

portfolio• Non-oil sectors• Lower construction and

material costs• Focus on Asia

Longer term

• Turn to private and

Islamic financing• Sell strategic assets• Remove government

subsidies and transfers• Introduce taxes

(income, property, VAT)

• Further reduce projectspending

• Deep structural andsocial reforms



Conclusions

24

1 2 3 4

•

Internal and external mega-forces put an increasing pressureon the Region to invest in economic diversification

• Low oil price is now testing the region’s strategies showingthat «Real» diversification will require more deep-cutting

reforms

• Prospects for the project cargo market remain good for now

• But re-calibration or scaling back of ambition levels has

begun, and will accelerate if oil price stays low for long• Has the Region done «Too little, too late»?



hank you for your attention

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Hoegh Lehovd