Tuesday, May 11, 2010

DUBAI (Zawya Dow Jones)--Union Railway, which plans an estimated $11-billion, 1,500-kilometer railway across the United Arab Emirates, will seek expressions of interest for the first phase of the project within the next two months, a top executive said Tuesday.

"We'll start the formal process for expressions of interest in the next two months," Union Railway's Chief Executive Officer Richard Bowker told reporters on the sidelines of a rail conference in Dubai.

The first phase of the project will be a 270-kilometer freight rail line linking Abu Dhabi's Shah sour gas field to Ruwais on the Persian Gulf coast.

ConocoPhillips (COP) and Abu Dhabi National Oil Co. signed a joint-venture agreement in July 2009 to develop the Shah sour gas field in Abu Dhabi but the U.S. oil major pulled out of the project last month.

Bowker declined to say what impact the pullout would have on the planned railway line but said Union Railway was "working closely with Adnoc."

Union Railway held an outreach session for companies interested in bidding for the first contract at the end of March, Bowker said, and expects to award the first enabling package by the end of the year.

"We're still finalizing the contract package, but it will be mostly design and build," he said.

The U.A.E-wide rail network will include a freight and passenger rail line extending from the emirate of Abu Dhabi's western region through Dubai, Sharjah, Umm Al Quwain, Fujairah, Ras Al Khaimah and Ajman.

Union Railway is also looking into the feasibility of building a high-speed passenger rail between Abu Dhabi and Dubai, Bowker said, but that "it isn't a priority at the moment."

Bowker said in March that he expects total project cost to be in the range of 30 billion U.A.E. dirhams ($8.2 billion) to AED40 billion. The entire project is expected to take seven to eight years to complete, he added.

Union Railway is looking at all financing options for the project, "from an equity and debt perspective, and also an export credit perspective," he said. "We're having exploratory discussions with all manner of financial institutions."

Union Railway is in talks with local industrial companies such as Abu Dhabi Gas Industries, or Gasco, Emirates Steel, petrochemical firm Borouge and Arkan Building Industries Co. to raise awareness about the project, Bowker said.

-By Stefania Bianchi, Dow Jones Newswires; +9714 446-1685; Stefania Bianchi@dowjones.com

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11-05-10 0817GMT