Vinci waits on $4.5bn Bahrain, Qatar bridge deal

Vinci, the world’s largest builder, said it hasn’t managed to agree a final contract for a $4.5bn project to build the world’s longest bridge between Qatar and Bahrain, amid a diplomatic stand-off between the Gulf neighbours.

“We had hoped to start the project in 2010,” Vanessa Lattes, a Vinci spokeswoman, said in a telephone interview on Tuesday. “The studies are finished and we are now working on all the technical and budgetary aspects.”

The two countries said in November that work on the 40km (25-mile) maritime bridge would start in the first quarter of 2010 and finish in 2015. It would link Bahrain, an archipelago, to Qatar and to a planned rail network across the six-nation Gulf Cooperation Council.

A decades-old territorial dispute sparked a naval incident with Qatari coastguards last month that injured a Bahraini fisherman, and Bahrain retaliated by closing indefinitely the office of Qatari broadcaster Al Jazeera. Qatar now appears to be stalling on the bridge project, said John Sfakianakis, chief economist at Riyadh-based Banque Saudi Fransi.

Bahrain, which is the smallest Gulf oil producer and is running out of reserves, has a “greater need” to open up to the rest of the Gulf than Qatar, owner of the world’s third- largest gas reserves, Sfakianakis said in a telephone interview. “The obstacles are more emanating from Qatar than Bahrain.”

Vinci, based outside Paris, announced in 2008 that it had won a contract to design the bridge, as part of a group that includes state-owned Qatari Diar Real Estate Investment Co and Germany’s Hochtief AG. It put the cost at $3 billion.

Gerald Mille, chief executive of Vinci’s joint venture with Qatari Diar, said in March 2009 that the addition of a rail line to the project had increased the budget to $4.5 billion, and that work would begin soon.

Bahrain denied that the plan to build the bridge, which dates back to 2001, had been suspended. Work on the project is progressing as scheduled, the official Bahrain News Agency said June 8, citing Finance Ministry Undersecretary Arif Saleh Khamees.

Lattes said in a June 8 interview that a Vinci team is still at the site, though part of it has been redeployed to work on other projects.

Bahrain, which currently is linked to one other Gulf neighbor, Saudi Arabia, by a 25-kilometer causeway, said in January last year that the new bridge would act as “a boost for Bahrain’s role as an ideal access point for international companies to develop their business in Gulf economies.” The causeway would cut the journey time by road between Bahrain and Qatar from the current five hours, via Saudi Arabia, to 30 minutes across the bridge.

Qatari Diar declined to comment when asked about the reason for the delay in proceeding with the construction phase.

Hochtief spokesman Christian Gerhardus said in a June 7 telephone interview that the Essen, Germany-based company got a “small sum” for its planning work on the bridge project. The actual construction contract was never awarded, so it’s not part of Hochtief’s order book, he said.

Bahrain was the first Gulf state to discover oil, in 1932, and its reserves are expected to run out in 10 to 15 years, according to the US State Department.

Dwindling oil revenues mean that it can’t afford to pay for the construction of the bridge by itself, and it won’t happen unless Qatar provides “the majority of the financing,” said Sfakianakis.

The territorial conflict centers on Bahrain’s control of the disputed Hawar Islands just off western Qatar. The International Court of Justice in 2001 awarded sovereignty of the islands to Bahrain.

Qatar is probably resisting demands from Bahrain to pay high fees for future use of the islands as it develops its offshore energy resources, according to Dalton Garis, an analyst at the Petroleum Institute in Abu Dhabi.

The bridge represents a powerful bargaining chip for Qatar, said Sfakianakis. “The causeway would play the symbolic role of linking up Bahrain to the rest of the GCC, it would make Bahrain feel that they are opened up to another part of the Gulf.”