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Global Desalination Investments

Where Abu Dhabi is Spending Oil Profits

Written by Nick Hodge
Posted November 11, 2009

The Middle East has more than oil on its mind.

With demand for electricity expected to grow 7% to 8% annually over the next five years, countries in the region are spending billions on infrastructure to secure adequate supply.

And they're using oil profits to do it.

This presents an interesting investment opportunity for energy investors.

Addiction in Reverse

For years, we've been addicted to the Middle East for their precious oil. And that dependence won't wane dramatically anytime soon.

But we're starting see some signs of that trend in reverse.

A growing population and a yearning for Western culture are leading to Westernized demands. Not only is the demand for electricity surging. . . so is the demand for fresh, clean water — often hard to provide in the desert.

Producing more energy requires more water. And producing more water requires more energy.

But with oil's price back on the rise, oil-rich governments are hesitant to burn their precious commodity for electricity. . . when they could be selling it for profit.

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Instead, they're using oil dollars — billions of them — to secure alternate methods of electricity and clean water production.

According to the Wall Street Journal, the government in Abu Dhabi "continues to spend billions of dollars in oil revenues on developing industries and infrastructure to diversify the local economy and to accommodate a growing population."

But here's the best part for investors: all these expensive projects are "likely to draw interest from international developers."

And the WSJ continues, "Oil-rich Persian Gulf states such as Saudi Arabia, Abu Dhabi and Qatar have relied on foreign investors in the past. . . to build and run their power plants and water desalination facilities."

Think about that. The Middle East is opening the floodgate to Western investment.

This is your window to siphon some oil dollars back into your pocket.

Cashing In on Oil Dollars

Just this week, Abu Dhabi announced it'll spend $12 billion over the next five years to upgrade and improve its water and electricity infrastructure, with a focus on "desalination, recycling sewage water, and renewable energy."

Of course, that's just the latest in a litany of billion-dollar desalination announcements from the region.

Back in June, Dubai announced it will "invest up to $20bn in desalination over the next eight years as it moves to meet soaring demand for fresh water."

And the International Desalination Association announced this week that "the global desalination market is growing at a record rate and the Middle East region is leading the world in terms of demand and expansion."

The report cited "an explosion of demand in the Gulf region due to population growth and high oil prices."

Now, we know some of the major players that are likely to benefit.

Dow Chemical (NYSE: DOW), Fluor (NYSE: FLR), and Siemens (NYSE: SI) are always favorites.

But as established blue chip companies, they can't offer you the best bang for your buck.

Instead, I've found a tiny company supplying a crucial part to nearly every new desalination plant in the world.

It doesn't matter who builds it (be it the likes of GE or Siemens), this company's technology is going in the plant.

And I think it could triple, as a sharp focus is placed on desalination expansion — especially in the Middle East.

Take a moment to learn about this company today.

When MSNBC finally gets around to touting desalination investments. . . you'll be glad you heard it here first.

Call it like you see it,

Nick Hodge

Nick

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