Region plans vital big grid connections
29 May 2023
The mantra “there will be no transition without transmission” dominated this year’s World Utility Congress, which was organised by Abu Dhabi National Energy Company (Taqa) and held in the UAE capital on 8-10 May.
“There will be no transition without interconnectivity with our neighbours. If we are not interconnected, we are not using the full capacity of our [electricity] network,” UAE Energy and Infrastructure Minister Suhail bin Mohamed al-Mazrouei said at the congress.
For the GCC states in particular, their ability to procure affordable and large-scale solar energy capacity, and the wide discrepancy in peak demands between the winter and summer months, which often results in substantial idle capacity, make it imperative to connect to other states or regions.
“Links to other GCC states and Central Asia will enable our electricity system to run more efficiently. Some have access to wind, others to solar or hydropower. We also have different peak hours,” Al-Mazrouei said. “We need to consider [these opportunities] and make the investments.”
Boosting transmission
In recent years, there has been a flurry of projects to build or enhance electricity transmission links within the GCC states, as well as with neighbouring countries such as Iraq and Jordan.
Contracts were awarded this year for the construction of overhead transmission lines connecting the GCC grid to Iraq via Kuwait, as well as a link between Iraq and Jordan.
Other projects in the early stages include a second connection between Saudi Arabia and Iraq, Saudi Arabia and the UAE, and the UAE and Oman.
Beyond the GCC, a $1.8bn electricity link between Saudi Arabia and Egypt is under construction. The project will facilitate the exchange of 3,000MW of electricity between the two countries through overhead transmission lines as well as high-voltage, direct current (HVDC) subsea cables.
The most ambitious plans include projects that will pipe electricity from Egypt, Tunisia and Morocco to European countries including Greece, Italy and the UK.
Some have access to wind, others to solar or hydropower. We also have different peak hours … we need to consider [these opportunities] and make the investments
UAE Energy and Infrastructure Minister Suhail bin Mohamed al-Mazrouie
Shifting peaks
Energy security has spurred investments to interconnect electricity grids between national borders and time zones. The pace of development is reminiscent of the advent of data interconnectivity two decades earlier.
Grid interconnections are also critical for the integration and optimisation of renewable energy, according to Jessica Obeid, a partner at New Energy Consult.
“Grid interconnections enable efficient management and mitigations of stability challenges linked to the integration of variable renewable energy such as wind and solar into the grid,” she says.
These interconnections enable the deployment of renewable energy where land is vast and resources are abundant, to be dispatched in energy load centres.
More importantly, they reduce the curtailment of renewable energy systems through electricity exchange, balancing supply and demand at various periods.
UK startup Xlinks aims to connect Morocco to the UK via four HVDC subsea cables stretching 3,800 kilometres across the Atlantic. “Long distance interconnectors solve the intermittency of renewables as the sun is always shining or wind is always blowing elsewhere,” says Simon Morrish, Xlinks’ CEO.
“The idea is to generate clean energy and then move it to meet demand, which is much more economic than relying solely on domestic capacity.”
Xlinks aims to generate 10.5GW through solar and wind farms in Guelmin Oued Noun and pipe about 40 per cent of that energy through subsea cables that will have to pass through Spain, Portugal and France. The UK will receive 3.6GW of clean, affordable energy – equivalent to 8 per cent of its electricity needs – by 2030.
Soaring data demand drives boom
Desertec’s long shadow
The scale of Xlinks’ ambition draws comparison with an earlier project, the Desertec Industrial Initiative (Dii), which launched in 2009, but ironically has yet to see the light of day.
Dii had planned to build renewable energy plants globally, including in Morocco, and supply up to 15 per cent of Europe’s power demand by 2050.
Xlinks’ proponents expect to succeed where Desertec failed, however. “Generation costs are more than 90 per cent lower than they were then, which makes the project economically – as well as politically – attractive,” Morrish says.
Xlinks’ point-to-point design with an exclusive energy supply for the UK is expected to eliminate challenges associated with trying to use third-party transmission networks.
Although the technologies are all mature, Morrish says iterations have led to a much lower levelised cost of transmission over these distances. There is also more expertise for the HVDC system beyond the original equipment manufacturers.
Average electricity prices in Europe have increased significantly over the past 10 years and power delivered from the Middle East and North Africa (Mena) region is competitive with other reliable low-carbon solutions, according to Morrish.
The existence of clear renewable targets in Europe could also benefit Xlinks’ project, as well as similar schemes, such as the EuroAfrica Interconnector, which aims to link Egypt to Cyprus and Greece, and the Elmed Mediterranean project that links Tunisia to Italy.
Morocco’s renewable energy leadership, which includes having implemented legislation designed to facilitate the export of renewable energy, is another positive factor.
“Previous projects have typically focused on the recipient jurisdiction, such as Europe, rather than understanding the drivers for the generation country,” says Morrish. “By focusing on the benefits to the Mena region, in this case Morocco, Xlinks has obtained support from both Morocco and the UK.”
The 13-year gap between Desertec and Xlinks has not necessarily changed the mindset of some industry players, who are just beginning to grasp the complexities involved in other decarbonisation technologies such as green hydrogen and carbon capture and storage.
“It is an excellent concept, but it will be exceptionally difficult, if not impossible, to execute given the high demand for HVDC cables, financing and political considerations,” says a Dubai-based contractor.
Unlike the more reasonably- structured interconnections between the GCC or Mena states, the scale and scope of Xlinks’ scheme and other similar projects will require export credit and multilateral development agency support in combination with project finance debt. Experts say this is critical, but not entirely unprecedented.
For instance, Taqa’s decision to contribute $31m in the startup’s early funding round, which also includes $6.2m from UK-headquartered Octopus Energy, appears to signify investor appetite for the project. The scheme is expected to boost foreign direct investment and create thousands of jobs in Morocco during its construction phase.
Electricity demand is increasing at alarming rates, in direct relation to the impact of climate change and the increases in temperatures, cooling and water demand, which reduces the available supply for exports
Jessica Obeid, New Energy Consult
Political undertones
In December 2022, Saudi Investment Minister Khalid al-Falih said the kingdom is keen to join an agreement between four countries to export clean electricity from Azerbaijan to Europe.
He was referring to an accord signed by Azerbaijan, Georgia, Romania and Hungary to build an undersea cable in the Black Sea transmitting energy from Caspian Sea wind farms to Europe.
The agreement involves a 1,100-kilometre, 1GW cable running from Azerbaijan to Romania. It is part of broader EU efforts to diversify energy resources away from Russia amid the Ukraine war.
This provides an alternative to Saudi Arabia’s grid expansion plans, and to the Saudi-Egypt link, as Egypt itself is involved in negotiations to link its electricity grid to Italy, Cyprus and Greece.
Beyond financing, there are other challenges for both intra-Mena and intercontinental grid connections.
An efficient electricity exchange market is necessary, notes Obeid. Another key issue is the unsustainable increase in demand in Mena states.
Figure1: Saudi-Egypt interconnector route
“Electricity demand is rising alarmingly, in direct relation to the impact of climate change and the increases in temperatures, cooling and water demand, which reduces the available supply for exports,” she says.
Plans to interconnect with Iraq, which has been heavily reliant on Iran for energy imports, can also be tricky. “The incentive is mostly political. Many countries have expressed interest in connecting their grids to Iraq’s, but none of these projects have yet materialised,” says Obeid.
“Linking Iraq to the Saudi grid is bound to be more viable and cheaper for Iraq compared to alternative options such as electricity exports from Jordan. But that is pending a political decision and would get Saudi Arabia and the GCC political and economic influence in Iraq.”
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Petrofac completes sale of Abu Dhabi business unit
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UK-headquartered Petrofac has completed the sale of Petrofac Emirates, a business unit it established in Abu Dhabi in 2008.
The unit has been bought by a consortium of financial investors led by the New York-headquartered hedge fund Mason Capital Management and UK-based asset management firm Pearlstone Alternative.
In a statement, Petrofac said the sale was completed after the satisfaction of all required conditions and approvals.
The business unit was originally founded with a strategy to provide engineering, design, procurement and construction services for oil, gas, refining, petrochemical and renewable energy projects.
Petrofac Emirates has engineering and construction (E&C) capability and includes E&C teams based in the UAE and India.
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Leadership role
Under current plans, Tareq Kawash, who has been the group chief executive of Petrofac since April 2023, will become the chief executive of Petrofac Emirates to lead the E&C business through its next phase under new ownership.
Kawash has over 30 years of international leadership experience at engineering procurement and construction (EPC) companies.
Prior to working at Petrofac, he was a senior vice-president at McDermott International.
Following the completion of the sale, Afonso Reis e Sousa will step down as group chief financial officer of Petrofac.
Commenting on the sale of Petrofac Emirates, Kawash said: “The completion of this transaction marks an important milestone for Petrofac Emirates and the beginning of an important new chapter for the business.
“Under our new ownership structure, with a focused platform for growth, we are well-positioned to build on our track record, strengthen our long-standing customer relationships and pursue new opportunities across the wider Mena region.
“The transaction is not the destination; it is the platform from which we move forward with confidence, discipline and ambition.”
Sam Read, a partner at Mason, said: “Our mission is to empower Petrofac Emirates to achieve its strategic goals, capitalise on new market opportunities, and leverage significant growth potential in the dynamic energy EPC sector.
“Petrofac Emirates has market-leading capabilities and an unmatched track record of delivering for its customers, and we look forward to partnering with the company to help drive continued success.”
The sale of Petrofac Emirates follows the completion of the sale of Petrofac Asset Solutions in April.
In December, it was announced that US-based CB&I had entered into a sale agreement to buy the unit.
Petrofac’s asset solutions unit provides operations, maintenance and decommissioning services for onshore and offshore energy assets.
In a statement, CB&I said that the acquisition would strengthen its portfolio with “a complementary reimbursable contracting model business, delivering predictable cash flow and enhancing service capabilities”.
Restructuring disruption
Amid Petrofac’s dramatic restructuring, there has been disruption to progress at some of the company’s projects.
In March, MEED reported that Petrofac, along with its partner China Huanqiu Contracting & Engineering Corporation (HQCEC), had stopped work on a petrochemicals project in Algeria, valued at approximately $1.5bn.
The news about the Algeria project came just over two weeks after MEED reported that Petrofac had also stopped work on an oil project in Libya and cut staff in the North African country.
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Chinese-Saudi joint venture to build 18GWh battery storage plant
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Middle East stocks recover unevenly
1 June 2026
The combined market capitalisation of the MEED Top 100 largest listed companies in the Middle East and North Africa rose to $3.73tn in mid-May 2026, against $3.48tn a year earlier – a 7.2% gain that recovers most of the value lost in the prior two years’ editions. The aggregate is not the story.
Saudi Aramco recovered by $181bn, rising from $1.64tn to $1.82tn and providing substantial support to the aggregate Top 100 valuation. The broader movements in the list differentiated along sectoral lines, with key trends including the continued growth of regional banks, the upward repricing for fertiliser and logistics names amid the Hormuz crisis, and the correction of Saudi mid-tier stocks as valuation peaks have failed to hold.
Oil and gas reweights
Aramco’s share price recovered from about SR25 to SR30, lifting the company’s market cap by 11% and raising the oil and gas sector’s share of the list back to 54.5%.
The company reported first-quarter 2026 net profit of $32.5bn, up 25%, on revenue of $115.5bn – giving it a price-to-earnings ratio of about 18, in line with the Saudi market average as of April.
Aramco’s diversion of crude to Yanbu through its 7 million-barrels-a-day West-to-East pipeline has supported a higher volume of sales at the now elevated prices compared to its Gulf peers, the exports of which have been more seriously affected by the blockade of the Strait of Hormuz.
Other Saudi names also benefiting from this combination of ongoing access through Yanbu and energy repricing produced the cleanest gains, with Rabigh Refining more than doubling in value to $11.7bn despite a $1.1bn loss, Ades Holding rising 40% to $5.8bn, Luberef rising 28% to $5.8bn and Yansab also seeing double-digit returns.
In the UAE, by contrast, Adnoc Gas has remained broadly flat at $66.7bn, with its Q1 2026 net income dropping 15% and conflict damage estimates indicating that full capacity will not be restored until 2027. Borouge meanwhile held, while Adnoc Drilling and Adnoc Distribution gained by 14% and 8%, respectively.
There was some slippage in the petrochemicals sub-cluster, with Saudi Basic Industries Corporation (Sabic) posting a net loss of $6.96bn and sliding 3%, alongside a 2% slide for the energy sector-adjacent Industries Qatar.
Banking and industry
The banking sector, which accounts for 33 of the 100 entries and 18% of the list by value, expanded by an aggregate 6.3% in absolute terms. Al-Rajhi Bank, the largest banking entry at $107.9bn, reported FY2025 net profit up 26% to SR24.8bn ($6.6bn); total assets passed SR1tn for the first time and Q1 2026 net profit rose a further 14%.
Emirates NBD, up 23% year-on-year to $47.1bn, reported FY2025 record profit before tax of AED29.8bn ($8.1bn) and likewise crossed AED1tn in total assets.
Kuwait Finance House also rose by 19%, Abu Dhabi Commercial Bank 19% to $28.7bn and Saudi National Bank 11%. Qatar National Bank stalled and slid 1%, while several smaller banks saw gains. Egypt’s Commercial International Bank rose 74% to $8.4bn off a depressed base, Jordan’s Arab Bank meanwhile rose 55%, Oman’s Bank Muscat by 52% and RakBank by 32%.
Several sectors have gained significantly owing to their direct exposure to the Iran conflict’s supply-chain repricing, including logistics, fertilisers and mining.
Logistics firms in the list gained 44% in absolute terms, with Saudi Arabia’s Bahri reporting Q1 2026 net profits up 303% year and revenue up 129%.
Marsa Maroc, the Casablanca-listed port operator, also entered the list at $6.6bn, up 85% on an African expansion that spans 34 terminals across 20 ports following a Liberia management deal signed in February.
Adnoc Logistics rose 32% to $11.6bn, while Air Arabia, the Sharjah-based low-cost carrier, joined the list at $6.1bn as it absorbed redirected long-haul flows. Nakilat, the Qatari liquefied natural gas shipping operator, was the sector’s sole softener, down 12% on slower throughput.
Mining and fertiliser entries sit alongside the logistics gainers. Jordan Phosphate Mines is the cleanest single expression of the post-Hormuz repricing visible on the list – up 127% year on year to $13.2bn, as the World Bank’s April 2026 Commodity Markets Outlook projects fertiliser prices to rise nearly 31% in 2026.
Maaden rose 23% to $65.3bn after FY2025 net profit jumped 156%, backed by record phosphate production; high aluminium output; and rising silver, copper and aluminium prices linked to artificial intelligence, data centre, solar and electric vehicle demand.
Morocco’s Managem also entered the list at $19.7bn, having almost tripled in value in the past two years on cobalt, silver and copper prices and African expansion.
Sabic Agri-Nutrients rose 44% on a 30% 2025 net profit increase, while Fertiglobe rose by 40% – both potentially anticipating a 60% forecasted rise in urea prices.
Property and other trends
The direction of the property and real estate sector has been uniformly downward. The Iran conflict has driven both a slump in UAE property sales and prices and a similar tourism-adjacent correction in Saudi Arabia. Both the Mecca-focused Umm Al-Qura and Jabal Omar development firms have seen their valuations slashed by more than a third, while Makkah Construction & Development slid by 15%.
The UAE’s Emaar Properties and Dar Al-Arkan and Qatar’s Ezdan Holding have also all seen slides of more than 15%. Kuwait’s Mabanee, which rose by 22%, is the one exception in the sector.
In Saudi Arabia’s mid-tier, Acwa Power shed 29% in value even as its revenue rose 18% and its net income 5.4%. Elm Company likewise shed 33%, Dr Sulaiman Al-Habib 19% and the Saudi Tadawul Group 21%.
Mouwasat Medical Services, MBC Group, Nahdi Medical and Saudi Logistics Services fell out of the list entirely on the same trajectory. Each had reported FY2025 earnings rises before the decline. What corrected was the valuation, not the operations.
Acwa Power’s trailing four-quarter average price-to-earnings ratio was 166x, and even after this year’s decline sits at 88x against the Saudi market average of 17.8x. Elm sits at 26x, Al-Habib at 33x, Saudi Tadawul Group at 42x – all rich by any comparable benchmark.
Many of these entries have fallen away from their peak valuations as the cooling of the gigaproject programme since early 2025 has undermined sentiment.
One example that sits on the same axis from the UAE side is Abu Dhabi National Energy Company (Taqa), which fell by 28% from $95.3bn to $69.0bn despite a 6% net income rise, even as capital expenditure also expanded by 50%.
There are now nine entries from Morocco’s Casablanca bourse against six a year ago, with an aggregate value of $74.7bn, up from $50.8bn. Industrial contractor Societe Generale des Travaux du Maroc,entered via a December 2025 initial public offering (IPO). Several Moroccan stocks have also slipped, however, including Taqa Morocco, down 42%; Maroc Telecom, down 18%; Banque Populaire, down 13%; and Bank of Africa, down 10%.
There has been a similarly divergent trend among 2024 IPO entrants. While OQ Exploration & Production rose 68% to $10.1bn and is now the largest stock on the Muscat Securities Market, the UAE’s Talabat – 2024’s second-largest IPO at $9.2bn – has corrected 33% to $6.1bn.
The Multiply Group has been replaced on the list through its November 2025 merger into 2PointZero Group, which now sits in the top 30 entries at $19.6bn.
Regional repricing
Four trends underpin the list’s 7.2% recovery. The conflict has repriced specific cohorts sharply higher – logistics up 44%, mining and fertilisers up 43%, the Yanbu refiners returning, and Aramco recovering to $181bn – with gains contingent on the Strait of Hormuz remaining closed.
Regional banks have maintained last year’s momentum, with assets crossing trillion-unit thresholds and loan books supported by project activity. Six names have posted double-digit gains that are unlikely to reverse if conditions normalise.
Saudi mid-tier stocks have corrected largely on valuation rather than operations, despite many reporting earnings growth through 2025, as confidence in gigaproject-driven growth has weakened. Property has also softened in the region as conflict has reduced routine and religious tourism.
The 12-month outlook depends on whether Hormuz reopens, whether Saudi mid-tier valuations stabilise, and whether banking expansion holds under broader repricing.
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Developers win deals for $3.5bn of Mecca projects
1 June 2026
The Royal Commission for Makkah City and Holy Sites has awarded six real estate development deals. The projects, which cover a total land area exceeding 2.7 million square metres (sq m), will require a total investment of SR13.3bn ($3.5bn).
The sites are located within the neighbourhoods of Jurhum South, Al-Khalidiyah, Al-Hajlah, Al-Hindawiyah East, Al-Hindawiyah South and Al-Hindawiyah West. The projects will be delivered as partnerships with domestic real estate developers, institutional investors and dedicated private investment funds.
A consortium consisting of Makkah Construction & Development Company, Umm Al-Qura for Development & Construction Company and Al-Rajhi United Real Estate Company will develop the Hindawiya West and Hindawiya South districts, which have a combined area of nearly 1.15 million sq m, adjacent to the Masar Destination project. The consortium informed the Saudi Stock Exchange (Tadawul) that it received letters of award for the project on 31 May.
The initial cost of the project is estimated at SR6bn. Umm Al-Qura will act as the consortium leader and development manager, while Makkah Construction & Development Company will serve as the financial partner. The infrastructure works will be executed by Al-Rajhi United Real Estate Company as the technical partner, with the entire development financed through a private, closed-ended real estate investment fund overseen by a Capital Market Authority-licensed manager.
A consortium comprising First Avenue for Real Estate Development Company, Dar Al-Majed Real Estate Company and Rekaz Real Estate Company has been awarded the concession for the East Hindawiyah site. Located 1.8 kilometres from the Holy Grand Mosque, the 235,000 sq m plot is expected to cost SR2bn to develop, which includes land acquisition and foundational infrastructure. The development will be structured as a real estate investment fund managed by Jadwa Investment, with the ultimate goal of creating an integrated urban destination featuring retail, office, hospitality and residential components. The final contract signing for this deal is expected by 10 June 2026.
Ladun Investment Company, in partnership with Al-Ayuni Investment & Contracting Company, has signed a deal for the Al-Khalidiyah district. With a targeted sales value exceeding SR6bn, the consortium will establish a closed-ended private real estate investment fund to execute extensive infrastructure works, subdivide the land plots, and handle subsequent marketing and sales. The detailed scope of works involves complete engineering designs, public park planning and utility coordination with entities such as National Water Company and Saudi Electricity Company, before a contract is signed by 9 June.
Saudi property dreams: Read the January 2026 MEED Business Review
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