Region plays high-stakes AI game
11 June 2024
This package also includes: Data centres meet upbeat growth
Artificial intelligence (AI) is a potential enabler for the economic diversification programmes of the GCC’s hydrocarbons-exporting states.
The UAE launched an open-source large-language model (LLM) last year. Falcon 40B, shortly followed by Falcon 180B, cemented the reputation of the Abu Dhabi government-funded Technology Innovation Institute as a major player in generative AI.
With 180 billion parameters and trained on 3.5 trillion tokens, Falcon 180B soared to the top of the Hugging Face Leaderboard, a benchmark for pre-trained LLMs. Falcon 180B outperformed competitors such as Meta’s Llama 2 in areas including reasoning, coding, proficiency and knowledge tests.
The launch of Falcon followed cumulative investments in research, talent acquisition and digital infrastructure. In recent years, Abu Dhabi has formed government-attached agencies and commercial entities backed by its sovereign wealth funds to focus on AI.
One such company is G42, which has partnered with the US’ OpenAI to develop sector-focused generative AI models, and with Microsoft to run applications on Azure and undertake AI skilling initiatives in the UAE and beyond.
Global AI hubs
The UAE aims to become a world-leading AI hub alongside the US and China, but the country will have to tread carefully when choosing partners to avoid geopolitical complications involving its most important security ally and its largest energy client.
Riyadh seems determined to give Abu Dhabi a run for its AI money. The GCC region’s two largest states have placed
separate multimillion-dollar orders for graphics processing units – powerful chips designed for training AI – from top US supplier Nvidia.
They have also formed AI-focused investment vehicles with a view to maximising investments and returns from AI ventures at home and abroad. Abu Dhabi formed MGX, which aims to build $100bn in assets under management within a few years, while Saudi Arabia’s Public Investment Fund formed a $100bn platform to transform the kingdom into a semiconductor and electronics hub, with AI playing a central role in the plan.
In May this year, the Saudi Data & Artificial Intelligence Authority and New York-based technology company IBM launched an open-source Arabic LLM called Allam on IBM’s Watsonx AI and data platform.
With AI promising to be a $1tn market by 2030, it offers attractive opportunities
Computer power
A potential issue facing the determined push for AI leadership is that AI requires enormous computational power and energy, in addition to vast capital and talent.
A recent article published by the World Economic Forum (WEF) suggests that the computational power required to sustain the rise of AI doubles approximately every 100 days.
Related read: Global AI market to top $1tn in 2030
“The energy required to run AI tasks is already accelerating with an annual growth rate between 26% and 36%. This means by 2028, AI could be using more power than the entire country of Iceland used in 2021,” the WEF article says.
The AI lifecycle impacts the environment in two stages. First is the training phase, when the models learn and develop by digesting vast amounts of data; and second is the inference phase, when they solve real-world problems.
At present, the environmental footprint is split, with training responsible for about 20% and inference taking up 80%.
“As AI models gain traction across diverse sectors, the need for inference and its environmental footprint will escalate,” the WEF warns.
A peer-reviewed analysis in the science journal Joule says that a continuation of the current trends in AI capacity and adoption will likely result in Nvidia shipping 1.5 million AI server units a year by 2027.
When running at full capacity, these servers are expected to consume at least 85.4 terawatt-hours of electricity annually, which is equivalent to 100GW of installed capacity in the next three years.
Data centres, which make up the main AI digital infrastructure, already account for about 1%-1.5% of global electricity use.
In a hypothetical scenario in which everyone shifts to AI for mundane tasks such as performing searches on Google, every data centre would effectively experience a 10-fold increase in energy consumption, according to Alex De Vries, a data scientist at the Central Bank of the Netherlands, which conducted the analysis published by Joule.
As a result, the hydrocarbons-exporting and energy-transitioning GCC states – particularly the UAE and Saudi Arabia – appear to be a natural fit for AI, due to the presence of abundant and cheap fossil-fuel or renewable-energy resources, and the need to diversify their revenue sources away from oil. With AI promising to be a $1tn market by 2030, it offers attractive opportunities.
According to a Dubai-based senior executive with a global infrastructure investor, each country and company will eventually need to consider what part they can play in the AI value chain.
Since Nvidia seems to have captured the microprocessor space, the other areas of opportunity are in developing computing power, algorithms and implementation. “Both Saudi Arabia and the UAE have the theoretical capability to grow into the computing power and implementation spaces, which require computing capacity through data centres and medium-skilled manpower to deploy, migrate, train and maintain [AI],” the executive says.
Greening AI
Policy adjustments could be needed to support such advances, especially when it comes to minimising AI’s carbon footprint, even as it enables the curbing of those in other sectors – including the power sector.
In addition to the vast computing and wattage requirements of AI, the region’s arid weather and very hot summer temperatures mean that regional data centres have greater cooling requirements.
To address this, the Dubai state utility has started to build a solar-powered data centre, which is understood to be the first of its kind in the world.
Saudi Arabia, which aims to have 58.7GW of renewable energy installed capacity by 2030 – accounting for about 50% of its electricity production mix – could follow a similar model.
Abu Dhabi’s quantum computer project, in partnership with researchers at Spain’s Qilimanjaro Quantum Tech, is under way.
Unlike a classic supercomputer that operates on binary states, a quantum computer uses quantum mechanics phenomena including superposition and entanglement to generate and manipulate subatomic particles such as electrons or photons, or qubits.
This allows greater processing powers that can enable the performance of complex calculations that would take much longer to be solved, consuming less power than a supercomputer.
The growing electricity surplus in Abu Dhabi, as all four reactors at the Barakah nuclear power plant come onstream this year, could also be allocated to data centres and AI applications.
In addition, Abu Dhabi’s plan to start procuring phase two of its Barakah nuclear energy plant may not only boost energy exports, but could also create sufficient margins to accommodate future AI computing demand.
Related read: Nuclear power will help region achieve AI ambitions
“I don’t know if that means only nuclear power can solve the demand, but it certainly is a good option and carries some strategic advantage as well,” says Karen Young, senior research scholar at Columbia University’s Centre on Global Energy Policy.
While AI needs a significant amount of electricity for computations, there should be savings through productivity increases
Efficiency gains
While it is difficult to accurately quantify and forecast AI’s overall carbon emissions, a holistic view of its overall environmental impact is required.
In theory, while AI itself needs a significant amount of electricity for computations, there should be savings through productivity increases. “Will people need to go to the office less often, and how about the improved performance of machines?” asks the Dubai-based infrastructure investor.
However, it is also important not to overstate AI’s potential benefits to the region’s economies. While AI could be a major driver of economic diversification, Young has yet to be convinced that it will significantly boost the GCC’s GDP growth.
Job creation is a vital element of economic diversification, she tells MEED, but AI is often used to replace roles in the service sector and lower-skilled opportunities, such as those in the retail banking sector. This could impact efforts under way in several GCC states to boost employment among citizens, such as the Saudi Nationalisation Programme and the UAE’s Emiratisation drive.
On the upside, however, AI can be very good at improving efficiencies in the oil and gas industry and the power sector, and at boosting productivity.
The need of the hour appears to be establishing a clear path towards efficient AI deployment, despite the fact that the results of the technology’s full-fledged implementation remain hard to ascertain.
“The UAE is doing a lot to attract skilled people to provide more value-added services, but that is an organic process and needs a more vibrant ecosystem of education institutions – and companies establishing more than just sales offices – to be truly called a hub,” the infrastructure investor tells MEED. “Saudi Arabia is still a bit far from that.”
Data centres meet upbeat growth
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Iraq’s projects market is at an inflection point. The country has built a sizeable and increasingly diverse projects pipeline, backed by ambitious national plans and an improving reform narrative. But according to MEED’s newly updated Iraq Projects Market report, the near-term outlook is now being tested by renewed regional volatility and persistent structural constraints at home.
Iraq is the Middle East and North Africa’s fifth-largest economy by nominal GDP, yet it remains heavily exposed to the hydrocarbons cycle. Oil and gas generate about 90% of government revenues and more than 40% of GDP, a dependency that shapes annual capital spending and the bankability of public-private partnership (PPP) deals. Earlier this year, the IMF forecast GDP growth of 3%-4%. In light of the latest regional conflict dynamics involving the US and Israel with Iran, that growth outlook is expected to soften as investor risk perceptions rise and supply chains face renewed stress.
Even so, Iraq’s projects market is not starting from a blank slate. By the end of March 2026, almost $120bn of contracts were in execution, with a further $300.4bn in the broader pipeline. The scale of that opportunity is underpinned by enduring reconstruction requirements, urgent energy-sector needs and a policy push to translate oil wealth into long-lived productive assets.
Reconstruction needs
Nearly a decade after the official end of the Islamic State conflict, Iraq’s reconstruction gap remains substantial. Estimates put the shortfall at about $88bn, reflecting the long tail of damage to housing, utilities, public buildings and transport links. Southern and central regions dominate the live pipeline, largely because they sit close to Iraq’s oil heartlands. Basra, in particular, is pivotal, anchoring major upstream activity and vital export infrastructure.
At the policy level, Iraq Vision 2030 signals a long-term ambition to diversify into tourism, agriculture, industry and digital transformation. The government’s immediate delivery vehicle is the National Development Plan (NDP) 2024-28, which commits more than $17bn a year in capital expenditure and prioritises energy, transport, housing and water infrastructure. This shift is reinforced by Iraq’s Green Growth Framework (2026), indicating that future procurement may place greater weight on efficiency, emissions reduction and climate resilience.
Macro risk
Despite policy ambition, the most immediate determinant of Iraq’s fiscal room is the oil price. A $10-a-barrel drop can reduce government revenue by an estimated $7bn-$9bn annually. Such sensitivity matters because infrastructure spending is still largely funded by the public purse. Oil price swings affect project awards, payment cycles and the government’s willingness to assume up-front capex obligations.
Iraq’s execution environment continues to be defined by bureaucratic delays, unclear land titles and opaque procurement processes. These factors can add 12-24 months to average delivery timelines. Nevertheless, there are signs of adaptation. PPP legislation is advancing, and developer-led models are gaining traction in large housing programmes. Furthermore, there is a growing reliance on international project management consultancy (PMC) firms—such as Hill International, Worley, and AtkinsRealis—to bridge capacity gaps and improve governance, cost control and scheduling.
Hydrocarbon driver
Oil and gas upstream remains the single largest driver of capital expenditure. Major developments, including the Gas Growth Integrated Project (GGIP) and Mansouriya, sit alongside a push to reduce gas flaring and expand downstream processing. The objective is to sustain export revenues while improving domestic fuel availability.
The power sector is even more urgent. Iraq faces an estimated 8-10GW generation shortfall, which keeps electricity supply at the centre of political risk. This gap is driving rapid procurement of generation capacity and grid upgrade contracts. Beyond traditional infrastructure, Iraq is also moving on digital adoption. Smart city pilots and fibre rollouts are attracting regional technology investors, while AI-enabled data centre projects are beginning to emerge.
Investment targets
Foreign direct investment (FDI) remains below $3bn a year, a low figure relative to market size. The most active investors outside the oil sector include the UAE, Saudi Arabia and Kuwait. To convert interest into deals, the National Investment Commission (NIC) is pursuing streamlined licensing and investor-protection reforms. A “one-stop shop” approach has reportedly reduced registration timelines for foreign investors from months to weeks in key sectors.
Investor protection mechanisms, such as access to international arbitration, are being strengthened, though enforcement remains a concern. Iraq’s three free zones—Basra, Karbala and Nineveh—offer additional incentives including tax holidays and customs exemptions, provided they can be paired with reliable utilities and bankable arrangements.
Conflict premium
The latest escalation involving the US and Israel with Iran has increased Iraq’s security risk premium. This is inflating materials costs and disrupting supply chains near eastern border zones. Even where projects are far from conflict areas, contractors are pricing in higher contingency for logistics and insurance. Iraq must also balance deep economic ties with Iran—particularly in energy—with Western investor expectations and sanctions-related compliance.
With more than 60% of its population under 25, Iraq has a potential demographic dividend, but it also faces immediate employment pressure and a shortage of skilled technical labour. Iraq’s projects market outlook for 2026 is best described as cautiously constructive. The pipeline is deep and the need is undeniable, but delivery will hinge on whether Iraq can translate plans into predictable execution. If progress on procurement and contract enforcement continues, Iraq can sustain a broad-based market that extends beyond hydrocarbons.
Click here to learn more about MEED’s newly updated Iraq Projects Market report
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Retal to develop project in Oman’s Sultan Haitham City
11 May 2026
Saudi Arabia’s Retal Urban Development Company has entered Oman with its first development agreement, signing a deal to build more than 2,000 residential units in Sultan Haitham City in Muscat.
In a statement to the Saudi Stock Exchange (Tadawul) on 11 May, the company said it had signed an agreement with Oman’s Ministry of Housing & Urban Planning to develop an integrated residential community at an estimated cost of SR3bn ($823m).
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Qiddiya seeks firms for light rail transit system
11 May 2026
Saudi gigaproject developer Qiddiya Investment Company (QIC) has requested contractors to express interest in a contract to design and build the first phase of the light rail transit system at Qiddiya Entertainment City.
The notice was issued on 5 May, with firms given until 20 June to submit expressions of interest.
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RCRC awards $1bn Sheikh Jaber Al-Sabah Road contract
11 May 2026
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Saudi Arabia’s Royal Commission for Riyadh City (RCRC) has awarded an estimated SR5bn ($1.3bn) contract for the construction of the Sheikh Jaber Al-Sabah Road project in Riyadh.
The contract was awarded to the joint venture of Riyadh-based Al-Rashid Trading & Contracting Company (RTCC) and Turkiye’s IC Ictas.
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The construction of the bridge originally began in August 1993 and was completed in 1997.
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Aecom to supervise Dubai Loop construction
11 May 2026
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US-based Aecom has been selected for a contract to undertake design review and construction supervision services for the Dubai Loop transportation system.
The contract was tendered by Dubai’s Roads & Transport Authority (RTA), which signed a construction agreement with Elon Musk-backed firm The Boring Company.
The first phase comprises a 6.4-kilometre route with four stations, linking the Dubai International Financial Centre (DIFC) and Dubai Mall.
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The latest update follows the appointment of Parsons Corporation to deliver programme management services for the Dubai Loop transportation system.
Next phase
The second phase will connect the Dubai World Trade Centre and DIFC with Business Bay.
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The RTA and The Boring Company signed a memorandum of understanding on the sidelines of the World Governments Summit in Dubai in February last year to explore the development of the Dubai Loop transportation system.
The Dubai Loop is expected to be similar to The Boring Company’s Las Vegas Convention Centre (LVCC) Loop project. The LVCC Loop is a 2.7km underground tunnel system that connects different convention centre halls, reducing walking time across the site to about two minutes.
The LVCC Loop has been in operation since 2021. It uses Tesla Model 3 cars to carry passengers between five stations. The Boring Company began construction in November 2019 at an estimated cost of $49m.
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