meed-logo

line1 line2 line3
SIGN IN / REGISTER

Solving Europe’s energy challenge

13 September 2022

Published in partnership with

One of the most apparent aspects of the Russia-Ukraine conflict is the rapid increase in energy prices brought on by Moscow’s reduction in exports to its European neighbours.

In 2021, Russia was the largest exporter of oil and gas to Europe, supplying some 40 per cent of its energy requirements, including 100 per cent of the total gas imports of five EU states, according to the International Energy Agency.

The continent’s three largest economies – Germany, Italy and France – depended on Russian gas for 46 per cent, 34 per cent and 18 per cent of their energy needs, respectively. 

The imposition of sanctions on Russia in March 2022, followed by Moscow’s threat to suspend hydrocarbon exports, has resulted in a surge in energy prices.

Opec’s crude basket price increased from $78 a barrel at the start of the year to $122 in early June, while Henry Hub natural gas prices more than doubled from $3.8 a million British thermal units (BTUs) to $8.7 a million BTUs over the same period.

Expensive energy bills

This rapid energy inflation has been passed on to consumers through higher electricity bills.

In the UK, for instance, the energy regulator Ofgem estimates that the default tariff price cap will more than double from £1,300 ($1,529) in January to £3,580 in October, and reach a peak of £4,266 in the first three months of 2023, when demand will be highest during the colder winter months.

Replicated across the continent, this is likely to result in millions of households entering ‘fuel poverty’ as they struggle to pay their energy bills. 

The Mena region is well-positioned to plug the shortfall in Russian gas exports as European governments scramble to source gas from new markets to reduce their dependence on Moscow

Reducing reliance on Russia

The subject was not surprisingly a central theme of debate at Siemens Energy’s Middle East & Africa Energy Week held in June, where attendees agreed on two main conclusions drawn from the crisis. 

The first was that the Middle East and North Africa (Mena) is well-positioned to plug the shortfall in Russian gas exports as European governments scramble to source gas from new markets to reduce their dependence on Moscow.

The GCC alone globally exports almost exactly half of the 411 billion cubic metres of gas that Russia supplies to Europe annually. Most of this is in the form of long-term liquefied natural gas (LNG) contracts to east Asia, but there is some limited capacity available – primarily from Qatar – to fill part of the shortfall.

European nations have been quick to recognise this. For example, following a visit to the region by its Vice-Chancellor and Climate & Energy Minister Robert Habeck in March, Germany – Europe’s largest energy market – is now fast-tracking the construction of two LNG import terminals and has entered a long-term energy partnership with Qatar, the world’s largest LNG exporter. 

Energy Week

The second principal finding from the Middle East & Africa Energy Week was that the conflict would act as an additional catalyst for renewable energy development as nations globally attempt to diversify their energy sources and reduce their dependence on imported fossil fuels. 

This was in keeping with the results of a poll of up to 400 of the event’s participants. The survey, which forms the central component of the Siemens Energy’s Middle East & Africa Energy Transition Readiness Index, revealed that attendees considered the acceleration of renewables as the highest priority among 11 energy policies in their efforts to tackle the climate crisis, as well as the one with the greatest potential impact.

The Middle East is already taking a clear lead in this as it sets ambitious targets for clean, renewable capacity. For example, Saudi Arabia is looking to scale up its share of gas and renewable energy in its energy mix to 50 per cent by 2030.

Similarly, the UAE has set ambitious targets for 2050: to improve energy efficiency by 40 per cent, reduce emissions from the power sector by 70 per cent and increase the share of renewables in the energy mix to 44 per cent.

While Europe is looking for alternative gas supplies to urgently fill the gap in the short term, there is little doubt that in the longer term renewable energies and hydrogen will dominate the energy markets

Dietmar Siersdorfer, Siemens Energy

Hydrogen

In the long run, the energy crisis also provides momentum for the development of hydrogen production in the region, one of four other central themes emerging from the Energy Week. 

Demand for hydrogen in Europe alone is forecast to double to 30 million tonnes a year (t/y) by 2030 and to 95 million t/y by 2050. Thanks to its geographical position, the Middle East is ideally located to meet this demand either by ship or pipeline. 

Today, there are at least 46 known green hydrogen and ammonia projects across the Middle East and Africa, worth an estimated $92bn, almost all of which are export-orientated.

“While Europe is looking for alternative gas supplies to urgently fill the gap in the short term, there is little doubt that in the longer term renewable energies and hydrogen will dominate the energy markets. That the robust mix of the energy (gas and renewables) will make the energy system more resilient and support energy supply security while we, at the same time, move us at a fast pace into a renewable future,” says Dietmar Siersdorfer, Siemens Energy’s Managing Director for the Middle East and UAE.

Electricity to Europe

Another unintended consequence of the Ukraine crisis is to turn attention to direct electricity supply from the Mena region to Europe. 

Although plans for exploiting the high solar irradiation levels and space provided by the Sahara desert through initiatives such as DESERTEC have long been mooted as an alternative solution, a combination of the crisis, lower costs and improving technologies are increasing impetus.    

Some projects are already capitalising on the trend. For example, a joint venture of Octopus Energy and cable firm Xlinks recently received regulatory approval for a 3.6GW subsea interconnector between Morocco and the UK, using energy produced from vast solar arrays in the desert. 

A similar project is the 2GW high-voltage EuroAfrica connector currently under construction linking Egypt with Greece via Crete. Plans are also under way for a third power connection between Morocco and Spain, which today is the only operational electricity link between Africa and Europe.

With the Egyptian-Saudi interconnector now under construction, and agreements recently reached for interconnectors between Saudi Arabia and Jordan and Kuwait and Iraq, the region is growing closer to supplying power to Europe directly.

“The development of regional grids has brought the prospect of direct current connection with Europe ever closer,” says Siemens Energy’s VP and Head of Grid Stabilisation in the Middle East, Elyes San-Haji. “Due to its plentiful solar resources, the Mena region could become an energy hub with a global network of high-voltage highways and super grids.”

Connection benefits

Interconnection makes sense on many levels. Not only would Europe benefit from a diversified, economical and renewable energy source, but its season of peak demand, winter, coincides with when supply is lowest in the Middle East, and vice-versa. Power transfer would not necessarily have to be in one direction only. 

The Ukraine conflict and ensuing energy crisis have created an unprecedented opportunity for the Middle East and Africa to become more closely integrated with Europe. Whether in the form of fuel exports, either gas or potentially green hydrogen fuels, or direct electricity supply, the Arab world has never had a better chance to become the energy partner of choice for its European neighbours.

Related reads:

Click here to visit Siemens Energy 
https://image.digitalinsightresearch.in/uploads/NewsArticle/9998557/main.gif
MEED Editorial

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Iran launches regional attacks after US and Israel strikes start

    28 February 2026

    Iran launched missiles aimed at Bahrain, Jordan, Kuwait, Qatar and the UAE on Saturday, 28 February, after the US and Israel began airstrikes on the Islamic Republic earlier in the day.

    Official news agencies in the countries targeted by Iran have confirmed the attacks and that missiles have been intercepted by air defences. There has been limited damage reported from the strikes, although one fatality has been reported in the UAE.

    The UAE’s Ministry of Defence (MoD) said there was a blatant attack involving Iranian ballistic missiles and that UAE air defence systems intercepted a number of missiles. It also confirmed that missile debris falling into a residential area resulted in the death of one civilian of Asian nationality. The UAE also said it reserves its full right to respond to this escalation and to take all necessary measures to protect itself.

    In Bahrain, the National Communication Centre (NCC) confirmed external attacks targeting sites and installations within Bahrain’s borders. It said the security and military authorities had immediately activated established emergency protocols and were taking all necessary operational measures on the ground.

    In Doha, the Ministry of Defence confirmed that Qatar had been attacked and that all missiles were intercepted before reaching Qatari territory.

    In Kuwait, the official Kuwait News Agency reported that air defence systems had dealt with missiles detected in Kuwaiti airspace.

    Meanwhile, in Amman, a senior military official from the Jordanian Armed Forces (JAF) confirmed that air defences had intercepted and neutralised two ballistic missiles targeting Jordanian territory.

    Saudi Arabia has condemned the attacks and has “affirmed its full solidarity with and unwavering support for the brotherly countries, and its readiness to place all its capabilities at their disposal in support of any measures they may undertake”.

    Main image: UAE announces successful interception of new wave of Iranian missiles. Credit: Wam

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15813394/main.gif
    Colin Foreman
  • Egypt’s Obelisk equity move merits attention

    27 February 2026

    Commentary
    Mark Dowdall
    Power & water editor

    The first phase of Africa’s planned largest hybrid solar and battery installation project reached commercial operations this week. While the 1.1GW Obelisk facility in Egypt is significant in capacity terms, the more interesting detail may lie in its ownership structure.

    Scatec secured the 25-year US dollar-denominated power purchase agreement in 2024 and moved the project into construction as majority shareholder with Norwegian Investment Fund for Developing Countries (Norfund).

    In November, France’s EDF acquired a 20% equity stake to join the project as a shareholder, while discussions with additional equity partners are at an “advanced” stage.

    With the development risk largely already absorbed and revenues secured under a long-term, dollar-denominated contract, the question arises: how are developers approaching capital allocation in the renewables market?

    Especially in emerging markets, sponsors must consider currency convertibility, sovereign exposure and overall balance sheet concentration. Bringing in partners after key milestones reduces that exposure without abandoning the asset.

    However, risk mitigation is not the only driver behind these decisions.

    This week, Masdar agreed to sell a 60% stake in a portfolio of wind assets in Portugal, a more mature European market with stable regulation and limited currency risk.

    Given the developer’s 100GW global target, this would seem a prudent way to recycle capital as part of an aggressive growth strategy.

    Meeting global climate targets will require sustained and rapid expansion of renewable capacity. Estimates suggest the world must add more than 1,100GW of renewables annually through 2030 to remain on track.

    Increasingly, as pipelines expand and capacity targets rise, developers are likely to weigh carefully when to hold assets and when to release capital.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15798541/main.jpg
    Mark Dowdall
  • Petrokemya awards contract for ethylene oxide project

    27 February 2026

    Register for MEED’s 14-day trial access 

    Petrokemya, an affiliate of Saudi Basic Industries Corporation (Sabic), has awarded China National Chemical Engineering Group Corporation (CNCEC) the main contract for an ethylene oxide catalyst project.

    The project covers engineering, procurement and construction (EPC) of a new 4,000-tonne-a-year (t/y) ethylene oxide catalyst production unit, encompassing multiple units for catalyst carrier washing and drying, as well as supporting utilities.

    Ethylene oxide catalysts are the core technology of the ethylene oxide industry chain, directly determining production efficiency, product quality and energy consumption of the process unit.

    Petrokemya is a wholly owned affiliate of Sabic, with its main petrochemical production complex located in Jubail Industrial City, in Saudi Arabia’s Eastern Province.

    The ethylene oxide catalyst project is the ninth contract awarded by Petrokemya to CNCEC since 2015. Previous jobs cover EPC works on seven specialty chemical projects and a project to upgrade and expand output capacity at Petrokemya’s main methyl tert-butyl ether (MTBE) production unit.

    Petrokemya awarded CNCEC the contract for the MTBE plant expansion project in November 2022, with the contractor starting work the following month.

    Through the project, the output potential of Petrokemya’s MTBE unit will increase from 700,000 t/y to 1 million t/y, purportedly making it the world’s largest single-unit MTBE plant.

    CNCEC achieved mechanical completion of the MTBE plant expansion project in August last year, and the project is now understood to have been commissioned.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15797372/main4837.jpg
    Indrajit Sen
  • Regulatory environment shifting for Kuwait oil and gas tenders

    27 February 2026

     

    Changes to the way key contracts are tendered in Kuwait have increased expectations that the country is shifting to a new regulatory environment for oil and gas projects.

    Contractors interested in bidding for Kuwait’s planned tender for a $3.3bn gas processing facility have been briefed that the country’s Central Agency for Public Tenders (Capt) will not be involved in the tender process.

    The exclusion of Capt from participating in the tender process has come at a time of increasing concerns surrounding the role of the agency, and has sparked speculation that it could be excluded from an increasing number of strategic tenders in future.

    Capt is responsible for reviewing technical and commercial evaluations of bids and verifying that bidding is competitive.

    Prior to its suspension in May 2024, Kuwait’s parliament was often blamed for blocking projects and halting the initiatives of Kuwait Petroleum Corporation (KPC).

    However, the suspension of parliament has not triggered an uptick in project activity at KPC, indicating that other problems are holding back decision-making.

    As time has passed, many stakeholders have started to view Capt as a key sticking point in the tendering process.

    One source said: “There is a lot of frustration within some parts of the country’s oil and gas sector about the time it takes for Capt to review everything and approve a tender.”

    Although this is not completely unheard of for small contracts tendered by Kuwait Gulf Oil Company (KGOC) to bypass Capt, it is unusual to see very large contracts bypass the agency.

    “A lot of people were very surprised when they heard that Capt would not be involved in this process,” said one source.

    “While the agency is resented by many in the sector that see it as a big reason for a lot of delays, it’s also highly respected for stopping corruption and bad practices.

    “If you look historically at which large contracts avoided a review by Capt or its predecessor, it was only the most critical and urgent projects.

    “The fact that this project is being permitted to side-step the agency’s process seems to mark a shift – and we could well see more big contracts following the same route in the future.”

    Past exceptions

    An example of a time period when key contracts were allowed to bypass Kuwait’s Central Tenders Committee (CTC), the predecessor to Capt, was in 1991.

    During this time, in the wake of the Gulf War, urgent contracts needed to be tendered by Kuwait Oil Company (KOC), including some related to extinguishing fires at oil wells, which were lit by retreating Iraqi troops.

    One source said: “I think the early nineties was the last time that large contracts were tendered by KOC without going through the relevant agency.

    “It is easier to bypass Capt when it is a KGOC contract, but it’s still very surprising to see it with a contract of this size.”

    If more contracts in the future are “fast-tracked” in the same way, it is likely that many stakeholders will welcome the effort to speed up tendering.

    However, some are worried that if the streamlined tendering model is replicated too widely, it could undermine checks and balances that stop corruption.

    “Kuwait is lucky as it has a system that makes corrupt practices very difficult to participate in,” said one source.

    “The country needs to be careful and make sure that it doesn’t undermine the rigour of the system by prioritising convenience.”

    Direct awards

    Another factor that has impacted expectations about the future of project tendering in Kuwait’s oil and gas sector is that the methods used for several large contracts have been recently tendered in other sectors.

    Key tenders that are impacting the discussions surrounding Kuwait’s oil and gas sector are the award of the $4bn Grand Mubarak Port contract to China Harbour Engineering Company in December and the award of a $3.3bn wastewater treatment plant contract to China State Construction Engineering Corporation in January.

    Both of those direct contract awards were government-to-government agreements that did not have an open tender process in Kuwait and were not approved by Capt.

    One source said: “These huge contract awards to Chinese companies without open tenders in Kuwait were extremely surprising.

    “If you had asked me at the start of last year whether this kind of thing would be signed off, I would have told you it’s highly unlikely.

    “I think there is no reason why we couldn’t see similar contract awards coming in the future in Kuwait’s oil and gas sector.”

    Another source said: “Just like the gas processing contract, these contracts awarded to Chinese firms seem to have side-stepped Capt in a way that is very surprising.”

    The planned $3.3bn gas processing facility is not the first time that KPC has tried to reduce its reliance on Capt for processing tenders.

    In April 2024, KPC launched its own tendering portal in an effort to streamline the tendering process for projects in the oil and gas sector.

    The portal was named the “KPC and Subsidiaries K-Tendering Portal” and is referred to as “K-Tender” by contractors.

    The portal gave KPC a way of tendering and communicating with contractors without relying on the Capt website.

    “The K-Tender portal was a step towards reducing reliance on Capt and gave KPC the flexibility to tender projects without Capt, even though, at the time, KPC made it clear that it intended to list all tenders both on the Capt website and its own portal.”

    The recent direct contract awards to Chinese contractors and the tendering process for the $3.3bn gas processing facility have sent a signal to contractors in the Kuwaiti market that more unusual tenders could be in the pipeline.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15791028/main.gif
    Wil Crisp
  • Kuwait awards oil pier contract

    27 February 2026

    Kuwait National Petroleum Company (KNPC) has awarded local firm Gulf Dredging & General Contracting Company a $172m contract to help develop a new south arm facility at the Shuaiba oil pier.

    The scope of the contract covers civil, marine, mechanical and electrical work, according to a statement.

    Gulf Dredging & General Contracting Company is a subsidiary of Kuwait-headquartered Heisco.

    The main contractor on the Shuaiba oil pier project is the Greek construction firm Archirodon. In October last year, KNPC awarded Archirodon a KD160m ($528m) contract to develop the new south arm facility.

    The Shuaiba oil pier comprises several structures, including the approach trestle, the north arm facility and the south arm facility. A number of planned projects are to be developed at the Shuaiba port facilities.

    The north arm facility consists of two berths, 31 and 32. When operational, it loads refined products for both KNPC and state-owned Petrochemicals Industries Company.

    The north arm facility is currently not operational and will be upgraded as part of a separate project.

    KNPC is a subsidiary of Kuwait Petroleum Corporation (KPC).

    Last year, KPC chief executive Sheikh Nawaf Al-Sabah reiterated that the company plans to increase its oil production capacity to 4 million barrels a day by 2035.

    About 90% of Kuwait’s oil production comes from Kuwait Oil Company, which also plans to achieve a daily gas production capacity of 1.5 trillion cubic feet by 2040.

    Kuwait is estimated to have 100 billion barrels of oil reserves.

    Under KPC’s 2040 strategy, it plans to invest $410bn, sourced from cash flow, debt and joint ventures with other businesses.

    Of the $410bn, KPC and its subsidiaries intend to invest $110bn to accomplish the group’s energy transition targets.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15791026/main.jpg
    Wil Crisp