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
  • Riyadh looks to reset its regional defence outlook

    11 September 2026

     

    Saudi Arabia may not have suffered as many Iranian missile and drone strikes as some of its neighbours – Bahrain, Jordan and Kuwait have all had to contend with many more during this year’s conflict – but it still feels exposed. Like other Gulf countries, Riyadh has learnt that its deep defence and economic ties to the US, which were meant to provide security and deter aggressors, have in some ways merely made it a target for Tehran.

    The threats are not just from direct Iranian strikes, though. In late July, Saudi Arabia joined with the US to attack Iraqi militia groups alleged to have targeted Saudi energy sites in the preceding days.

    Yemen’s Houthis are also re-emerging as a serious threat. After several years in which the conflict in Yemen was largely in abeyance, the Yemeni group has in recent months repeatedly launched attacks on Saudi airports and refineries, as well as on ships passing through the Bab El-Mandeb Strait.

    From mid-July to mid-August, the Houthis carried out 16 attacks against Saudi assets, including seven oil facilities and six oil tankers, according to the conflict monitoring group Armed Conflict Location & Event Data (ACLED). Riyadh responded with hits on Houthi targets; most notably on weapons depots and other infrastructure in the port city of Hodeidah on 24 July.

    The Houthis stepped up their attacks on 8 August, firing dozens of ballistic missiles and drones at Saudi Aramco facilities in Abha, Jaqzam, Khamis Mushait and Najran. The Saudi authorities said 73 civilians were injured. Major General Turki Al-Malki, a spokesman for the Saudi-dominated Coalition to Support Legitimacy in Yemen, described the Houthi attacks as “a dangerous escalation” and said Riyadh would take “all necessary operational measures” to deter further attacks.

    So far, a return to a full-scale war in Yemen has been avoided, but ACLED’s Middle East analyst Sherwan Hindreen Ali warned in a report in August that, if both sides continue to escalate, the “chances for renewed full-scale war increase exponentially”.

    New partnerships

    The increasingly volatile nature of the region has prompted Riyadh to reevaluate its approach to security and to develop new defence partnerships with allies.

    The first major step came in late July, when Saudi Arabia launched the Multinational Maritime Defence Coalition with an initial band of 13 other countries; more are expected to sign up in the coming months. The group is designed to protect shipping in the Red Sea, the Gulf of Aden and nearby waters, with Saudi Arabia’s Rear Admiral Abdullah Bin Salem Al-Shehri as its commander.

    That was followed by a trilateral mutual defence pact with Pakistan and Turkiye signed in Mecca on 7 August. Their joint defence agreement includes a provision that an attack on any one of them will be considered an attack on all three. At a meeting in Istanbul on 31 August, the partners agreed to set up a secretariat in Riyadh.

    There have been other, smaller steps too. In late August, Saudi Arabia signed an agreement to expand defence co-operation with France, during a visit by Crown Prince Mohammed Bin Salman Al-Saud to Paris (pictured). And on 1 September, Saudi Arabia’s National Cybersecurity Authority signed a memorandum of understanding with Pakistan to strengthen cybersecurity cooperation.

    Diplomatic tracks

    For Riyadh, enhancing its security capabilities to deter Iran and the Islamic Republic’s allies in Yemen and Iraq is a critical issue. However, the Iran war looks unlikely to be resolved by military means alone. Indeed, Saudi officials have repeatedly emphasised their preference for a negotiated, diplomatic solution to the conflict.

    The regional diplomatic efforts have been spearheaded by Pakistan, Oman and Qatar, but Saudi Foreign Minister Prince Faisal Bin Farhan Bin Abdullah Al-Saud has also spoken on several occasions to his Iranian counterpart Abbas Araghchi – most recently on 6 September.

    One issue where Riyadh is less keen to publicly engage is in relation to Israel. When Saudi Arabia signed an agreement with the US in July covering the development of a civil nuclear power programme, the deal made no mention of Riyadh having to normalise links with Israel – a condition that previous US administrations had insisted on. That was a notable win for Saudi Arabia, although it was thrown into doubt when US President Donald Trump insisted in the following days that the deal would only proceed if Riyadh signed up to the Abraham Accords.

    Trump sent the proposed nuclear deal to the US Congress for approval in late August, but administration officials reiterated at the time that the pact would only ‌go into effect if Riyadh normalised relations with Israel – something that, in the current environment, looks extremely unlikely.

    Alliance strains

    Saudi Arabia’s close ties with the US have been a central element in the kingdom’s regional positioning for decades – but the combination of the Iran war and the volatile nature of the Trump administration means the strength and direction of those ties are now a matter of speculation.  

    The situation is made more complex by the rivalry between Riyadh and Abu Dhabi, with their differing approaches to regional conflicts and diplomatic initiatives creating a strain within the GCC bloc.

    Both sides have tried to change the narrative. In July, Saudi Media Minister Salman Al-Dosary and the UAE’s National Media Authority (NMA) chairman Abdulla Bin Mohammed Al-Hamed issued similar statements on social media denying any rupture between the two governments, with Al-Dosary writing that the countries were “united by a shared history and heritage, and wise leadership”.

    On the broader regional stage, Saudi Arabia remains unable to fully insulate itself against the Iran war. On 31 August, the Saudi oil tanker SIDR was hit by Iranian projectiles while transiting the Strait of Hormuz, resulting in the death of two crew members. On the same day, another Saudi oil tanker, the Amzan, was hit by Yemen’s Houthis off the coast of Yanbu, in the Red Sea.

    Coupled with the wave of Houthi attacks on 8 September, it suggests that Saudi Arabia’s efforts to create new layers of deterrence have yet to make their mark.

    Photo credit: SPA

    MEED’s October special report on Saudi Arabia also includes:

    > ECONOMY: Conflict bolsters case for Saudi economic diversification
    > BANKING: Saudi lenders readjust to lower lending and deposit climate
    > POWER: Saudi Arabia’s power award activity slows
    > WATER: Saudi water sector hits sharp slowdown
    > CONSTRUCTION: Saudi construction defies the headwinds
    > TRANSPORT: Saudi infrastructure pushes forward amid conflict

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19583845/main.gif
    Dominic Dudley
  • Consultant wins Dubai Al-Maktoum airport metro link

    11 September 2026

     

    Register for MEED’s 14-day trial access 

    US-based engineering firm Aecom has won a design contract for the Route 2020 extension, which will start from the Expo 2020 metro station and connect with Al-Maktoum International airport’s West Terminal.

    Dubai’s Roads & Transport Authority (RTA) awarded the contract.

    The extension will run about 3 kilometres (km) and include two stations.

    MEED understands the invitation to bid was issued in January, with a submission deadline in mid-March.

    The existing Route 2020 metro link is a 15km-long line that branches off the Red Line at Jebel Ali metro station. The line comprises 11.8km of elevated tracks and 3.2km of tunnels, and has five elevated stations and two underground stations.

    The RTA awarded the AED10.6bn ($2.9bn) design-and-build contract for the project to a consortium of Spain’s Acciona, Turkiye’s Gulermak and France’s Alstom in 2016.

    The RTA also selected Aecom to provide consultancy services for the upcoming Dubai Metro Gold Line project, also known as Metro Line 4, in October last year, as MEED reported.

    The Gold Line will start at Al-Ghubaiba in Bur Dubai. It will run parallel to – and alleviate pressure on – the existing Red Line, before heading inland to Business Bay, Meydan, Global Village and residential developments in Dubailand.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19571676/main.jpg
    Yasir Iqbal
  • Saudi Arabia sets October deadline for Mecca metro design

    11 September 2026

     

    The Royal Commission for Makkah City & Holy Sites (RCMC) has set a deadline of 14 October for a contract covering the initial design studies for its long-planned metro network in the holy city.

    The scope includes reviewing existing studies, preparing a concept design, conducting land acquisition studies, developing an integration concept for future phases and other related studies.

    The notice was issued in May, with an initial submission deadline of 5 August, as MEED reported.

    In September last year, RCMC invited contractors to attend an early market engagement meeting for the project.

    In an explanatory document inviting companies to attend the event, the RCMC’s General Transport Centre said it was seeking to gauge market interest in the multibillion-dollar project and obtain feedback on its proposed procurement approach.

    MEED exclusively reported in June last year that the project was restarting. Current plans envisage a four-line network, named lines A-D, with 89 stations and three depots, to be implemented over three phases between 2032 and 2045.

    Project scope

    Stage 1 focuses on lines B and C, involving 2.4 kilometres of tunnelling under the Masar project and integration with the existing Mashaer line.

    The network will run just over 62km and comprise 31 stations, 21 of which will be underground, including three iconic stations. A total of 19.5km will run through tunnels, while 41.2km will be elevated, with the remainder at grade.

    The 66 required trainsets are projected to provide a daily passenger capacity of about 450,000, equating to annual ridership of 171 million.

    The 84.7km-long second phase, due to be operational by 2038, will extend the two lines towards the outskirts of Mecca and includes construction of the initial inner and central segments of lines A and D.

    Comprising 61.1km elevated and 18.6km underground, Phase 2 is planned to add 45 stations serving the two new lines, as well as two depots and a potential interconnection with the planned Saudi Landbridge. The 59 trainsets for Phase 2 will increase the network’s projected total annual passenger capacity to more than 500 million.

    Phase 3 covers the elevated 36km extension of lines A and D and involves procurement of a further 72 trainsets, increasing the network’s ultimate passenger capacity to 1.2 million daily and 642 million annually by completion in 2045.

    Associated development

    The metro plan also envisages several transit-oriented developments (TODs) at different points on the route. These will typically comprise commercial, residential and retail elements to maximise the investment case.

    The client’s proposed procurement approach involves three distinct packages: civil and systems works, TODs, and operations and maintenance.

    The initial concept calls for some of the project to be delivered on a public-private partnership (PPP) basis, wherein the private sector, through special purpose vehicles, will part-finance, build, operate and then transfer commercially viable elements of the scheme.

    The then-called Mecca Mass Rail Transit Company (MMRTC) first launched the metro project in 2013; however, the scheme has faltered for more than a decade due to funding issues, land acquisition challenges and scope changes.

    The relaunch of the procurement process raises hopes that the project will now come to fruition, although it is likely to be at least 18 months before any definitive works start.

    Mecca is home to Saudi Arabia’s first metro, the nine-station, 18km-long Mashaer line, which opened in 2010. It operates only seven days a year during Hajj, but carries more than 2 million pilgrims during that time.

    Some 30 million pilgrims visit the city each year, with this number set to grow. A known, quantifiable and growing demand base will help facilitate the use of a PPP mechanism if the framework is adopted.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19569659/main.jpg
    Yasir Iqbal
  • Consortiums submit bids for Sadara cogeneration plant

    11 September 2026

     

    Register for MEED’s 14-day trial access 

    At least three consortiums have submitted bids for the contract to develop and operate a cogeneration steam and power plant catering to the Sadara petrochemicals complex in Saudi Arabia.

    The planned independent steam and power plant (ISPP) project will have a capacity for 400MW-450MW of combined-cycle electricity generation and 550-700 tonnes an hour of steam.

    According to sources, bids were submitted for the contract at the end of August.

    The consortium bidders include: 

    • Abu Dhabi National Energy Company (Taqa) / Samsung C&T (South Korea)
    • Al-Jomaih Energy & Water (Saudi Arabia) / Albawani (Saudi Arabia) / Sepco 3 (China)
    • Acwa (Saudi Arabia), Korea Electric Power Corporation (Kepco) / Doosan Enerbility (South Korea)

    Sadara Chemical Company (Sadara) is the project client. It is the downstream joint venture of Saudi Aramco and US-headquartered Dow Chemical.

    The estimated $500m project includes construction of a power plant, substations, a seawater intake system and associated switchyards and switchgear.

    The project will also include gas turbines and a back-pressure steam turbine, as well as facilities for steam production.

    In 2024, MEED exclusively reported that Sadara had prequalified potential bidders for the project. It is understood that the request for proposals was issued towards the end of last year.

    The first units at the $20bn Sadara petrochemicals complex in Jubail began production in 2016, and the complex became operational in 2017.

    The Sadara complex is designed to produce more than 3 million tonnes a year (t/y) of chemicals and performance plastics, including polyurethanes, propylene oxide, propylene glycol, elastomers, polyethylene, glycol ethers and amines.

    Construction is also continuing on the Najim cogeneration facility, which will supply the Amiral petrochemicals complex with up to 475MW of power and approximately 452 tonnes an hour of steam.

    Previously known as the Amiral cogeneration independent steam and power plant, the project is being developed by a team comprising Abu Dhabi National Energy Company (Taqa) and Japanese power generation company Jera.

    South Korean contractor Samsung C&T is the engineering, procurement and construction contractor for the project.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19567716/main.jpg
    Mark Dowdall
  • UAE plans 150km Boring Company tunnel network

    11 September 2026

    The UAE plans to build more than 150 kilometres of underground tunnel with US tunnelling firm The Boring Company, in a programme backed by a $3bn funding round the UAE led.

    The Series D round values the Boring Company at $23bn, about four times the $5.7bn it was worth after a 2022 funding round. The UAE and affiliated investment entities led the round, which will accelerate a partnership to deploy underground infrastructure across the UAE, the firm said.

    The 150km target marks a substantial expansion of the company’s footprint in the country, extending work already committed through the Dubai Loop project. It contrasts sharply with what has been contracted so far. The Boring Company has signed a construction contract with Dubai’s Roads & Transport Authority (RTA) for the pilot phase of Dubai Loop, covering a 6.4km route and four stations linking Dubai International Financial Centre (DIFC) and Dubai Mall. The pilot is expected to cost about AED565m ($154m), with tunnelling due to begin in the second half of this year.

    The 150km figure therefore represents an ambition for the wider partnership rather than a contracted volume, with the bulk of the network yet to be tendered, designed or awarded. No timeframe has been attached to the target.

    A second Dubai Loop phase will connect Dubai World Trade Centre and DIFC with Business Bay, extending the tunnels to 22km across 19 stations. The total cost across both phases is expected to be about AED2bn ($545m), with completion scheduled within three years. The pilot route is projected to carry about 13,000 passengers a day, rising to about 30,000 a day across the full route.

    Other investors in the round include Human Capital, Vy Capital, Valor Equity Partners, Sequoia Capital, Andreessen Horowitz, Temasek, Shamal Holding and Baron Capital. The proceeds will also fund hiring, the scaling of the company’s Loop transit systems in the US cities of Las Vegas and Nashville, and further development of its Prufrock tunnel-boring machines, which it says can operate in both soft ground and hard rock.

    The RTA and the Boring Company signed a memorandum of understanding in February last year to explore developing the Dubai Loop, and the construction contract followed in February this year. In May, US engineering firm Parsons was appointed as programme manager for the pilot phase, with a scope covering independent design verification, permitting and multidisciplinary design reviews.

    The appointment comes amid a broader shift towards underground construction across the Gulf, as metro, sewerage and highway works in the UAE, Saudi Arabia and Qatar increasingly default to tunnelling.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/19567623/main.jpg
    Yasir Iqbal