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
  • Executive briefing: US-Israel-Iran conflict

    6 March 2026

    Download the briefing

    In this executive briefing, Ed James and Colin Foreman from MEED outline the key developments in the US-Israel-Iran conflict and examine the potential economic, infrastructure and market impacts across the Middle East.

    Drawing on regional data and analysis, the briefing explores the drivers behind the escalation, the scale of attacks across GCC states, and the possible short- and long-term implications for energy markets, shipping, aviation and regional investment.

    For ongoing updates and verified reporting as events unfold, follow MEED’s mega thread here.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15890483/main.gif
    MEED Editorial
  • Kuwait extends bid deadline for Al-Khairan phase one IWPP

    6 March 2026

     

    Kuwait has extended bidding for the first phase of the Al-Khairan independent water and power producer (IWPP) project.

    The project is being procured by the Kuwait Authority for Partnership Projects (Kapp) and the Ministry of Electricity, Water & Renewable Energy (MEWRE).

    The facility will have a capacity of 1,800MW and 33 million imperial gallons a day (MIGD) of desalinated water.

    It will be located at Al-Khairan, adjacent to the Al-Zour South thermal plant.

    The new deadline is 30 April.

    The main contract was tendered last September, and the deadline had already been extended once, most recently until 4 March.

    Three consortiums and two individual companies were previously prequalified to participate.

    These include:

    • Abu Dhabi National Energy Company (Taqa) / A H Al-Sagar & Brothers (Saudi Arabia) / Jera (Japan)
    • Acwa (Saudi Arabia) / Gulf Investment Corporation (Kuwait)
    • China Power / Malakoff International (Malaysia) / Abdul Aziz Al-Ajlan Sons (Saudi Arabia)
    • Nebras Power (Qatar)                                                                                                                                        
    • Sumitomo Corporation (Japan)

    The Al-Khairan IWPP project is part of Kuwait’s long-term plan to expand power and water production capacity through public-private partnerships (PPPs).

    The winning bidder will sign a set of PPP agreements covering financing, design, construction, operation and transfer of the project.

    The energy conversion and water purchase agreement is expected to cover a 25-year supply period.

    Kapp extended another deadline recently for a contract to develop zone two of the third phase of the Al-Dibdibah power and Al-Shagaya renewable energy project.

    The PPP authority is procuring the 500MW solar photovoltaic independent power project (IPP) in partnership with the ministry.

    The bid submission deadline was moved to the end of April, a source close to the project told MEED.

    According to the MEWRE, the total generation capacity currently offered under partnership projects has reached 6,100MW, equivalent to about 30% of Kuwait’s existing power capacity.

    The ministry and Kapp are also preparing to tender the main contract for the 3,600MW Nuwaiseeb power and water desalination plant after plans were approved by Kuwait’s Council of Ministers last November.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15889101/main.jpg
    Mark Dowdall
  • UAE utilities say services stable amid tensions

    6 March 2026

    Register for MEED’s 14-day trial access 

    Abu Dhabi National Energy Company (Taqa) and Etihad Water & Electricity (EtihadWE) have confirmed that water and electricity services in the UAE are operating normally amid ongoing regional tensions.

    In a statement, Taqa said it had activated its risk management frameworks and “power generation, water desalination, transmission, distribution and wastewater services are operating safely and without interruption”.

    According to Etihad WE, services are being delivered with “approved response plans” and “precautionary operational procedures” amid the current regional circumstances.

    Taqa is one of the UAE’s largest integrated utilities, with assets including the Taweelah B independent power and water (IWPP) plant and the 2,400MW Fujairah F3 combined-cycle power plant.

    EtihadWE operates electricity and water distribution networks across the Northern Emirates, supplying more than two million residents.

    Iran’s recent missile attacks on energy infrastructure across the GCC in retaliation for US-Israel attacks have drawn renewed attention to the importance of the region’s utilities sector.

    While power and water assets have largely avoided damage, there have been some incidents affecting broader energy infrastructure.

    Saudi Aramco had shut down its Ras Tanura refinery following a drone strike, while US cloud provider Amazon Web Services reported service outages after incidents at two data centres in the UAE.

    In January, Taqa and Etihad won a contract alongside France’s Saur to develop and operate a major wastewater treatment plant in the UAE’s northern emirate of Ras Al-Khaimah.

    The Rakwa wastewater infrastructure project is RAK’s first public-private partnership for a sewage treatment plant.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15888121/main.jpg
    Mark Dowdall
  • Drawn-out conflict may shift planning priorities

    6 March 2026

    Commentary
    Mark Dowdall
    Power & water editor

    Across the GCC, power and water networks have largely been planned around steadily rising consumption, driven by population growth and cooling demand.

    A drawn-out conflict in the region may begin to change how planners think about these systems – particularly how they can keep operating if parts of the network are disrupted.

    On Thursday, Iran’s Energy Minister Abbas Aliabadi said that US-Israeli attacks had damaged water and electricity supply facilities in several parts of the country, while urging the public to be careful with water and electricity consumption.

    So far, major power and water infrastructure in the GCC has largely avoided damage. In the case of desalination, plants of this scale supply drinking water to millions of people, so striking them would immediately affect civilian populations and represent a significant escalation.

    There is also an element of mutual vulnerability. Iran relies on its own electricity and water infrastructure, and Aliabadi’s comments this week suggest those systems are already under pressure. Targeting desalination plants in the GCC could invite similar disruptions at home.

    However, if infrastructure disruption becomes a recurring risk in the region, the question may gradually shift from how to produce more water and electricity to how to reduce immediate reliance on continuous supply.

    Some elements of that thinking are already visible in the project pipeline. In Saudi Arabia, for example, total reservoir storage capacity has reached about 25.1 million cubic metres, with roughly 44% located in the Mecca region and 31% in Riyadh. This provides a buffer that can sustain supply temporarily if desalination production is disrupted.

    Additionally, the kingdom has about $8bn-worth of water storage projects in early study or feed stages. As regional tensions persist, schemes like this may move higher up the priority list.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15887101/main.jpg
    Mark Dowdall
  • US oil companies to profit while Middle East exports are curtailed

    6 March 2026

    While the oil and gas operations of the Middle East’s biggest producers are being dramatically curtailed by the conflict sparked by the US and Israel’s attack on Iran, US producers are likely to see windfall profits.

    So far, the list of oil and gas assets in the Mena region disrupted by the conflict is long and includes facilities in all GCC nations, as well as Iraq and Iran itself.

    In addition to oil fields and refineries that have been shut – either due to direct Iranian attacks or concerns over further strikes – about 20 million barrels a day (b/d) of production has been removed from the global market by the effective closure of the Strait of Hormuz.

    Oil price

    The disruption to global oil and gas supplies caused by the Iran conflict has pushed oil prices up by around 15%, with Brent briefly rising above $85 a barrel on 3 March – its highest level since July 2024.

    This has boosted investor optimism about the outlook for US oil companies.

    Texas-headquartered ExxonMobil made $56bn in profit in 2022 after Russia’s invasion of Ukraine created a sustained period of higher oil prices. It was a record year for the company, and it could see a similar bump this year if oil prices remain high.

    Shale response

    US shale producers are ramping up production to capitalise on higher oil prices, according to the Paris-based International Energy Agency (IEA).

    Recently drilled shale wells could add around 240,000 b/d of supply in May, and an additional 400,000 b/d could be added in the second half of the year, according to an IEA document cited by the Financial Times.

    Gas impact

    The impact of the Iran conflict on liquefied natural gas (LNG) prices has been even more pronounced than on oil, with several gas benchmarks hitting multi-year highs.

    The Dutch Title Transfer Facility rose by 55%, reaching its highest level since fuel markets spiked after Russia’s 2022 invasion of Ukraine.

    One of the key factors driving prices higher was Qatar – the world’s second-biggest LNG producer – halting exports on 2 March after Iranian attacks on several facilities.

    Qatar is expected to take at least several weeks to restart exports from its liquefaction terminals.

    Not only will time be required to ensure the export route through the Strait of Hormuz  is secure, but restarting LNG export terminals is also a gradual process. They require a slow restart to avoid damaging cryogenic equipment, which cools natural gas to around -160°C.

    In addition, LNG trains must be brought back online sequentially; Qatar’s Ras Laffan hub has 14 trains.

    US advantage

    While the world’s second-biggest LNG producer is likely to be offline for some time, the US – the world’s biggest LNG producer – is already operating near full capacity and is benefiting from the higher-price environment.

    Cheniere and Venture Global, the two biggest US LNG producers, have both seen their share prices rise amid the conflict.

    Cheniere shares are up 18% since the start of February, while Venture Global’s share price has risen 12% over the same period.

    The scale of additional revenues earned by US companies – and the revenue losses suffered in the Middle East’s oil and gas sector – will largely depend on how long the disruption linked to the Iran conflict continues.

    If the disruption persists and significant long-term damage is done to Middle East oil and gas infrastructure, US-based oil and gas companies could record another year of record profits.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/15886759/main.png
    Wil Crisp