Something old, something new: GCC energy trends in 2025
To avoid a 2008-style power crunch, every type of energy must be thrown into the mix
John D. Rockefeller, founder of the Standard Oil group in 1870, never left the dinner table without feeling slightly hungry. He lived to the age of 97 and was the world’s richest person. A similar approach would serve the GCC countries well in 2025.
The oil price is currently a bit lower than the GCC countries would like it, set to end the year at around $74 per barrel for Brent crude. At this price, Saudi Arabia and Kuwait run moderate budget deficits, while the UAE, Qatar and Oman will record decent surpluses.
Revenues are high enough to avoid a crisis and provide ample funds for growth; low enough to encourage reform and ward off complacency.
So GCC energy policies in 2025 have the following recipe: maximise oil and gas revenues, continue development and reform of the traditional petroleum sector, and expand into new energy and related businesses, both at home and abroad.
All this must be achieved while guarding against serious economic and political risks – which were largely dodged in 2024, but have not gone away.
Opec+ has not enjoyed a successful year. Despite continuing its production restraint, including extension of the voluntary cuts by some members throughout 2024, oil prices ended in virtually the same place as they began. They have slipped steadily since briefly topping $91 per barrel in April.
Meanwhile, the support of oil prices means the organisation has been relentlessly losing market share – to US shale, traditional competitors such as Brazil and Canada, and to new entrants, notably Guyana and Argentina’s shale.
Demand looks fairly tepid again this year, though the International Energy Agency boosted its estimates in its latest report.
The big story is China: a soft economy and the rapid adoption of electric cars and natural gas-powered lorries seem to have brought its oil demand growth to the final course.
Still, the Opec+ framework and its production cuts have held together – an achievement in itself. Despite grumbling over undercompliance by members such as Iraq and Russia, there has been no overt tantrum.
Neither Saudi Arabia nor Russia, the leading lights of Opec+, want cooperation to collapse. A price war will strain Riyadh’s Vision 2030 goals and Moscow’s war economy.
A price plummet may also attract complaints from Washington, as in 2020 when oil barons such as Continental Resources’ Harold Hamm regained a listening ear in the White House.
The sudden prominence of artificial intelligence brings opportunity – if well-planned
But finally getting on track for moderate production increases would head off some higher-cost competition.
Abu Dhabi National Oil Company (Adnoc) continues its major expansion, nearing 5 million barrels per day (bpd) capacity with potential to stretch this to 6 million bpd. Under current plans, its quota will inch up from 2.9 million bpd in January to March 2025, to almost 3.4 million bpd by September, still well short of maximum capacity.
Kuwait Petroleum Corporation again has ambitious plans for capacity growth, from 2.8 million bpd currently to 3.2 million bpd next year and 4 million bpd by 2035. But that will require its new government to press ahead while parliament remains suspended.
Qatar, not in Opec+, has another 100,000 bpd to come from its leading production field, Al Shaheen.
Saudi Arabia is satisfied with its current crude capacity; it will continue to search for outlets, particularly in joint ventures with Chinese chemical and refining players.
But as the Chinese market grows increasingly crowded and sated, a turn to still-growing but trickier Asian markets, notably India, becomes more crucial.
The situation for gas is easier in 2025: global liquefied natural gas markets remain fairly tight.
But Qatar still has a big job to sign up buyers for all its new LNG output arriving from about 2027 onwards. Adnoc, though, has sold nearly all of the volumes from its smaller, new Ruwais plant.
And all the GCC members have significant plans for producing more gas. In Qatar’s case for export, but for the others mostly for domestic use in power generation and, especially, value-adding industry.
Saudi Arabia’s Jafurah unconventional development is the largest and most eye-catching.
2024 was a busy year for dealmaking, with a sale of additional Saudi Aramco stock, the confirmation of Adnoc’s $16.4 billion acquisition of German chemical maker Covestro, and its launch of an international low-carbon growth platform, XRG, valued at more than $80 billion.
XRG will no doubt search for more inorganic targets to deliver that target, one of the first being Arcius Energy, its new gas-focused joint venture in Egypt with BP.
The venerable British oil major, resetting its strategy and seeking to turn around its valuation, may have more to talk about with its friends on the Corniche.
Adnoc and Aramco are also both busily searching for more international LNG opportunities.
QatarEnergy’s international exploration ventures have delivered some striking successes. But now it needs to show that these can turn into commercially viable developments in countries such as Suriname, Namibia and Cyprus. And Oman continues a run of IPOs to raise funds and boost commercial dynamism.
Saudi Arabia is rapidly moving towards the leading position in the GCC for renewable capacity, overtaking the UAE, the initial leader.
The UAE’s scene, though, remains highly active with Abu Dhabi’s main utility Emirates Water and Electricity Company just having secured land for 4.6 gigawatts of solar and wind power. Plans to add more nuclear generation may also take concrete steps in the coming year, while Riyadh’s long-mulled atomic plans await a deal with the US.
A mix of state-owned or partly-owned and private companies, notably Abu Dhabi’s Masdar and Saudi Arabia’s Acwa Power, are also among the world’s most active international developers. Again, we can expect a flurry of dealmaking from Masdar, along with organic growth in areas such as Central Asia, Eastern Europe and Africa.
Batteries and less traditional renewable sources such as geothermal are also gaining prominence.
Meanwhile, the region’s hydrogen story has slowed to a more realistic focus on completing and learning from a couple of the most advanced projects, while securing more solid commitments to buy the clean but pricey fuel.
All this new electricity action is necessary because of burgeoning demand. On top of strong growth in population and non-oil economies in most of the GCC, the sudden prominence of artificial intelligence (AI) brings opportunity – if well-planned.
It can boost the performance and cleanliness of traditional and new energies and industries. But to avoid a repeat of the widespread power crunch around 2008, gas, renewables and probably nuclear and carbon capture will all have to be thrown into the mix.
The GCC states, with their abundant land, straightforward approval procedures, pools of capital and exceptionally low-cost renewables, are an excellent place to build the electricity-gobbling data centres that do AI’s thinking.
Clever strategic joint ventures can make one or more GCC states a central player in this emerging boom sector – finally providing the elusive healthy menu to the region’s historic diet of petroleum.
Robin M. Mills is CEO of Qamar Energy, and author of The Myth of the Oil Crisis