Are the Gulf Nations Moving Away from Oil

11 October 2017

Lab Chat

With some of the biggest oil reserves in the world, it’s understandable the Gulf nations have a reputation as so-called ‘oil countries’. Indeed, the likes of Saudi Arabia and Kuwait are heavily reliant on oil, with around 90% of exports down to fuel. There is change on the horizon, however. Read on to see how Gulf countries are diversifying their energy portfolio. 

Changing energy in the UAE

It’s no secret that the United Arab Emirates are keen on innovation. Their plans for new energy seem to support that too. In 2018, they will open the first nuclear power plant in the Middle East. The Barakah 1 reactor was completed in May 2017, but is still awaiting licensing approval for Nawah Energy to begin operations. 

That’s just the first stage too. The Barakah complex will eventually have a further three units. When it’s finished, it will be capable of providing around a quarter of the UAE’s electricity. 

More broadly, the UAE Energy Plan 2050 aims to reduce the reliance on gas, which currently dominates the UAE’s energy landscape. By bringing nuclear, renewables and clean fossil fuels into play, they’re aiming to reduce this reliance to around 38%.

Saudi Arabia continues the trend

Not to be outdone, Saudi Arabia have also put plans into place to broaden their horizons. While Aramco are using new technology to explore the ‘Empty Quarter’ for oil, the Saudis have also launched their Vision 2030 which sets out a post-oil plan. They want to increase non-oil revenue from around $40 billion to over $250 billion. 

Also part of the plan is an increase in non-oil exports, while still improving its ranking in worldwide economies from 20th to the top 15. A small proportion (below 5%) of Aramco will be offered on the stock exchange to add to the country’s wealth fund. And to make up for the loss in oil, the Saudis are even looking to develop solar facilities in the north. 

Behind the shift 

Kuwait is yet another example. They set a target for 15% renewables by 2030 in their 2010 plan. So, why are we seeing this change from oil to the likes of nuclear and solar? In recent years, there has been a clear increase in awareness of climate change and its effects. This is paired with the fall in oil prices and ever-growing fear of peak oil. With a finite supply of fossil fuels, Gulf countries have known for some time that they need to prepare for change – and it now seems those preparations have begun. 

Oil pirces falling, has become clear for some time, same reason Kuwait released their 2030 blueprint in 2010. 

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