The unprecedented events of 2020 were hugely disruptive for the Middle East’s power generation sector. With the pandemic continuing to ravage large parts of the globe, 2021 may prove another challenging year for regional power generators, but equally they should prove better placed to withstand the upheaval.

The key issue for the GCC states was that travel restrictions imposed to slow the spread of Covid-19 meant that residents who typically travel overseas during the hottest summer months were forced to stay at home. This exaggerated the typical seasonal trends whereby heavy usage of air conditioning units causes electricity demand to surge over summer. Most, if not all, GCC states experienced record electricity demand levels this summer.

This was then compounded by the impact of Opec+ crude oil production cuts. Gas is a key feedstock for baseload electricity generation, but the likes of Saudi Arabia, Kuwait and the UAE all rely heavily on gas that is produced alongside oil. When associated gas output fell in line with crude output, governments were forced to burn increased volumes of less-efficient oil as a result.

Each of the six GCC states has individual dynamics, but 2021 ought to prove less disruptive for their power sectors.


Kuwait’s power sector was hit especially hard by the pandemic. The Opec cuts greatly reduced gas availability, while refinery upgrades (MEES, 24 December) also reduced availability of fuel oil. With LNG imports via the 5.8mn t/y Golar Igloo FSRU being maxed out in previous summers anyway, Kuwait had no option but to burn record volumes of crude oil in order to meet the surge in power demand (see chart 1 and MEES, 25 September).

The gas-crunch will be slightly less severe next year as Opec cuts have been eased from their most severe May-July levels and will ease further in Q1 (MEES, 11 December). However, the biggest change ought to be the planned Q1-startup of the 22mn t/y Al Zour LNG import terminal which will give the government flexibility to import vastly greater quantities of gas.

Charts included 1: Kuwait Burned Record Amounts Of Crude Oil Over Summer (‘000 B/D)


Charts included 2: Saudi Oil Burn*: Total Oil Burn (‘000 B/D) On Course For Second Consecutive Annual Increase



The UAE’s struggles burst to the forefront when Minister of Energy Suhail al-Mazrouei acknowledged that the country had produced above its Opec allocation “due to peak summer electricity demand in the UAE, which required an increase in oil production and associated gas” (MEES, 4 September). This is despite the UAE importing piped gas from Qatar and LNG through a terminal in Dubai.

As with Kuwait, the tapering of Opec commitments will ease the pressure on the UAE, but a much bigger development is the start-up of the country’s first nuclear power plant – the first in the Middle East outside Iran. The 1.4GW Barakah unit 1 began supplying the grid in August (MEES, 21 August) and reached full capacity earlier this month (MEES, 11 December).

As testing continues, Barakah will be shut down again but is expected to begin commercial operations “in early 2021” and should contribute significantly over summer (MEES, 11 December). Moving away from nuclear, Dubai has begun testing the first 600MW unit of the 2.4GW Hassyan coal-fired power plant, which will also be commercially operational in 2021 (MEES, 4 September).

In conjunction with the expansion of solar capacity to 2.29GW following last year’s start-up of the 1.18GW Noor solar PV plant, the UAE’s dependence on gas-power is falling.


Saudi Arabia was relatively unscathed by the year’s volatility thanks to the late-2019 start up of the 2.5bn cfd Fadhili non-associated gas processing plant. With Fadhili reaching full capacity ahead of the summer’s electricity demand surge (MEES, 19 June), Saudi Arabia was able to offset the Opec-related drop in associated gas output. Indeed, the kingdom set a new record for gas production of 10.7bn cfd on 6 August (MEES, 6 November).

The upshot of the Fadhili ramp-up is that while Saudi Arabia’s electricity demand will likely have grown this year – 1H figures from state utility SEC show a slight increase in peak load – oil burn has remained relatively stable (see chart 2). The historic surge in oil burn that Kuwait experienced over the summer didn’t happen in Saudi Arabia, with consumption staying broadly in line with 2019 levels (MEES, 18 December).

As for 2021, the Hawiyah Gas Plant (HGP) Expansion Project will add 1.07bn cfd of gas processing capacity by June (MEES, 26 June), providing Aramco with additional flexibility.

Charts included 3: 2020 Qatar Powergen Falls From Monthly Record 5.83twh In July



Elsewhere in the GCC, Oman has more than offset any drops in associated gas through its participating in the crude oil production cuts. Including exports of piped gas from Qatar, Oman’s gas availability hit a record 4.87bn cfd in August, enabling it to supply a record 840mn cfd to power plants that month. Unconventional gas from Block 61 has replenished Oman’s supplies and the October start-up of the block’s Ghazeer project has provided a further boost (MEES, 16 October).

Meanwhile, as the only GCC state not subject to Opec+ cuts, Qatar has had no issues with gas availability. Moreover, the vast bulk of its gas is of non-associated volumes from the North Field. While monthly demand surged to a record high 5.83TWh in July, Qatar was easily able to supply sufficient gas (MEES, 4 December). Gas will continue to generate all of Qatar’s electricity until the 800MW Al Kharsaah PV plant starts up. The first 350MW is due online next year (MEES, 24 January).

In Bahrain, gas also provides the vast bulk of fuel for power generation. Approximately two-thirds of gas production is typically of non-associated volumes, and total output this year is broadly level with 2019-levels.