Even More Oil…

Deserts, mountains, coral reefs, NEOM, Cristiano Ronaldo, Karim Benzema, F1 Grand Prix, and the 2034 FIFA World Cup—what ties these elements and individuals together? The remarkable Kingdom of Saudi Arabia (KSA). This Gulf nation, renowned for its vast oil reserves, is making ambitious strides toward energy transformation and innovation. As mentioned in a previous article about the United Arab Emirates’ (UAE) energy mix, it’s worth noting that the seven Gulf countries—Bahrain, Iran, Iraq, Kuwait, Qatar, KSA, and the UAE—accounted for 38% of global oil production in 2022. Their estimated oil reserves in 2021 comprised approximately 49% of the world’s total.[1]

KSA holds significantly larger oil reserves compared to the UAE. As of November 2024, Saudi Arabia was producing 8,963,000 barrels of oil per day[2], the equivalent of filling roughly 570 Olympic-sized swimming pools daily. In December 2023, KSA ranked as the third-largest oil producer globally.[3] To emphasize, KSA’s 2023 estimated oil reserves were 267.23 billion barrels[4], representing 17% of global reserves.[5] These figures are nothing short of extraordinary!

First Steps Toward Energy Transformation

While KSA is actively taking steps toward transitioning from fossil fuels, these still dominate the nation’s energy mix. According to 2023 data, oil and gas were the primary energy sources.

A detailed breakdown of the country’s energy production shows that renewable energy sources currently play a minor role. However, KSA has ambitious plans for a transformative shift. This is exemplified by Energy Minister Abdulaziz bin Salman Al Saud’s announcement that Saudi Arabia will invest $270 billion in low-emission energy projects by 2030.[6]

A cornerstone of this transformation is the Saudi Vision 2030 program, designed to implement interdisciplinary reforms across sectors such as healthcare, housing, taxation, public funds, privatization, and energy. By 2030, KSA aims to achieve a 50% renewable energy share in its energy mix and achieve net-zero emissions by 2060.

As part of Saudi Vision 2030, KSA launched a small-scale research nuclear reactor in 2018. This initiative aims to develop nuclear energy infrastructure, train personnel, and transfer nuclear technologies to prepare for future reactor operations.[7] The country plans to build nuclear power plants with a goal of generating 17 GWe (gigawatts electric) from nuclear sources by 2040.[8] To illustrate, this capacity could power approximately 74.5 million homes annually—far exceeding Poland’s roughly 14 million households.

Saudi Arabia has also launched the Saudi Green Initiative (SGI), targeting a reduction of carbon dioxide emissions by 278 million tons annually.[9] Major investments in renewable energy include projects like the Sudair Solar Photovoltaic Independent Power Plant, which began in 2021. This solar plant, located in Riyadh Province (yes, Riyadh is not only the name of the capital of KSA but also one of the thirteen provinces of this country), will generate 1,500 MW of electricity, powering approximately 185,000 homes.[10]

Another notable project is the Sakaka Solar Power Plant, launched in 2021 with a capacity of 300 MW. Located in Al-Jouf Province, this $320 million project marks the first initiative under the National Renewable Energy Program, which according to the Custodian of the Two Holy Mosques (this is the title used by the King of KSA His Higness Salman ibn Abdulaziz Al Su’ud) is a strategic effort aligned with Saudi Vision 2030.[11] Progress is evident, with 6.2 GW of renewables connected to the grid, 44.2 GW under development, and an expected capacity of 100–130 GW by 2030.[12]

Energy Market in Saudi Arabia

Historically, KSA’s energy market, like others in the Gulf, was characterized by state-owned enterprises and vertically integrated monopolies. However, reforms are underway. The country operates on a single-buyer model, with the Saudi Electricity Company owning most generation assets and nearly all transmission and distribution networks.[13]

In 2017, KSA established the Saudi Power Procurement Company (SPPC) to facilitate agreements with independent power producers. SPPC conducts competitive tenders for energy projects, diversifying energy sources and enhancing the national grid’s capacity.[14]

Cross-Border Energy Interconnections

Saudi Arabia is connected with neighboring countries through interconnectors. The Gulf Cooperation Council (GCC) countries are linked via a 400 kV interconnection overseen by the Gulf Cooperation Council Interconnection Authority (GCCIA). Established in 2001, this connection aims to enhance energy security in the region. KSA was one of four Gulf countries to spearhead this initiative, with the first phase completed in 2004. By 2009, Bahrain, KSA, Qatar, and Kuwait were operationally connected.[15]

KSA’s energy mix is evolving into a carefully crafted mosaic, where traditional oil and gas gradually give way to modern alternatives. The country is transitioning from being “all about oil” to embracing a more diversified energy “diet.” This approach recognizes that relying solely on oil, while lucrative short-term, may prove unsustainable in the long run.

Though the journey is far from smooth—more desert sand than rose petals—the KSA’s goals are undeniably ambitious. KSA is poised to transform from a global “barrel exporter” to a renewable energy powerhouse. One thing is certain: if it stays on course, we may one day call it the “Kingdom of Sun and Wind” rather than the “Kingdom of Oil.”

[1] https://www.eia.gov/energyexplained/oil-and-petroleum-products/where-our-oil-comes-from.php

[2] https://www.ceicdata.com/en/indicator/saudi-arabia/crude-oil-production

[3] https://www.nasdaq.com/articles/10-top-oil-producing-countries-updated-2024

[4] https://www.opec.org/opec_web/en/about_us/169.htm

[5] https://www.eia.gov/international/analysis/country/sau

[6] https://www.linkedin.com/pulse/saudi-arabias-270-billion-green-energy-leap-golden-opportunity-j5v6f/

[7] https://www.vision2030.gov.sa/en/explore/projects/the-low-power-research-reactor

[8] https://www.world-nuclear-news.org/articles/saudi-arabia-reiterates-plans-for-nuclear-energy

[9] https://www.sgi.gov.sa/about-sgi/sgi-targets/reduce-carbon-emissions/

[10] https://acwapower.com/en/projects/sudair-pv-ipp/

[11] https://acwapower.com/en/projects/sakaka-pv-ipp/

[12] https://www.sgi.gov.sa/about-sgi/sgi-targets/reduce-carbon-emissions/

[13] RahmatallahPoudineh, Anupama Sen, Bassam Fattouh, Electricity Markets in the Resource-Rich Countries of the MENA: Adapting for the Transition Era, published in 2020 by International Association for Energy Economics

[14] https://ippjournal.com/company/saudi-power-procurement-company-sppc

[15] https://gccia.com.sa/about-us/aboutus/