Energy market in the United Arab Emirates

Key new goals of the United Arab Emirates' (UAE) National Energy Strategy include:

• tripling the contribution of renewable energy by 2030
• increasing national energy investments to United Arab Emirates Dirham (AED) 150 to 200 billion until 2030
• raising the share of clean energy in the total energy mix to 30 per cent by 2031
• increasing the country's renewable energy capacity to 44% by 2050 (Net Zero Energy Strategy 2050

The country has implemented projects and strategies to lower the carbon impact of hydrocarbon fuels. In July 2023, the state oil company brought its net zero target forward by five years. It also committed to cut methane leakage to zero by 2030.

Key opportunities for Canadian energy companies in the UAE

There is a large focus on upstream activities as the UAE pumps large investment into new exploration and production (E&P) and field expansion projects. This includes enhanced oil recovery applications like the Hail & Ghasha sour gas scheme.

The Abu Dhabi National Oil Company (ADNOC) are committing $6 billion CAD to a downstream expansion strategy it developed. Key projects include:

• Electrifying offshore facilities and powering operations with nuclear and solar energy.
• Building a low-carbon ammonia plant.
• Capturing five million tonnes of carbon dioxide annually by 2030.

ADNOC are building a new liquefied natural gas (LNG) export terminal in the UAE which includes construction of 14 sub-transmission stations, pigging operations, two new compressor stations, and laying of 330 to 450km of natural gas pipelines.

The production of hydrogen and renewables are a priority in the UAE. A new pilot hydrogen plant with capacity of 1.25 MW, producing 20.5 kg of hydrogen per hour, is being proposed. Also, two hydrogen hubs are planned for 2031 with a goal of establishing five hubs by 2050.

Decarbonization efforts, including Carbon Capture, Utilization, and Storage (CCUS) and methane emissions reduction, remain priorities. ADNOC plans to test and deploy the latest emissions detection and quantification technologies by 2023. They will continue reducing methane emissions using flare gas recovery systems and regular leak detection and repair programs.

The UAE has also pledged to deploy advanced technology, including drones and satellites, and to decarbonize natural gas through blue hydrogen production to further improve its methane reduction performance.

Notable challenges for Canadian energy companies in the UAE

The Russian war has highlighted the European dependence on Russian oil and gas. Since February 2022, European imports of Russian fuel have decreased from 40% to 10%. This decline has created opportunities for the UAE to fill this deficit. Austria and Germany have recently secured energy supplies from ADNOC for the next few years.

Two years ago, the Kingdom of Saudi Arabia announced that to do business there, companies must locate their Middle East Head office there. This has created direct competition with Dubai as the commercial hub of the Middle East. In June 2023, following five years of reduced diplomatic relations between Canada and KSA, hands were shaken, and diplomatic ties were re-established. This has created a new open market for Canada.

Companies must learn, respect, and adapt to the local business culture in the UAE as part of their international expansion strategies. Canadian companies should expect to encounter challenges around finding the right partner and understanding how procurement and projects work in terms of deliverables and payments.

Upcoming projects and events

• Offshore Northern Seas, August 26 to 29, Norway
• The World Utilities Congress, September 9 to 11, UAE
• Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), November 11 to 14, UAE

Summary

The UAE's National Energy Strategy aims to triple renewable energy contributions by 2030, increase energy investments to AED 150-200 billion, raise the clean energy share to 30% by 2031, and boost renewable energy capacity to 44% by 2050.

The UAE is investing heavily in upstream and downstream projects, including enhanced oil recovery, low-carbon ammonia plants, and new LNG export terminals.

Decarbonization efforts, such as CCUS and methane emissions reduction, are top priorities. The production of hydrogen and renewables is also a key focus, with pilot projects and hydrogen hubs planned. Canadian energy companies have opportunities in these areas but must navigate local business culture and competitive regional dynamics.

For more information on the energy sector in the UAE market please contact uaecommerce@international.gc.ca