How can a region prepare both for a future of record oil demand and position itself as a global leader in renewable-powered digital infrastructure? That question framed the tone at recent high-level gatherings in Abu Dhabi and Dubai where oil producers, gas exporters, and renewable developers came together to confront a paradox: fossil fuel demand is set to rise for decades, yet capital is flowing disproportionately into clean energy.
1. Oil Demand Growth Defies Earlier Peak Predictions
In the latest forecast from the Organization of the Petroleum Exporting Countries, oil demand is set to rise from current levels to 123 million barrels a day by 2050, powered by energy-intensive industries such as artificial intelligence. That’s in line with the International Energy Agency’s restored Current Policies Scenario, which doesn’t see a peak in oil demand before the middle of the century. The rethink from earlier peak-oil predictions reflects a global rebalancing toward energy security over rapid decarbonization.
2. Chronic Underinvestment Threatens Future Supply
Industry leaders have also warned that upstream oil investment has been running at around half the level required to meet future demand. The CEO of Eni, Claudio Descalzi, said that over the last 12 years, capital flow has not been enough to replace natural field declines. Indeed, the observed global rate in the IEA’s field decline analysis stands close to 6%, reflecting natural decline rates averaging 8%, a potential loss of about 5.5 million barrels per day annually if investment stalls.
3. LNG Expansion Faces Engineering and Market Tests
Rechristened by some as a “destination fuel,” natural gas is seeing the largest infrastructure build-out. Close to 300 bcm of new LNG export capacity is scheduled to come online by 2030, which represents a 50% increase from 2024. This boom encompasses sophisticated engineering: cryogenic liquefaction trains, large-capacity storage tanks, and the expansion of regasification terminals. And operations must keep running efficiently and safely under high-throughput conditions. Market fundamentals remain tight, with Asian and European buyers competing for flexible cargoes, while destination-flexible contracts reshape trade flows.
4. Geopolitics and Price Sensitivity Shape Gas Demand
Price-sensitive markets, like India, have curbed consumption amid high LNG prices blamed on geopolitical turmoil. Exporters, though, continue to hike supply: among the latest additions is Nigeria LNG’s seventh liquefaction train, which expands capacity from 22 million tonnes per annum to 30 million tonnes per annum. In Asia, LNG’s use in transport and maritime industries is shaping up as a growth driver, provided pricing is stable and infrastructure is rolled out.
5. Scaling Up Renewable Energies in the Hostile Environments of MENA
The Middle East and North Africa are leveraging large tracts of their deserts for giga-scale solar and wind projects. Some engineering challenges that come up are dust-resistant photovoltaic coatings, inverter systems that can operate at high temperatures, and integration on the grid over long transmission distances. According to the IEA, the world’s capacity for solar, wind, and hydro is likely to double by 2030, and MENA will account disproportionately for this, with projects like Saudi Arabia’s NEOM, Oman’s Salalah Free Zone, and the UAE’s AI campus in Abu Dhabi.
6. Hydrogen-Ready Infrastructure as a Strategic Hedge
The MENA low-carbon hydrogen strategies are crystallizing around three plays: export to premium markets, decarbonizing existing hydrogen uses, and pioneering new applications in shipping, aviation fuel, and green steel. Projects like the 1.2 Mtpa NEOM Green Hydrogen facility integrate electrolysis with renewable generation, while leveraging existing gas pipelines for ammonia transport. Domestic adoption, however, remains slow in light of the cost advantage of abundant hydrocarbons.
7. Data Centers as Anchor Offtakers for Clean Power
The report by Dii Desert Energy labels hyperscale data centers as “super offtakers” for renewable electricity. Typically, these are single sites with more than 100 MW of capacity each, incorporating high-bandwidth fiber connectivity and redundant power architectures. In MENA, colocation with solar and wind farms, combined with hydrogen-based backup systems, is one pathway to near-zero-carbon operations. The UAE-US “Stargate” AI campus, designed for up to 5 GW of capacity, illustrates this model, but geopolitical and supply chain constraints on advanced AI chips may slow deployment.
8. Bridging Old and New Energy Systems
The coincidence of long-lived oil and gas demand with accelerating renewable deployment demands integrated planning. For the MENA, this means balancing upstream investment to avoid supply shocks with building transmission, storage, and conversion infrastructure for clean energy exports. Hydrogen-ready turbines, hybrid gas-renewable microgrids, and flexible LNG terminals able to handle bio-LNG or hydrogen blends-novel engineering solutions-are the enablers that can bridge the transition.
Whether in Abu Dhabi or Dubai, one message came across: neither the region nor the world can be satisfied by fossil fuels or renewables alone. It is a question of synchronizing investment cycles, engineering capabilities, and policy frameworks in such a way that the twin objectives of supply security and decarbonization move forward together.
