Energy investments in the Middle East and North Africa are projected to grow 9 per cent in the next five years to more than $879 billion, as energy exporters boost spending amid higher oil revenue, according to a report by Arab Petroleum Investments Corporation (Apicorp).
The investments, which include both planned and committed investments in the region between 2022 and 2026, are up $74bn when compared with last year's estimates by the Saudi Arabia-based multilateral lender.
Saudi Arabia, Opec’s largest crude producer and the Arab world’s largest economy, is expected to lead the region in energy investments, followed by Iraq, Egypt and the UAE, Apricorp said in its Mena Energy Investment Outlook 2022-2026 report on Tuesday.
Of this, investments in committed projects — ones in execution stage — amount to $352bn, while planned projects investment total $527bn, the report said.
Countries are boosting investments in different sectors, including oil and gas, power and petrochemicals.
“Mena countries shoulder the largest share of global investments in oil and gas going forward to ensure global energy security and avoid an impending super cycle that may severely hamper the world economy,” said Ramy Al-Ashmawy, senior energy specialist at Apicorp.
“At the same time, the region continues to invest in decarbonisation, renewables and clean energy as part of the long-term strategic vision for a low-carbon future underpinned by a greener, more balanced and sustainable energy mix.”
Gulf economies are forecast to receive up to $1.4 trillion in additional revenue in the next four to five years as a result of higher oil prices and lower inflation, the International Monetary Fund said in a report last month.
Oil prices, which rose 67 per cent in 2021, rallied to a notch under $140 per barrel in March before giving up some gains. They are still up 60 per cent since last year on supply concerns amid the Russia-Ukraine conflict.
The Mena region is expected to add 5.6 gigawatts of installed capacity from renewables in 2022, from 3 gigawatts that came online in 2021, according to Apicorp. By 2026, the region is expected to add 33 gigawatts of installed capacity.
Morocco and Jordan are leading the race for achieving renewable energy targets in the region, while other countries, including Saudi Arabia, UAE, Egypt and Oman, have relatively low renewable energy generation, but they are expected to witness a “significant increase with several planned and committed large-capacity projects in the pipeline”, the report said.
The UAE, Opec's third-largest oil producer, aims to become carbon neutral by 2050, with clean and renewable energy investments worth Dh600bn ($163.5bn) planned over the next three decades.
Abu Dhabi, which accounts for the bulk of the UAE's oil production, is building the world’s largest solar plant at Al Dhafra with a capacity of 2 gigawatts, while Dubai is building the world’s largest solar energy park in an effort to reduce reliance on natural gas and diversify its power sources.
The Mohammed bin Rashid Solar Park is expected to generate 5,000 megawatts of electricity by 2030 and drive up to Dh50bn in investment.
Saudi Arabia is also building new renewable energy projects as it aims to become carbon neutral by 2060.
“Energy diversification is at the top of the agenda, with several Mena countries integrating renewables in their generation mix as part of a shared policy objective to diversify the power mix with low-cost, low-carbon energy sources and bolster power supply security,” Apicorp said.
Natural gas, a dominant fuel for power generation, is expected to grow to maintain a power generation share of about 70 to 75 per cent across Mena by 2024, the report said. Oil-fired power, on the other hand, is expected to drop from 24 per cent of total generation to around 20 per cent by 2024 amid efforts by governments to cut emissions.
Apicorp’s analysis also shows that blue and green hydrogen will dominate the emerging hydrogen markets in the near term across the region.
Blue and grey hydrogen are produced from natural gas, while green is derived from splitting water by electrolysis.
“Mena is well positioned to supply around 10 per cent to 20 per cent of the global hydrogen market by 2050, with GCC and North Africa set to become global export hubs catering for demand in Europe and South-east Asia,” the report said.
The UAE is drawing up a comprehensive road map to position itself as an exporter of hydrogen and tap into its future potential.
The Gulf country aims to capture about 25 per cent of the global hydrogen market share and is in discussions with many countries to export it, Minister of Energy and Infrastructure Suhail Al Mazrouei said earlier this year.
Last month, Adnoc, clean energy company Masdar and British energy multinational BP signed a strategic partnership agreement to develop clean hydrogen and tap into opportunities offered by the energy transition.
Green and sustainability bonds issued in the Mena region in 2021 more than tripled from the previous year to $18.64bn, the report said.
if you go
The flights
Etihad, Emirates and Singapore Airlines fly direct from the UAE to Singapore from Dh2,265 return including taxes. The flight takes about 7 hours.
The hotel
Rooms at the M Social Singapore cost from SG $179 (Dh488) per night including taxes.
The tour
Makan Makan Walking group tours costs from SG $90 (Dh245) per person for about three hours. Tailor-made tours can be arranged. For details go to www.woknstroll.com.sg
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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MATCH INFO
Liverpool 2 (Van Dijk 18', 24')
Brighton 1 (Dunk 79')
Red card: Alisson (Liverpool)
RESULT
RS Leipzig 3
Marcel Sabitzer 10', 21'
Emil Forsberg 87'
Tottenham 0
Martin Sabbagh profile
Job: CEO JCDecaux Middle East
In the role: Since January 2015
Lives: In the UAE
Background: M&A, investment banking
Studied: Corporate finance
THREE
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England v South Africa schedule:
- First Test: At Lord's, England won by 219 runs
- Second Test: July 14-18, Trent Bridge, Nottingham, 2pm
- Third Test: The Oval, London, July 27-31, 2pm
- Fourth Test: Old Trafford, Manchester, August 4-8
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
MATCH INFO
Barcelona 4 (Messi 23' pen, 45 1', 48', Busquets 85')
Celta Vigo 1 (Olaza 42')
