Siemens Energy signs $1.5bn deal to develop Saudi power plants

Gas-fired plants will produce four gigawatts of electricity

The Taiba 2 and Qassim 2 plants will provide reliable energy and contribute to sustainability efforts in Saudi Arabia. Photo: Siemens Energy

Siemens Energy has signed a $1.5 billion deal to supply key components for two gas-fired power plants in Saudi Arabia and to maintain the sites for 25 years.

The Taiba 2 and Qassim 2 plants will produce four gigawatts of electricity combined and will be built in the western and central regions of Saudi Arabia, respectively, over the next few years, the company said in a statement on Monday.

China Energy International Group is Siemens Energy’s engineering, procurement and construction and contracting partner on the projects.

“The new gas-fired power plants will provide reliable energy supply and contribute to the sustainable and future-orientated development of the country,” said Karim Amin, a member of the managing board of Siemens Energy.

Saudi Arabia, the world's biggest crude exporter and the Arab world's biggest economy, has set ambitious targets to tackle climate change and cut carbon emissions to overhaul its economy and reduce its reliance on oil. The kingdom has set a target of achieving net-zero carbon emissions by 2060.

Saudi Arabia plans to spend $10 billion to expand its Master Gas System (MGS), which includes upgrading compression systems and laying new pipelines. The move is expected to increase the network's capacity significantly.

This expansion will make more natural gas available, enabling power plants in the kingdom to switch from crude oil.

The MGS was constructed during the 1970s and became operational in 1982. Since then, Saudi Aramco has utilised the network to distribute natural gas throughout Saudi Arabia, primarily transporting associated gas from fields including Ghawar.

The Taiba 2 and Qassim 2 plants are expected to save up to 60 per cent of carbon dioxide emissions compared with oil-fuelled power plants, Siemens Energy said on Monday.

The plants will initially be connected to the grid in simple cycle mode in 2026 and will be permanently operated as a combined cycle power plant a year later, the company added.

In 2021, Aramco signed a long-term service agreement with Siemens Energy to obtain a range of turbines and generators for four major oilfields.