The amount of oil burned to generate electricity in the Middle East and North Africa is set to shrink sharply, freeing up more Saudi and Iraqi crude for export, according to the International Energy Agency.
Even as electricity demand in the MENA region is set to surge 50 percent by 2035, the IEA sees oil’s share in the power mix falling to just 5 percent, from about 20 percent currently. Crude-burning will be displaced by increased use of natural gas and renewables, according to a report from the Paris-based agency published on Thursday.
OPEC’s two biggest producers, Saudi Arabia and Iraq, would be able divert 500,000 barrels a day and about 220,000 barrels a day, respectively, from domestic power generation to exports or other higher-value uses by 2035, IEA Executive Director Fatih Birol said in an interview on Wednesday.
Oil no longer burned in power plants, “will definitely be a contribution to the supply” on world markets, Birol said. “This will also bring hard currencies to the countries in terms of their revenues.”
The Rise of Gas
The MENA region supplies over 30 percent of the world’s oil and nearly 20 percent of its natural gas. How governments meet the increased demand for power will have significant implications for their local economies as well as for global energy markets.
Natural gas generation more than tripled over the past two decades, with Egypt, Iran, Saudi Arabia and the United Arab Emirates accounting for two-thirds of that consumption, according to the report. Over the next decade, it will keep expanding, with gas-fired capacity on course to rise by more than 110 gigawatts, adding to the 350 gigawatts already in operation in 2024.
Cooling and desalination are the main drivers of electricity demand growth in a region that will suffer the most from extreme heat and water scarcity, according to the IEA. Rapid growth in populations and incomes will also require more power for industries, the electrification of transport, the expansion of cities and new digital infrastructure including data centers.
Power demand in the region tripled between 2000 and 2024, increasing by more than 1,000 terawatt-hours and making it the third-largest contributor to global electricity demand growth after China and India. Of the total growth, four countries alone accounted for 70 percent of the increase: Saudi Arabia and Iran each contributed 25 percent, while Egypt and the United Arab Emirates each contributed 10 percent.
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