Blogs -2

Foreign investment in the Gulf still mostly in oil and gas

The United Arab Emirates and Oman together attract more than half of the total foreign direct investment inflows across the Middle East. The Netherlands is among the top 10 investing countries. But while FDI globally is shifting towards fossil-free investments, in the Gulf states the oil and gas sector remains the main destination

High energy price triggers fossil fuel production expansion in the Gulf 

The natural reflex after an oil price hike by oil states in the Gulf region is to increase fossil fuel production capacity. The current acceleration of the global energy transition does not seem to detract from this. Abu Dhabi - the United Arab Emirates' largest emirate and the centre of its oil industry - plans to invest $127 billion over the next five years to expand its oil production capacity by 20 per cent to five million barrels per day. In Oman, they are focusing on increasing gas production.gulf nw


Greening ambitions these oil states do have. But getting around 30 per cent of electricity generation from renewable sources by 2030 will require hefty investments. Gulf states do make efforts to interest foreign companies in these investments but without much success. Foreign investors apparently do not see green power as an alternative revenue model. The development of renewable energy capacity is focused on domestic energy consumption and thus will not bring in export earnings as long as 'green hydrogen' as an energy carrier is still in its infancy.

Innovative push

An innovative push is also welcomed by Gulf states in, for instance, the financial (fintech) and manufacturing sectors, which are destined to eventually take over from the oil-based economic growth engine. That is why many non-oil-related sectors have recently been opened up to full foreign ownership. For now, however, foreign investors prefer to lend a hand to the Gulf states in the race to pump as much oil and gas out of the ground as possible, before the global demand for it declines for good.

Share this article on