Middle East Energy Leaders Warn of Underinvestment in Oil, Bet on Digital Growth

Two conferences in the Middle East this month opened insights on energy and sustainability from a Middle Eastern perspective.

The enormous ADIPEC event in Abu Dhabi brought together hundreds of speakers in 10 different strategic areas and numerous technical sessions across four days.

Discussion of sustainability occurred within the context of an imperative for investment to sustain growth in all forms of energy and especially oil and gas. The spotlight was also on AI which received praise for already providing remarkable efficiency gains in petroleum operations and planning.

A much smaller but equally vibrant event opened in Dubai, where a Dii Desert Energy summit gathered some of the same OEMs and EPCs but wearing very different glasses, seeing a new energy future for the Middle East.

Together they shed light on what’s known, and what’s unknown, about the world’s energy future.

Words and phrases

Dr. Sultan Al Jaber, ADNOC Managing Director and Group CEO, who is also UAE Minister of Industry and Advanced Technology, set the tone for ADIPEC in his opening remarks.

“Tune out the noise, track the signal,” he said. “Near-term uncertainty is real, while long-term demand remains strong.”

“The long-term outlook shows demand growth for every form of energy across every market.

“Renewables will more than double by 2040, LNG will grow 50 percent, jet fuel will grow more than 30 percent and oil will stay above 100 million barrels per day beyond 2040,” he said.

Al Jaber noted that petroleum will be increasingly used for materials as well as for mobility. He noted that electricity demand will surge as power for data centers grows four-fold, 1.5 billion people locate to cities, and 2 billion air conditioners are added worldwide by 2040. In aviation, the global airline fleet will double by the same year.

He highlighted another major theme, voicing a pervasive concern for investment capital, saying, “We need to free up dormant capital that is tied up in existing energy infrastructure assets.”

His address was followed by remarks from Doug Burgum, US Secretary of the Interior and Chairman of National Energy Dominance Council.

Related: US Drillers Pick Up The Pace

“Today is the day to announce that there is no energy transition, there is only energy addition and that we need to have more power,” he said.

The term ‘energy addition’ was deployed frequently during the four days with others including ‘energy abundance’, ‘energy realism’, and ‘energy pragmatism’. One phrase notably absent from Dr. Al Jaber’s address, and from almost the entire event, was ‘climate change’.

This might not be surprising except for the fact that Al Jaber served as president of the COP28 conclave in Dubai two years ago, which was the first UN climate summit to explicitly recognize fossil fuels as a cause of climate change and to call for a transition away from them.

The phrase was used, however, by Bill Gates, who appeared prerecorded on-screen at one technology discussion, where he stated his optimism about innovation to enable decarbonization. He said that lowering carbon emissions is necessary to maximize human welfare and he called for leadership in deploying key technologies.

No oil glut

OPEC used the event to present highlights of its World Oil Outlook 2025 report, which combines certainty about long-term demand growth with great concern for investment. The report foresees global energy demand expanding by 23% to 2050, in part from energy-intensive industries including AI. It sees oil demand reaching 123 million barrels per day in 2050, requiring $18.2 trillion in oil-related investment during the period 2025-50, most of that being upstream investment.

As for short-term forecasts, the CEOs, industry reps, and high-level ministers at ADIPEC saw little sign of oversupply in 2026. But they were more interested in looking long-term and their consensus was that capital investment has been deficient, especially in the oil sector.

“I don't think there's going to be glut,” said James Danly, Deputy Secretary of Energy, USA, as he shifted focus to long-term considerations.

“The policies that should be enacted are deregulatory efforts to ensure that price signals can be responded to over the long haul and that demand can be satisfied as nimbly as possible,” he said.

Claudio Descalzi, CEO, Eni, explained why he did not see signs of oversupply next year.

“In the last 12 years, we are investing half of what we need to invest to increase production,” he said. “We know that demand is increasing, and the supply is more or less there, and in 2026 there is additional one million barrels, it’s an average but we are not investing enough.”

“We have Guyana, we have Brazil, but there is no other big project that can start producing,” he continued. “So we have demand increasing and we don't have enough supply and enough investment.”

Tengku Muhammad Taufik, President and Group CEO, PETRONAS, expressed similar concerns about long-term investment.

“Last year there was a number north of $3 trillion (of investment), almost two-thirds of that went to renewables and lower carbon,” he said. “There's not been enough being ploughed back into the core fossil fuels and hydrocarbons.”

Musabbeh Al Kaabi, CEO, Upstream, ADNOC, expressed confidence that next year's global economic growth will be sufficient to spur more oil demand. He also conveyed concerns about investment.

“It's clear that the industry inherently is underinvesting, and the risk we're going to face, potentially, is the lack of investments to mitigate natural decline but also to meet growing demand,” he said.

“I think that puts responsibility on integrated energy producers like us because we need to maintain an acceptable level of investment.”

Expanding gas

Natural gas received its own reframing, being described no longer as a ‘transition’ fuel but as a ‘destination’ fuel, in the words of Lorenzo Simonelli, Chairman & CEO, Baker Hughes, who spoke at the conference.

Its enhanced status is apparently at the expense of coal, the one fossil fuel that did not receive much affection at ADIPEC.

The global gas market was looked at from various perspectives over the four days, with general agreement that despite large quantities of the chilled fuel coming on-line, rising demand will ensure there is not global oversupply.

Eng. Mohamed Hamel, Secretary General, Gas Exporting Countries Forum, discussed the market dynamics.

“Of course, there is a wave of new energy capacity expected in the next five years,” he said. “This is a challenge and an opportunity.”

He explained that the wave will induce downward pressure on prices, but opportunity exists because it will also incentivize additional demand from price sensitive markets, particularly in Asia, where gas can penetrate new markets in the transportation and maritime sectors.

He said that global demand has been increasing steadily, with expectation of 1.6 percent increase this year and 1.8 percent next year.

Yumiko Yao, President of Tokyo LNG Tanker Co., Tokyo Gas, spoke on behalf of a major gas importer. She described a basic shift in market structure.

“Europe has improved its energy facilities and stabilized inventories,” she said. “Now they are coping with increasing contracts offering destination flexibility.”

“So for us,” she continued, “we think that Europe and Asia now compete for LNG but also complement each other.

“I think we are looking at the market together and communicating better, so trying to work for mutual benefit, which is challenging, but it's good for the liquidity of the market.”

Shri Sandeep Kumar Gupta, Chairman and Managing Director, GAIL, shared insights from a developing country importer perspective.

“Geopolitical tensions have led to increase in prices,” he said. “India is a very price sensitive market, despite the huge potential to increase its natural gas consumption because of urbanization, because of a young demography.”

“I am very confident that when geopolitical tensions are resolved, and prices are sort of returned to normal levels, there is a huge potential of natural gas growth,” he continued.

“All the growth will come in the LNG market, of which India’s current share is about 5 to 6% of total LNG trade in the world, and I think that share will double.”

Dr. Philip Mshelbila, Managing Director and CEO, Nigeria LNG, spoke as a representative of a rising exporter.

“Since ‘22, we've looked at buyers being interested in much longer-term contracts to give them that reliability of supply that they seek,” he said.

“We are a growing company with 22 million tons per annum and we are in the process of building a seventh train that will take us to 30 million tons per annum, so we are planning to bring additional supplies into the market.”

MENA data centers  

As ADIPEC was closing the Dii Desert Energy Leadership Summit opened in Dubai, with more than 70 speakers, including high level executives, investors, and industry reps all devoted to developing net-0 energy in the Middle East and North Africa (MENA).

The Dii think tank and networking organization, active in MENA since 2009 when the renewable energy take-off was barely foreseen, is striving to build regional capacity for new energy. It now has much momentum to build on.

The IEA predicts that global solar, wind and hydro capacity will double by 2030. Investment in low-carbon energy now outpaces fossil fuel investment by a 2–to–1 ratio, up from approximately 1–to–1 a decade ago, and this gap will probably widen. Meanwhile, the energy think tank Ember has reported that solar and wind power development actually outpaced electricity demand growth in the first half of 2025, causing a slight decline in demand for coal and gas.

These global gains are compelling Dii to find catalysts for innovation in MENA. One result announced at the summit is a report, Data Centers: The New Super Offtakers of Clean Energy, which studies the Middle East as a prime location for ‘sustainable’ data centers.

The report zeros in on an enormous opportunity for the Gulf region, where countries are now vigorously developing digital infrastructure with major US companies building cloud data centers while pursuing corporate net-0 targets.

The essential proposal is to export data center capacity, using the world’s lowest cost renewable energy, the region’s ample land, and a favorable policy environment which can move quickly. The report puts focus on building ‘hubs’ where data center developers can leverage these advantages.

It describes places where this work is already underway, where the critical infrastructures of giga-scale renewables generation and high-bandwidth connectivity overlap. These include NEOM in Saudi Arabia, the Salalah Free Zone in Oman, and the UAE-US AI campus in Abu Dhabi, as well as sites in Kuwait, Qatar, and Jordan.

The relevant technologies are described in some detail; the report sets out a staged decarbonization strategy for data center operations based on renewable power and low-carbon hydrogen.

That renewables-powered data centers will arise in MENA is perhaps a hope, but one that must be taken seriously, given the surprising advances of new energy over the past two decades. What appears certain is uncertainty about the future of energy old and new, an uncertainty lurking in the background of both the recent confabs in Dubai and Abu Dhabi.

By Alan Mammoser for Oilprice.com

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