‍Natural Gas: A Transition Fuel In Multiple Dimensions

As part of Vision 2030, Saudi Arabia embarked on a massive, generational expansion of its power generation capacity.

As part of Vision 2030, Saudi Arabia embarked on a massive, generational expansion of its power generation capacity, founded first on its aspirations to integrate downstream industrial processes into its hydrocarbon value chain by investing in the production of natural gas at Jafurah (among the world’s largest non-associated unconventional gas fields) in parallel to construction of millions of metres of trunk and branch gas pipelines across the Kingdom. Led by Aramco and ACWA Power and funded by the PIF as well as by external investors, this gas and power build out is already transformative, despite being less than 50% complete at present.  Nearly all Saudi Arabia’s oil production will be directed for export rather than burned for power generation, and the power generation itself – a mix of natural gas and solar – is directed at a mushrooming cluster of manufacturing industries, from the mundane to the complex. 

Jafurah’s first gas began flowing in late 2025, and production is expected to grow from 200 million cubic feet per day to over 2 billion cubic feet per day in 2030, powering over 15GW of new gas fired power plants to be completed over the same horizon, and filling an extensive network of gas pipelines across the Kingdom targeted for export and domestic industrial use. Far from being only a so-called transitional energy source, Jafurah is the backbone of the industrial transition Saudi Arabia is undertaking to complement its much discussed social and cultural transformation.

In speaking to Saudis in the private sector, it is more often the ongoing industrial transformation in Saudi Arabia rather than the social one that causes them to marvel and exclaim.

Early and ongoing beneficiaries of this investment cycle have been the local producers of cables, transformers, switchgears, towers, and pipes, in which we have invested over the past several years.  As the build out stage matures around Saudi Arabia’s gas investments, we envision future opportunities downstream in the industrial manufacturing space as well as in the utilities management / operations management spaces. And as the SME public equity space grows, small industrial players are increasingly listing on the Nomu exchange to raise capital to fund expansion of downstream industrial activities such as metals recycling, mining, and industrial materials.

The UAE’s continued investment in both conventional and unconventional gas assets accelerated in 2025, with announcements of successful early work on unconventional drilling onshore in Abu Dhabi as well as continued development of offshore gas resources.  Over the past 5 years, ADNOC has listed most of its downstream subsidiaries, from ADNOC Drilling to ADNOC Distribution, and has driven increasingly global investor access to and interest in Abu Dhabi’s fossil fuel resources.  In 2025, this culminated in the ADNOC Investor Majlis, a first-time event for the region bringing together ADNOC’s many partners and investors from upstream suppliers to long only funds like Ajeej and every financial and operational level in between.  At the event, ADNOC via its listed subsidiaries reaffirmed its commitment to investment and growth as well as to transparency and minority shareholder interests, setting a new high bar regionally for investor interaction. What the Majlis made clear was that the scope and scale of Abu Dhabi’s ambitions is not yet well understood beyond its borders – in particular, the leadership of the emirate is singularly focused on embedding the most innovative technologies available, especially those driven by or enhanced with AI, into the fossil fuel value chain, to ensure that it is as clean and productive as possible.

Oman went from strength to strength this year, driven by the aggressive expansion and development of its own gas extraction and gas processing resources, 5 of which are now listed on the Muscat stock exchange, comprising drilling, pipeline management, shipping, base oils production, and maintenance. These listings are in part responsible for the significant revival of volumes and interest in the exchange, which has been moribund for almost a decade, due to their strong commitment to dividends, shareholder communication, and growth aspirations.

And in Kuwait, shaken up in 2024 by a new Emir and suspension of parliament, 2025 brought green shoots of investment in their own massive resources, with tenders issued for gas and chemicals processing and drilling operations and at the end of the year, and IPO of Action Energy Services, a workover boat operator upstreaming into higher value drilling rigs and contracts as Kuwait’s oil & gas investments accelerate.

As we turn to Qatar, the region’s gas giant, 2026 and 2027 will see the culmination of a decade of major investments in the expansion and exploitation of Qatar’s North Field natural gas resources.  The North Field expansion is set to add over 40% to Qatar’s gas production, and almost 6.5% to global gas production. This growth in predictable, stable price natural gas supply is seen as a critical input for the power and compute aspirations of China, Korea, and Japan, among others, making Qatar critical to these states, and Qatar’s world class gas infrastructure highly valuable.  And as has happened before, as funds from the expanded gas output flow into Qatar’s economy, we expect further acceleration of their development of consumer and industrial activities, particularly in tourism and healthcare. 

Moreover, as global hyperscalers and platform developers like Open AI locate new assets and future compute to the GCC, they have prioritised capacity agreements with multiple states, as both a risk mitigation and power management tool.  This means that all the GCC energy producing states stand to benefit from the inflow of data and its associated capital into the region, built on the backbone of their investments in natural gas extraction, processing, and distribution.

Beyond the power itself, the past 5 years saw regional systems integrators, software designers, data analytics platforms, data centre managers, and other digital support services firms thrive and grow.  In 2025, their profiles all became far more prominent as the US signed a series of agreements across the Gulf agreeing to significant high value chip exports to both the UAE and KSA, as well as strategic agreements with Qatar.  These agreements envision the shift of a significant amount of inference and compute into the GCC, in order to benefit from its geopolitical openness / neutrality as well as its inexpensive power generation and abundant energy. 

Instead of your car, the GCC nations will now be powering your search and your idea generation!

Within the GCC public equity universe, numerous opportunities to invest in this implementation and production layer on top of its power and compute exist, and form a growing part of our portfolio.  Crucially, more IP is developed locally and exported (particularly along the lines of the UAE’s bilateral CEPA agreements) as nonaligned developing countries seek information and services that require them to become direct clients of the US or of China.  Increasingly, we see the UAE in particular and the nations of the GCC in general as forming a critical intermediate layer between Western tech innovation and Eastern low cost components – enabled by their energy resources – exporting services, inference, and information to the surging populations of India, Central Asia, and Africa.

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