Employees wrapped in heat, sand, and dust covered by masks and clothing head to the Zapora Combined Heat and Power Plant site. / Courtesy of Ministry of Trade, Industry and Energy

On the 21st (local time), under the scorching sun in eastern Saudi Arabia. After leaving Dammam and driving for about two hours on the highway in the middle of the desert to reach Jafurah, an unfamiliar landscape unfolded. Known as the 'largest shale gas field in the Middle East,' here the finishing touches and trial operations were underway for the 'Jafurah gas plant,' which processes and refines gas extracted from the gas fields, and the supporting 'cogeneration power plant.'

At the plant site, a 'air-cooled condenser' resembling 15 large fans gathered together caught the eye first. The air-cooled condenser facility, half the size of a soccer field, is a product supplied to the Middle East by Dasan DTS, a domestic small and medium-sized enterprise. In the Middle East, where water is scarce, steam is cooled with air and fans.

It was not only Korean equipment that entered this faraway land. Employees of KEPCO and Doosan Enerbility were conducting trial operations of the cogeneration power plant. KEPCO is in charge of the development and operation of the cogeneration power plant project with Saudi Aramco, while Doosan handles the entire process from design to equipment supply, installation, and trial operation. Saudi Arabia is dedicating itself to this project, planning the construction of the second Jafurah cogeneration power plant even before the first one begins operating.

◇ energy transition and soaring power demand, the Middle East as the land of opportunity

UAE Barakah Nuclear Power Plant / Courtesy of Ministry of Trade, Industry and Energy

As the land of 'black gold,' the Middle East accelerates its energy transition, 'Team Korea' is increasing exports. Over the past five years, the Middle East accounted for a whopping 98% of KEPCO's overseas project orders (based on capacity). Currently, 11 out of a total of 33 overseas projects, including nuclear power plants, cogeneration, wind power, solar power, and HVDC (high-voltage direct current transmission), are being operated in the Middle East.

KEPCO has identified Saudi Arabia and the United Arab Emirates (UAE) as key countries for overseas business this year. The reason Korean energy corporations are expanding in the Middle East is due to the 'energy transition' and the 'rapidly growing power demand' in these oil-rich countries.

The UAE has set a goal to increase the share of renewable energy to 50% by 2050 and achieve carbon neutrality. Additionally, with OpenAI announcing plans to build a 26-square-kilometer mega-scale artificial intelligence data center in Abu Dhabi, power demand is expected to rise sharply. The construction of the data center is anticipated to result in power demand equivalent to that of five nuclear power plants.

Saudi Arabia, an oil-rich country, also plans to reduce its thermal power share (currently 96%) and increase its renewable share (currently 3.5%) to 50% by 2030. Motnana Alodaib, the project development director at Acwa Power, said, "Saudi Arabia has set ambitious energy transition goals and requires various partners like the Korea Electric Power Corporation and Doosan, which have decades of know-how."

Saudi Arabia is also slated to host several large-scale international events, including the AFC Asian Cup (2027), the Neom Winter Asian Games (2029), Expo (2030), the World Cup and the Riyadh Summer Asian Games (2034). Power demand is expected to increase exponentially. According to Mordor Intelligence, Saudi Arabia's power facility capacity is projected to expand from 92.9 GW in 2025 to 123.2 GW by 2030.

Kwon Byeong-su, head of the Luminarie Project's Korea branch, said, "Saudi aims to swiftly replace old power plants to enhance efficiency," adding, "Currently, renewable and combined cycle gas power projects are simultaneously underway." A Doosan Enerbility employee at the Luma gas power plant site also noted, "Saudi is practically one large construction site."

◇ Korean corporations aiming for revenue diversification through overseas business

KEPCO has reorganized its business portfolio around nuclear and renewable energy in response to changes in the global energy market. With accumulated technology in HVDC and battery energy storage systems (ESS), KEPCO is actively entering the global market and aiming for revenue diversification.

Graphic=Son Min-kyun

This year, projects up for bidding or expected to be up for bidding in the Middle East represent opportunities for Team Korea. The projects expected to be up for bidding this year include ▲UAE Abu Dhabi Water and Electricity Authority's battery ESS project (400 MW) ▲Saudi Arabia Jafurah 2 cogeneration project (320 MW) ▲Saudi Atomic Energy Corporation's two nuclear power units ▲Saudi round 6 renewable energy project (5 GW) ▲Saudi Group 1 battery ESS project (2.0 GW) ▲UAE Al Nuf combined cycle power plant (3.3 GW) ▲Bahrain Sitra independent water and power project (1,200 MW).

In the energy industry, there are expectations that KEPCO will win the Abu Dhabi Water and Electricity Authority's battery ESS project and the Jafurah stage 2 cogeneration project this year. Winning the Abu Dhabi Water and Electricity Authority battery ESS project would mark the first entry of a Korean company into the Middle Eastern battery market, setting a foundation for future project bids. Just as KEPCO's successful implementation of the Jafurah cogeneration plant stage 1 increased the likelihood of securing stage 2, the potential to win diverse projects in various fields is growing.

The increase in energy project orders in the Middle East also aligns with the needs of Korean corporations seeking revenue diversification. KEPCO's accumulated liabilities have exceeded 200 trillion won due to selling electricity at prices cheaper than cost, necessitating reduction through overseas business. Doosan Enerbility, which once struggled with the phase-out of nuclear power, is also aiming to increase sales and improve profitability by expanding overseas orders.

Energy projects in the Middle East also provide opportunities for domestic small and medium-sized enterprises. A single project won by KEPCO involves participation from at least 10 to as many as 90 domestic construction companies, equipment firms, maintenance operators, and financial institutions. In the case of the Barakah nuclear power plant, 78% of the total project cost of $18.6 billion was infused into the domestic market.

KEPCO views the stability of Middle Eastern projects as attractive. Middle Eastern projects offer free project sites and water supplies, have vast lands unlike in Korea, and are less prone to civil complaints due to the monarchy system. They are carried out by forming consortiums with state-owned corporations, thus minimizing risk and ensuring stable revenue through long-term power sales contracts. This contrasts with countries like the United Kingdom, where power must be sold competitively after plant construction.

A KEPCO official stated, "Signing a long-term power sales contract with a major Middle Eastern energy corporation for over 20 years makes stable revenue generation possible," adding, "The joint entry effects of Team Korea, which include domestic construction company execution and financial institution funding, can also be anticipated."

However, geopolitical risks in the Middle East also pose as a threat. Conflicts such as the Israel-Hamas war and aerial attacks by Houthi rebels on Israel can delay energy project orders in the Middle East or delay the supply of equipment.

Kim Hee-jung, the construction director for the Saudi Jafurah project, said, "Due to the Houthi and Israel war, European equipment could not be supplied through existing routes and had to pass through Africa," adding, "There were difficulties such as transporting approximately 2000 kg of machinery by land over two nights and three days."

Lee Gwang-ho, president of KEPCO's Middle East branch, stated, "Nuclear power projects require domestic and international stabilization due to the use of nuclear fuel," acknowledging that the Israel-Hamas conflict delayed some nuclear project orders. However, Lee emphasized that "The Middle East remains an indispensable market."

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