Industry

Data centres consume vast amounts of energy. (Image source: Adobe Stock)

The global electricity demand is on an unprecedented upward trajectory, fuelled by the rapid expansion of data centres essential for supporting energy-intensive advanced technologies, including artificial intelligence (AI)

Despite significant investments in alternative energy sources and global climate policies aimed at reducing carbon footprints, the unchecked energy consumption of data centres risks undermining these efforts. And this means the reliance on fossil fuels will continue, as renewable sources do not have the capacity to satisfy this demand.

A recent report by the International Energy Agency (IEA), titled “What the Data Centre and AI Boom Could Mean for the Energy Sector”, underscores the scale of the challenge. Investment in new data centres has surged, particularly in the United States, propelling electricity demand to unprecedented levels. The report predicts that by 2026, the electricity consumption of data centers, cryptocurrencies, and AI systems could reach 1,000 Terawatt Hours (TWh) – a figure comparable to Japan’s annual energy usage – up from the current 460 TWh.

The rapid adoption of advanced technologies looks to outpace the capacity of renewable energy sources to meet latent demand. While the expansion of renewable energy, particularly solar and wind power, has been a central focus of global energy strategies, these sources are not yet sufficient to meet the surging electricity demand from the tech sector. In response, many tech companies, particularly in the United States, are expected to turn to natural gas – a sector experiencing robust growth – as a primary energy source to power their operations. 

At present, many tech companies operate data centres with a capacity of around 40 MW, but the coming years are set to see an acceleration in the size and energy demands of these facilities. By the time these companies begin constructing campuses of 250 MW or more, the energy requirements will be substantial – equivalent to the electricity needs of an entire mid-sized city. As a growing number of campuses of 500 MW or more emerge in the 2030s and 2040s, the demand for gas-generated electricity could surge, following years of national investment in a green transition. This shift could place further strain on global energy systems, especially in regions that are already grappling with the challenges of transitioning to a low-carbon economy.

Significant challenge

The extraordinary rise in electricity demand driven by data centres and AI technologies presents a significant challenge to global energy supply systems. As tech companies continue to expand their operations, the sheer scale of energy required to power these facilities will put immense pressure on existing infrastructure. Current projections suggest that the growing electricity needs of the tech industry could outstrip the capacity of renewable energy sources, particularly in regions where these technologies are rapidly developing. In the absence of effective regulation and investment in new energy solutions, there is a real risk that power shortages, grid instability, and rising energy prices could become commonplace.

For energy supply systems, this rapid rise in demand underscores the necessity for innovation in power generation, distribution, and storage. Power grids must evolve to meet the needs of an increasingly digital world, with greater flexibility and efficiency in handling variable loads from data centers and other large-scale users. Investment in energy infrastructure – both to expand capacity and enhance resilience – will be crucial to ensuring that demand can be met without compromising the reliability of energy services for other sectors.

Ultimately, balancing the growing demand for electricity with the availability of supply will require coordinated efforts across governments, industries, and energy providers. If the increasing energy consumption of data centres and AI technologies is not effectively managed, the resulting strain on the global energy system could have far-reaching consequences, including potential power shortages, rising costs, and challenges in meeting the needs of both the tech sector and the broader economy.

This article is authored by Synergy Consulting

NESR is investing in next-gen advanced drilling technologies. (Image source: Adobe Stock)

Speaking exclusively to Oil Review Middle East, Sherif Foda, chairman and CEO of leading MENA oilfield services company NESR, discusses business prospects

"The MENA region’s energy sector is proving to be highly promising with numerous, albeit different, strength points across countries. We predict that some markets will grow much faster than others, based on their timelines and goals to increase their capacity.

"Kuwait is one example of how much potential the region holds, with the GCC country expected to achieve the highest percentage of growth to work toward ambitious production capacity targets.

"At NESR, we have been specifically focused on maintaining a fully diversified portfolio across more than 15 countries to ensure we are ready to increase service capacity at a very fast pace, based on unique demand drivers such as those in Kuwait, by leveraging our agility and leading MENA footprint to ensure we remain the most focused, customer-centric service provider in our sector.

"Our focus for the foreseeable future is on investing in research and development to enhance our intellectual property, particularly around advanced drilling tools and decarbonisation, which will, in turn, help us reach our goal of doubling the size of the company over the next three to five years.

"Since the company’s foundation, we’ve already quadrupled the size of the business through the establishment of key “anchor countries” and portfolio “pull through” in each of these countries to maximise our segment touch points. When it comes to our next-gen advanced drilling technologies platform ROYA, we are proud to be the first MENA company to organically build its own RSS, MWD and LWD. ROYA is an platform which we recently
launched at the International Petroleum Technology Conference (IPTC) in Saudi Arabia. Since then, I am proud to say we successfully executed multiple jobs in the region after extensive testing in North America."

You can read the full interview in the latest issue of Oil Review Middle East, here

The Hydrogen Council Board is driven by global CEOs. (Image source: Adobe Stock)

Masdar, Siemens Energy and Yara Clean Ammonia has joined the Hydrogen Council as board members, effective as of 1 January 2025

The Hydrogen Council Board is driven by global CEOs working to advance visionary ideas to leverage hydrogen as the means for the energy transition. The first board member from the Middle East, Masdar will bring valuable insights on the ambition and investment progress in the region, while Siemens Energy and Yara Clean Ammonia bring expertise in electrolysers and ammonia production respectively.

Welcoming the new members, Jaehoon Chang, CEO of Hyundai and Sanjiv Lamba, CEO of Linde, co-chairs of the Hydrogen Council, said, ‘We are pleased to welcome Masdar, Siemens Energy and Yara Clean Ammonia to the Board and work together as we guide the sector through a pivotal time for the energy transition. Hydrogen has made encouraging progress, with record levels of committed capital and projects past Final Investment Decision reported globally in 2024. However, over the next two years, regulatory stability, clear demand signals and global standardisation will be key to maintaining a robust scale-up trajectory and unlocking hydrogen’s full economic and societal benefits. We look forward to collaborating with the entire Board to tackle these challenges and driving the hydrogen industry forward together."

Mohamed Jameel Al Ramahi, CEO of Masdar, said, "The Hydrogen Council is central to advancing hydrogen as a key component in the transformation of the energy system and uniting our sector’s expertise has never been more critical. I am honoured to join the Council’s Board and work with global leaders to drive innovation, shape policies, and accelerate large-scale hydrogen deployment worldwide."

SMEs contributed approximately 16% to the oil and gas sector in Q2 2024. (Image source: Adobe Stock)

As part of the National Policy for Local Content that came into effect in 2023, the Ministry of Energy and Minerals (MEM) is focusing on programmes and policies to enhance local content and sustainable development in Oman

According to Ali bin Salim al Rajhi, Director General of Planning at the Ministry of Energy and Minerals, the administration is currently considering fresh perspectives to design local content, with plans to identify a new identity and introduce the Local Content Certificate Project.

While the Omanisation rate in exploration and production companies has surpassed 92% this year, Rajhi noted that the Ministry is working for similar outcomes from contracting companies. With approximately 69% of such companies from Oman, the government is looking to fill 130 positions to boost its localisation rate. 

Overall, small and medium-sized enterprises (SMEs) contributed approximately 16% to the oil and gas sector in the second quarter of 2024. 

Highlighting social responsibility in the oil and gas sector, the Ministry is also developing a general framework, inviting suggestions from several sources to ensure diversity.