Saudi energy deals bring $2.1bn pipe plant, $2.2bn power project

Saudi energy deals signed this week will bring a $2.1 billion pipe factory and a $2.2 billion power plant expansion, led by Chinese and Egyptian firms.

First, China’s Dalipal Holdings agreed a 25-year land lease with King Salman Energy Park (SPARK). It plans to invest about $2.1 billion in a modern factory for energy equipment there. The site gives the firm access to utilities, logistics and major energy markets in the kingdom.

Second, Egypt’s Elsewedy Electric teamed up with China’s Sinohydro on a $2.2 billion contract. The pair will enlarge the Rabigh 2 independent power plant.

Saudi energy deals back local industry

The Dalipal site will span roughly 1.03 million square metres inside the industrial park. Its first phase should cost about $600 million, the state news agency said.

A fully owned Dalipal unit will build and run the plant. Its production lines will turn out seamless well pipes for oil and gas, along with drill pipes and hydrogen pipelines.

Output will supply Saudi Arabia, markets across the Middle East and buyers further afield. The deal follows a letter of intent that SPARK and Dalipal first signed at the ADIPEC conference in November 2024.

Mishal Al-Zughaibi, who heads SPARK, called the lease a key milestone. He said it reflected the “confidence of leading Chinese industrial companies” in the kingdom’s future.

Meng Fanyong, chairman of Dalipal, described Saudi Arabia as “a strategically important market” for his firm. A local base, he said, would bring the company closer to customers and speed up regional supply.

Such Saudi energy deals support the National Industrial Strategy, which seeks to double industrial output and lift exports sharply by 2030.

Rabigh 2 to add 2.3 gigawatts

Meanwhile, the Rabigh 2 upgrade will raise capacity by 2.3 gigawatts. Elsewedy Electric expects commercial operations to begin in May 2029, it said on Wednesday.

Al-Mourjan Two Electricity Co. awarded the deal, which covers design, procurement and construction of a gas-fired combined-cycle plant. The partners will also link the plant to the national grid.

The equipment list includes six Siemens gas turbines, two steam turbines and six heat recovery steam generators. Work on the site is already more than 39% complete, the company said.

Founded in 1938, Elsewedy Electric earned $5.7 billion in revenue last year and employs around 22,000 people. Listed on the Egyptian Exchange, it runs 34 production facilities.

Rising demand for electricity

Saudi Arabia is adding power capacity as demand from factories, offices and homes keeps growing. Its licensed generating capacity stood near 92.5 gigawatts in 2024, while consumption rose 4.1% that year. The grid received about 402.6 terawatt-hours of electricity in 2024, official data show.

In addition, the kingdom wants renewables to supply roughly half its electricity by 2030, with gas covering the remainder. Efficient combined-cycle plants such as Rabigh 2 play a central role in that plan.

Taken together, these Saudi energy deals show that foreign firms still see strong prospects in the kingdom. Both projects also point to deepening Chinese and Egyptian business ties with Riyadh, despite tension across the region.