Eastern Province Governor in Saudi Arabia Inaugurates Gulf Electricity Market Connection with Iraq Worth $300 Million Annually

His Royal Highness Prince Saud bin Naif bin Abdulaziz, the Governor of Saudi Arabia's Eastern Province, inaugurated the Gulf Electricity Market Project's connection platform with the Republic of Iraq on Tuesday, October 10, at the GCC Interconnection Authority (GCCIA) headquarters in Al Dammam city.

In his address, His Royal Highness emphasized that the Electricity Connection Project among the GCC countries aims to preserve energy security and enhance integration for the benefit of the Gulf's citizens. He noted that energy security holds immense global importance, with electricity generation evolving beyond traditional methods to include nuclear and renewable energy sources. Prince Saud bin Naif expressed the aspiration to expand this initiative to involve other countries.

Prince Saud bin Naif commended the efforts of those in charge of GCCIA for their contributions to enhancing energy security's credibility, affirming the Gulf countries’ commitment to ensuring energy security.

He also stressed that the platform's inauguration is a testament to the positive neighbourly relations with the Republic of Iraq, underpinned by geographical proximity.

Engineer Yaqoob Saif Al Kiyumi, Vice Chairman of GCCIA, stated during the ceremony, “Today, we are witnessing the launch of a new project that fulfils one of the Authority's objectives, introducing the Platform for the Gulf Market Electricity Connection Project with the Republic of Iraq. This platform creates opportunities for the Gulf market to facilitate the exchange and trade of electric power among the countries of the Gulf Cooperation Council and the Republic of Iraq. Furthermore, it empowers Gulf nations to enter into bilateral or multilateral agreements and to reserve the essential transmission lines needed for the transfer of electric power among them.”

Engineer Al Kiyumi emphasized that the Platform for the Gulf Market Electricity Connection Project is a sophisticated system designed for electricity market management, serving as the foundation for the Authority's plan to replace the existing electricity market management system. This strategic move aims at enabling the Authority to effectively adapt to ongoing market developments and meet the precise goals and requirements established for its connection with the Republic of Iraq, a neighbouring sister nation.

He further pointed out, “The platform will contribute to raising efficiency levels to maximize the utilization of the Gulf Electricity Interconnection, along with enhancing flexibility in its utilization. All of this will be automated, positioning it to serve as a unified solution for standardized data exchange and a robust foundation for future development and the enhancement of the information management system for the Gulf Cooperation Council countries and the Republic of Iraq.”

Engineer Al Kiyumi revealed that the Authority is currently executing three expansion projects for the Gulf Electricity Interconnection, involving expansion with the State of Kuwait, United Arab Emirates, and direct interconnection with the Sultanate of Oman. Additionally, the Authority has explored the possibility of expanding its network by signing memorandums of understanding to study the interconnection of its network with the electrical networks of both Jordan and Egypt.

He highlighted, “The launch of the Gulf Market Electricity Connection Project with Iraq marks a promising step towards reaching other international networks.”

Furthermore, Al Kiyumi pointed out that the presence of the Interconnection Authority in the Eastern Province alongside major energy companies underscores the value of the Authority's role and enhances its ability to anticipate future energy trends and assess real needs based on economic indicators that can be utilized.

Moreover, the GCCIA has played a vital role in supporting member states' electrical networks during emergencies. It has ensured the uninterrupted flow of electric power to member state networks, with a 100% success rate in avoiding partial or complete disruptions. The Authority has provided momentary support by transmitting the required energy through the electrical interconnection network, which stretches over a thousand kilometres from the State of Kuwait in the north to the Sultanate of Oman in the south. It has supported over 2,700 cases since its inception.

He affirmed that the project has contributed to achieving savings estimated at approximately USD3 billion since its inception, compared to the investment and operational costs of the project, which amounted to about USD1.5 billion.

He also emphasized the commitment to embracing all international experiences in reading energy trends and advancing the energy market. He pointed out that the GCC countries are considered the world's foremost energy source and will continue to support member states' plans to expand their renewable energy activities to enhance their flexibility in dealing with future challenges.

Engineer Ahmed Al-Ebrahim, CEO of the GCCIA, expressed his gratitude to His Royal Highness Prince Saud bin Naif bin Abdulaziz, the Governor of the Eastern Province in the Kingdom of Saudi Arabia, for his patronage and inauguration of the interconnection platform.

He said: “The platform enables Iraq to engage in the exchange and trade of electric power with the GCC countries collectively or individually, providing extensive flexibility for the exchange and trade of electric power between the Republic of Iraq and the Gulf countries. The platform also facilitates cross-border trade among the Gulf countries in a streamlined and efficient manner, in addition to reserving the necessary transmission lines for electric power transfer among these countries.”

Al-Ebrahim further highlighted that they anticipate the exchange of approximately 2 terawatts of power with Iraq during the summer period. The trade is expected to extend into the winter season, reaching around half a terawatt.

He noted that the electricity exchanged with the Republic of Iraq could contribute to sales of energy quantities amounting to approximately USD200-300 million annually. He emphasized that this figure could increase significantly in case of a gas shortage used for electricity production, reaching up to USD232 million when using liquefied natural gas or USD438 million if oil is used for electricity generation.

Furthermore, Al-Ebrahim pointed out that the electricity connection project would save Iraq around USD100 million when using liquefied natural gas or USD215 million when using oil for power generation.

He further explained that the Authority is actively working to expedite the activation of the Gulf Electricity Market, with the aim of enhancing the exchange and trade of electric power among member states. To achieve this, the Authority continues to develop a platform for energy trade in the Gulf electricity market, a program designed by the Authority's professional team. In its initial phase, this program aims to encourage the establishment of daily contracts for energy trade among member states, similar to global electricity markets.

He emphasized the Authority's success in ensuring the uninterrupted flow of electric power to member states, with a 100% track record in avoiding partial or complete disruptions to the electrical networks of GCC countries.

The CEO of GCCIA noted that the Authority provides immediate support by directly transmitting the required energy through the electrical interconnection network, having supported approximately 2,700 cases since its inception.

He highlighted that the Authority has yielded economic benefits for the GCC countries exceeding USD 3 billion, achieved through reductions in energy investments, fuel costs, operational and maintenance expenses, as well as carbon emissions reduction. He clarified that the total investment over 14 years amounted to USD 1.5billion.

He revealed that the Authority has conducted a feasibility study for the expansion of the Gulf Market Electricity Connection Project within the Gulf Cooperation Council member states. The study resulted in three key projects: the expansion of the interconnection with Kuwait, the United Arab Emirates, and Oman.

He confirmed that these expansions will allow Gulf countries to receive greater electrical support during emergencies and enable them to engage in electricity trade during periods of surplus energy.

These expansion projects offer significant benefits by increasing the combined capacity, enhancing interconnection capability to carry larger capacities to support emergency situations, and, most importantly, enhancing the security and stability of the network while reducing disruptions.

Al-Ebrahim stated: “The actual completion rate for the Al-Wafra station in Kuwait, part of the Gulf Market Electricity Connection expansion Project with Kuwait, reached approximately 25% by the first half of the year. The project is set to be completed in December 2024, and it includes adding two 400-kilovolt lines from the Al-Fadhili station in the Kingdom to the Al-Wafra station, which will also be expanded (including electrical switches, reactors, protection, and control systems) and is scheduled for completion in the second half of 2024.”

He further explained that the expansion project with the United Arab Emirates includes adding two 400-kilovolt lines from ‘Al Salwa Station’ in the Kingdom to the ‘Al-Sila Station’ in United Arab Emirates, along with the expansion of the 400-kV stations of the GCCIA (GONAN, Salwa, and Al-Sila). These expansions are expected to be completed by late 2025.

He emphasized that the goal of interconnection with neighbouring countries is to increase reliability and utilize diverse electrical energy sources through energy trade markets and agreements, providing electrical energy as a strategic commodity that can be marketed through Gulf, Arab, regional, Asian, African, and European energy markets. This will bring significant economic benefits to the GCC countries.

The CEO of GCCIA mentioned that the Authority has strengthened its financial position by implementing a new financial model that aligns with the best global practices and standards.

“This has bolstered its financial capacity, enabling it to finance electrical interconnection expansion projects through cooperation and partnership with Gulf and Arab development funds, as well as regional and Arab financial institutions,” he said.

He also highlighted that the Authority has initiated projects to enhance its digital systems, improve efficiency, and enhance its cybersecurity to ensure performance improvement, cost reduction, and mitigation of cybersecurity risks by applying international security standards to its systems.

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