A significant stride in Saudi Arabia's energy sector has been marked by the awarding of a $2.6 billion contract to a joint venture between Spain's Tecnicas Reunidas and Egypt's Orascom Construction. The contract, announced on Monday, will see the companies expand the Qurayyah Independent Power Plant (IPP) in the Eastern Province of Saudi Arabia, a key project aimed at bolstering the Kingdom's power generation capacity.

The project, dubbed the Qurayyah IPP Expansion Project, involves the expansion of an existing 3 gigawatt (GW) combined cycle gas-fired power plant. The contract, secured through a 50-50 joint venture between the two engineering giants, also includes the construction of a 380-kilovolt (kV) electrical substation and the implementation of infrastructure ready for future carbon capture technologies.

The contract was awarded by the Hajr Two Electricity Company, a consortium comprising ACWA Power, the Saudi Electricity Company, and Haji Abdullah Alireza.

Osama Bishai, Chief Executive Officer of Orascom Construction, expressed enthusiasm about the project, stating, “This project exemplifies the type of opportunities that we actively pursue where we can leverage our expertise to deliver high-quality projects and maximum value. It also builds on our success in the power sector, most recently in Egypt, and we look forward to making a similar significant impact in Saudi Arabia.” Bishai also emphasized the strategic partnership with Tecnicas Reunidas, noting the extension of their collaboration in Saudi Arabia and the broader region.

For Tecnicas Reunidas, this contract represents a significant milestone in its ongoing recovery and growth strategy. The Spanish company, specializing in building energy infrastructure, has seen its shares surge nearly 50% year-to-date. This resurgence follows a period of contraction in energy investments, influenced by the pandemic and the geopolitical uncertainties stemming from the war in Ukraine. The company’s recent string of contracts in the Middle East and other regions is projected to triple its net profit by 2026, compared to 2023.

The Qurayyah IPP Expansion Project is a crucial component of Saudi Arabia’s efforts to enhance its power generation capabilities while also preparing for a future with advanced carbon capture technologies. This project aligns with the Kingdom's broader energy strategy, which aims to diversify its energy mix and reduce its environmental footprint. The integration of carbon capture infrastructure reflects a commitment to sustainable energy practices, positioning Saudi Arabia as a leader in adopting innovative solutions for its energy needs.

The collaboration between Tecnicas Reunidas and Orascom Construction signifies a powerful alliance, combining the expertise and resources of two leading engineering firms. This partnership is expected to deliver a state-of-the-art power plant that meets the growing energy demands of Saudi Arabia's rapidly developing economy.