Energy sector: driving growth, ensuring a cleaner future

The UAE’s energy sector continues to be a core pillar of the national economy, even as the country accelerates diversification into new sectors including tourism, logistics, aviation, fintech, advanced manufacturing, and the digital economy.

Recent estimates from the Central Bank of the UAE suggest that overall real GDP will grow by 4.9% in 2025 — significantly higher than previous expectations — supported by a robust rebound in the hydrocarbon sector. Hydrocarbon activity is projected to expand by 5.8% this year, following phased adjustments in production and strong demand from global markets.

This expansion underscores a fundamental structural reality: while non-oil activities today account for some 77.1% of total GDP, the oil and gas industry remains the country’s foundational economic engine, providing both fiscal stability and strategic leverage in global markets.

Dual growth track

Despite major advances in economic diversification, the UAE’s growth model continues to operate on a dual track. On one track is the fast-growing non-oil economy — now a hub for international finance, tourism, trade, cultural industries and technology. On the other track is the traditional hydrocarbon sector, which remains indispensable for export revenue, sovereign wealth accumulation and public investment capacity.

Latest national statistics indicate that around 30% of GDP is still directly generated by the oil and gas sector, with hydrocarbons accounting for approximately 13% of total exports. The International Energy Agency notes that oil and gas production remains central to the UAE's export profile and energy system, even as renewable power grows steadily.

This balance — where hydrocarbons generate financial muscle and non-oil sectors generate employment, innovation and global integration — is what differentiates the UAE from fossil-dependent economies. The model shields the country from sharp volatility, allowing it to reinvest strategically across multiple future-facing sectors.

Capacity boost

In the upstream and midstream domains, major investments are underway aimed at ensuring energy security, supporting industrialisation, and positioning the UAE as a stable energy partner into the 2030s and beyond. Adnoc is implementing a $150 billion capital programme to raise the UAE’s maximum sustainable oil production capacity from around 4 million barrels per day to 5 million barrels per day by 2027.

This is not merely a move to expand output — it is a geopolitical and economic signal. The UAE is preparing for a global landscape in which hydrocarbons remain part of the energy mix even as renewables expand. The strategy aligns with IEA forecasts showing that oil and gas will continue to play a key role in transport, petrochemicals, industrial energy and aviation fuel supply for decades.

Market research estimates that the UAE’s oil and gas market — worth $14.22 billion in 2025 — could reach approximately $18.24 billion by 2030, representing a compound annual growth rate of 5%. The upstream segment alone is projected to expand by 5.6% per year, driven by mega-projects such as Hail & Ghasha, Lower Zakum and major offshore expansion programmes.

Gas is emerging as an even more strategic growth front. With demand rising domestically and regionally, the UAE is rapidly advancing LNG, sour-gas and ultradeep gas field development. The planned LNG export complex in Ruwais, which has attracted global investment partnerships, is expected to increase national liquefaction capacity to around 15 million tonnes per year within this decade.

Jobs engine

The renewed momentum in hydrocarbons is translating into significant job creation and supply-chain development. Abu Dhabi’s oil and gas workforce continues to expand in line with upstream activity and major export infrastructure investments.

In particular, the push into unconventional resources and carbon-management technologies is widening the spectrum of job roles — from reservoir engineers and materials scientists to pipeline logistics specialists and AI-based drilling analysts.

Localisation also forms a core pillar of sector growth. Under the In-Country Value (ICV) framework, Adnoc is increasingly awarding major procurement and engineering contracts to UAE-based firms, creating new industrial capabilities and retaining economic value domestically. This localisation strategy has led to growth in domestic fabrication, component manufacturing, engineering services, high-skill technical employment and advanced maintenance ecosystems.

Meanwhile, growth in renewables is adding entirely new classes of employment. Engineers trained in grid planning, offshore-wind installation, hydrogen electrolysis, solar park operations and battery systems integration are increasingly in demand. As the UAE expands its clean-power portfolio, universities and vocational institutes are aligning curricula to support energy-transition careers.

Market stability

The UAE’s role within Opec and the global energy system continues to carry strategic weight. With around 100 billion barrels of proven oil reserves — 96% of which lie in Abu Dhabi — the UAE remains one of the largest and most reliable producers. As markets fluctuate under geopolitical pressure, the UAE’s capacity to scale output or stabilise supply makes it a critical anchor in global oil price dynamics.

This supply reliability has given the UAE a stronger diplomatic and economic hand. It is seen by major economies in Asia and Europe as a stable long-term energy partner — a factor that supports wider geopolitical, commercial and investment relationships.

Moreover, the UAE’s growing LNG network adds influence in the global gas system. As LNG plays a central role in balancing renewable intermittency worldwide, the UAE is positioning itself at the core of 21st-century energy diplomacy.

With around 100 billion barrels of proven oil reserves — 96% of which lie in Abu Dhabi — the UAE remains one of the largest and most reliable producers.

Clean power shift

The future of UAE energy is not solely oil and gas. A massive clean-energy expansion is well underway. Under the UAE Energy Strategy 2050, the country aims to raise the share of clean energy in the national electricity mix to 50% by mid-century while reducing the carbon footprint of power generation by 70%.

The Mohammed bin Rashid Al Maktoum Solar Park in Dubai — one of the world’s largest single-site solar energy projects — continues to scale in phases, reinforcing the country's status as a cost-leader in solar generation. Meanwhile, Abu Dhabi is investing in utility-scale solar, green hydrogen, carbon capture and grid modernisation.

In January 2025, Masdar launched a groundbreaking project in Abu Dhabi capable of supplying 1GW of round-the-clock clean power — a milestone in making renewables reliable for baseload electricity. Masdar is also active in more than 40 countries, targeting 100GW of renewable capacity and up to one million tonnes of green hydrogen annually by 2030.

Multi-layered energy future

The UAE’s energy strategy is not about a sudden switch from hydrocarbons to renewables, nor about abandoning legacy strengths. Instead, it is a carefully sequenced transformation built on stability, investment foresight and global partnerships. Oil and gas continue to provide the financial backbone — funding public services, infrastructure development and sovereign wealth accumulation — even as the clean-energy sector gathers scale and confidence.

This balanced approach gives the UAE the ability to manage risks that many economies undergoing transition face. By reinforcing its upstream and LNG positions while simultaneously expanding solar, hydrogen, storage and carbon capture capabilities, the UAE is ensuring that it remains relevant through every phase of the global energy cycle. It is not reacting to global trends — it is shaping them.

Wider ecosystem

The result is an energy ecosystem that is wider and more dynamic than at any point in the country’s history. A young engineer entering the sector today could work on offshore drilling optimisation, hydrogen electrolyser design, electric grid integration or large-scale solar deployment — all within the UAE. This evolution is reshaping talent development, research priorities and public–private partnerships across the country.

At the international level, the UAE’s presence is expanding from being a reliable supplier to becoming a convenor and collaborator in global energy diplomacy. Partnerships through Masdar, Adnoc, the UAE Hydrogen Leadership Initiative and South-South renewable investment corridors are creating new channels of cooperation across Africa, Asia and Europe. The country is increasingly viewed as a platform where technology, capital and expertise meet.

Dual momentum

Renewable energy advocates argue that the UAE is demonstrating that hydrocarbons and renewables do not need to exist in opposition. Instead, they can reinforce one another —one providing economic resilience, the other building long-term sustainability.

“As global markets navigate uncertainty, the UAE’s approach offers a story of continuity entwined with transformation: hydrocarbons supporting the present, and clean energy preparing the future. It is this dual momentum that places the UAE among a select group of nations not simply adapting to the global energy transition, but helping define its trajectory,” market watchers assert.

“Energy, in the UAE context, is not a sector,” they insist. “It is a strategy that funds diversification. A strategy that strengthens diplomatic influence. A strategy that creates high-skill employment and future-ready industries. And a strategy that is steadily reshaping the UAE’s position in the global economy—from energy supplier to energy systems architect.”