A Shift From Energy Transition to Energy Addition?

By Amy McLellan

From Issue 1, 2025 of Breakbulk Magazine.

(7-minute read)

2025 marks ten years since the Paris Agreement, the landmark international climate change treaty signed by nearly every country in the world. Designed to combat climate change and limit global warming to well below 2° Celsius (3.6° Fahrenheit) above pre-industrial levels, the Treaty was a moment of hope that humanity could work together in the face of a global threat.

Much has happened over the past decade, and some of that hope has evaporated, with many climate scientists now believing that 1.5°C (2.7° Fahrenheit) of warming is already a certainty, while many commentators claim the roadmaps to Net Zero are unworkable and unaffordable for much of the world.

Speaking at the Singapore International Energy Week in late 2024, Amin Nasser, the president and CEO of Aramco, the world’s largest energy company, said the energy transition faces a “sizeable gap between prediction and reality,” particularly in the Global South where countries are still largely dependent on conventional oil, gas and coal.

He believes that rather than an energy transition, it is more realistic to talk about “energy addition,” with growth in energy demand mostly met by alternatives instead of replacing conventional energy in any meaningful way.

A New Realism

This reframing is already reflected in the decisions of the supermajors to pull back on energy transition projects after their expensive plans bumped up against some hard realities and lost favor with traditional shareholders. One report, from the University of Oxford, found that only 2% of upstream CAPEX investments by cash-rich oil and gas firms are low carbon.

Those working on the frontlines of the energy industry are cognizant of this reality gap, with many welcoming the recent remarks by the Aramco boss. “I fully agree with the remarks about energy addition,” says Rafael Vicens, head of Global Projects & Industry Solutions, Middle East and Africa, at DB Schenker. “We need to talk about this - we need to be both ambitious but also realistic.”

Mauro Varela Armas, global logistics proposals, purchasing and commodity manager at Spanish EPC Técnicas Reunidas, reports there has already been a “noticeable shift” in how clients approach the energy transition.

“Clients are increasingly adopting a more pragmatic and holistic approach, recognizing that a balanced energy mix is essential to meet growing global energy demands, particularly in the Global South,” he says.

This balance, says Armas, comes from the understanding that “while renewables are crucial Global for long-term sustainability, oil and gas still play a vital role in meeting immediate energy needs.”

In the Global South, where energy access and affordability are critical, such a pragmatic approach is particularly important. “Clients are investing in solutions that support both sustainability goals and energy security, ensuring that no region is left behind in the transition,” he says.

Others agree that there’s a new pragmatism at work. “The energy transition is undoubtedly maturing,” says Mohammad Jaber, MD, air and sea, at DSV Abu Dhabi. “Over the past decade, many ambitious projects were proposed with little immediate practicality, but now there is more focus on pragmatic solutions.”

He says there’s now clear emphasis on technology that can be implemented at scale today. “Offshore wind energy, carbon capture technology and the development of green hydrogen have all become more tangible and economically viable in recent years,” says Jaber.

Moreover, the push towards net-zero emissions is no longer about one-size-fits-all global solutions, but more regionally appropriate approaches, with Jaber noting the fact that, in the Middle East, solar energy has become one of the most economically viable sources of clean energy.

Regional Differences

An energy addition is clearly a more palatable concept than an energy transition for producing nations like Saudi Arabia, with a longer tail of demand for fossil fuels clearly good news for GDP. Even so, the energy transition is still a major focus here, although Armas of Técnicas Reunidas notes a difference in approach.

“While the spirit of the energy transition is similar, the pace is not,” he says. “Europe has developed strict frameworks, such as the EU Green Deal, which mandates ambitious emissions reductions and promotes renewable adoption. In the Middle East, the transition is more gradual, balancing economic diversification with a continued reliance on traditional energy sources.”

There are big renewable and clean energy projects underway, including large-scale solar such as the Mohammed bin Rashid Al Maktoum Solar Park in the UAE, which has a planned production capacity of 5,000 MW by 2030; major hydrogen investments, such as the $8.4 billion NEOM Green Hydrogen facility in Saudi Arabia, which will be the world’s largest green hydrogen production facility when operational in 2026; and investments in transition fuels, such as e-fuels and sustainable aviation fuel.

The success of the Baraka project in the Al Dhafra region of Abu Dhabi, the first commercial nuclear plant in the Arabian world and now the UAE’s largest source of electricity, is set to encourage more investment in nuclear power. This sustainability push is good news for those in the project cargo and logistics industries, as the new investments are additive to existing fossil fuel investments.

“The energy transition in the Middle East is exciting for us,” says Carsten Wendt, head of sales, high & heavy and breakbulk, at Wallenius Wilhelmsen. “The region is investing in increased rail transport to create sustainable transport systems, such as the rail network connecting Saudi Arabia, UAE and Oman.

“We see this as an opportunity to increase our breakbulk business in the region, as our RoRo vessels have perfect underdeck storage for the rail carriages. RoRo is one of the best ways to transport them, it’s very safe and we have extensive experience in handling these types of cargoes.”

Capacity Challenges

There are challenges in the region, however, with infrastructure and capacity constraints to be overcome. “The Middle East is fast becoming a driving force behind the world’s energy transition,” says Ellis Renforth, president of operations for Europe, Middle East and Africa at Wood.

The UK-headquartered EPC saw its contract wins in the Middle East hit US$920 million in 2024, including orders in Iraq, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. He notes, however, that shifting to a more diversified energy mix is “incredibly complex.”

“It will require a dynamic workforce of consultants and engineers to advise, design and advance it,” says Renforth, highlighting the group’s investment, alongside its Iraqi JV partner Al Majal, on a new state-of-the-art vocational training center in Basra.

Renforth sees “vast opportunity” in the Middle East in 2025, and beyond. “Energy companies and countries across the region are committing billions of dollars to decarbonization projects, technologies and solutions to reduce carbon intensity, meet net zero targets and drive the energy transition,” he says. “In 2025 we anticipate further demand for our solutions and our world-renowned decarbonization experts who are advising clients on technology selection and capital investment in the ever-evolving areas of hydrogen and carbon capture.”

He underscores, however, the need to “build a pipeline of strong engineering talent” in the region capable of meeting the challenge of an ever-increasing workload.

Human capital isn’t the only resource in demand. There are other challenges, not least that booming workloads are not always aligned with available capacity, be it people, vessels or equipment.

“Regionally there are some countries, such as Saudi Arabia, where there’s a lack of equipment because of the huge magnitude of projects happening at the same time,” says Vicens of DB Schenker. “For heavy-lift companies, this makes it a very attractive place to work, as long as you get all the permits and licenses.”

Collaboration Required

There also needs to be better collaboration across the supply chain, which is being asked to deliver more during a time of great flux. Jaber at DSV says it’s a time for those working in the logistics sector to be “forward-thinking and adaptable.”

“The energy transition is poised to reshape the Middle East’s logistics landscape, with increasing demand for specialized transportation and storage solutions for renewable energy infrastructure,” he says, noting that projects like solar, wind and hydrogen will require unique materials and components that will drive growth in the logistics sector and stimulate local production.

A common understanding of how the different parts of the supply chain work, including the role of EPCs, will be needed along with more forward planning when it comes to securing capacity.

“The urge to secure or hire capacity well in advance is still maybe not as fast or well thought as it should be, given the level of announced investments that are running around in the markets,” says Armas at Técnicas Reunidas. “But there are lots of conversations going on, and many 3PLs are forcing this type of new relationship between themselves, EPCs, heavy-lift operators and vessel owners, which I think is a great approach.”

He foresees several looming bottlenecks in the supply chain, including vessel and barge availability and the challenges of securing heavy-lift equipment. The main headache, however, is the uncertainty about the pace at which all of this is going to develop.

“Many vessel and equipment owners are impatiently waiting for higher levels of compromise and visibility, in order to accelerate and increase the availability (whether that’s buying new improved vessels, axel lines for heavy transport or high capacity cranes) so that it matches the capacity requests that will be required in the next years,” he says.

“As a shipowner told me during a Breakbulk event in 2024, ‘I cannot buy four new vessels without the guarantee that I will redeem the investment,’ yet the events over the last four years, from the pandemic to the Ukraine-Russia and Israel-Palestine wars, are not favoring the initiative.

“The key to overcoming bottlenecks here is close and well-thought-out collaboration between forwarders, EPCs, vessel owners and heavy-lift operators from the earliest stages of a project,” he concludes.

All Eyes on Washington

It’s impossible to discuss the Middle East without talking politics. And 2024 brought heightened tensions to the fore again, with the ongoing Israel-Gaza crisis, the retaliatory attacks on shipping in the Red Sea, the fall of the Assad regime in Syria and, in December, Israeli air strikes on sites across Yemen.

“The geopolitical background is concerning,” says Wendt of Wallenius Wilhelmsen. “What’s happening in the region is very much impacting our service pattern. Like many carriers, we’re now avoiding the Suez Canal and that’s cutting off service, especially in the Red Sea.”

Like many companies, the breakbulk carrier had expected the crisis, and the costly delays as vessels reroute round the Cape, to last just a couple of months. “We never assumed it would last this long,” says Wendt. “It’s now over a year since the crew of the Galaxy Leader were taken hostage, and we’re all concerned about the fact that they are still being held.”

All of this, plus an incoming Trump administration in the White House, makes for uncertain times for those working in the region. “The change in the U.S. could shake things up completely in the region, so we are alert and observing to see what happens so we can adapt dynamically,” says Vicens of DB Schenker.

Boom Times Ahead

Despite all the challenges, companies working in the region remain optimistic about the future. “The project logistics sector in the Middle East remains robust,” reports Jaber of DSV, which has several big projects on its radar for the year ahead.

These include several packages for NEOM, railway projects across the region, many energy projects, like ADNOC’s Hail and Ghasha gas and carbon capture project, the Ta’zeez industrial chemicals and transition fuels ecosystem and the Borouge 4 petrochemicals facility.

“There is a healthy order flow,” says Jaber, “fueled by significant investments from governments and private entities in the region specially ADNOC and Aramco.”

Técnicas Reunidas is also looking ahead to a busy year, with Armas reporting involvement in several key projects with major energy companies. These include Aramco, ADNOC, and QatarEnergy, across sectors such as refining, gas, LNG, offshore and power generation.

Vicens of DB Schenker also sees the current boom continuing over the next 12-24 months. “There was a huge explosion of projects in Q4 2024 as projects that had been on hold were suddenly given the greenlight as budgets were unlocked,” he says. “There are now a lot of tenders in oil and gas, renewable energy, carbon capture and by the end of 2025/2026, there will be a boom in hydrogen power projects.”

Whether it’s city-building, huge infrastructure projects or vast energy transition projects, the Middle East is a region undergoing transformation at an economic, social and human scale. It remains an exciting place to work, with huge potential to work on the frontlines of a region that is both adding to, and transitioning, the world’s energy supply for whatever the future may hold.

DB Schenker and DSV will be exhibiting at Breakbulk Middle East 2025. Aramco, Técnicas Reunidas, Wood, ADNOC and QatarEnergy are members of the Breakbulk Global Shipper Network.

Top photo: A wind turbine delivery for NEOM Green Hydrogen Company. Credit: NEOM
Second: Kuehne+Nagel is delivering 1.4 million tons of wind turbine equipment for NEOM. Credit: Kuehne+Nagel
Third: Ellis Renforth, president of operations for Europe, Middle East and Africa at Wood. Credit: Wood
Fourth: Sharaf Shipping handles project cargo for renewable projects. Credit: Sharaf Shipping