How Green Energy is bringing Oman and Saudi Arabia together: China, the Solar Plant of Ibri II, and the Rubaʿ al-Khali Corridor

In late 2019, Rafiqul and Hussain were forced to move their camel farms some 700 metres north. These two herders were employed by a local sheikh close to the Omani city of Ibri, and the reason for the displacement was that the Omani government had decided to build a solar plant in the middle of his land. What Rafiqul and Hussain did not know, however, was that the new plant was expected to be the largest in the country and a stepping stone in a regional rapprochement between Oman and Saudi Arabia.

Ibri II is the flagship photovoltaic project of the Saudi electric ACWA Power (50%), in partnership with the Gulf Investment Corporation (GIC, 40%) and Alternative Energy Projects Corporation (AEPC, 10%). It features 14 million solar panels that cover a little bit over 120 hectares (13 million square feet, or about 225 football fields), with a peak capacity of 500 megawatt, and the ability to generate electricity for around 33,000 homes (1,598 GWh). The plant started operations in November 2021, and it is expected to offset 340,000 tonnes of CO2 every year.

Aerial view of Ibri II. Photo by the Omani Ministry of Energy and Minerals, 2023

China’s Involvement

The project signals an important shift towards green energy in the oil-rich Sultanate. Like other countries in the Gulf, Oman adopted its Vision 2040 in 2021, a policy roadmap to diversify the economy of the country and attract foreign investment, largely through the development of its IT infrastructure and green energy sector. The programme followed the example set by the McKinsey-authored Saudi Vision 2030 launched in 2016.

But where did Oman obtain funding to cover the cost of such a big-scale project? The answer lies further east, in China. In March 2019, the Asian Infrastructure Investment Bank (AIIB), one of the main financial arms of the Chinese Belt and Road Initiative (BRI), approved a line of $60 million for the project, around 15% of its total cost.

The participation of AIIB granted enormous credibility to the venture. As AIIB Team Leader for Ibri II Seung Myun Lee argued “AIIB had been the leading voice on the project, ensuring that the project itself was prepared for and committed to upholding the highest environmental and social standards.” Other lenders joined soon thereafter, like Bank Muscat, Riyad Bank, Siemens Bank, Standard Chartered Bank and Warba Bank, completing the funding requirements for the plant’s construction.

Changing Saudi-Omani Relations?

Big infrastructure projects like Ibri II are rarely seen in isolation. Instead, they are usually part of larger industrial corridors with subsidiary industries and transportation hubs that benefit from the clustering of economic activity and allow the hauling of goods around the world.

 The Empty Quarter road between Oman and Saudi Arabia. Map by The National, 2021

Ibri II is not an exception to this trend. Despite sitting on the edge of Rubaʿ al-Khali, the largest sand desert in the world and a natural border between Oman and Saudi Arabia, Ibri II is a key node on a highway inaugurated in 2021, the only one that connects the two countries directly. For Omani producers, it gives access to global markets through Saudi port cities on the Red Sea. Saudis, in return, can now benefit from Oman’s port hubs in the Indian Ocean. The Rubaʿ al-Khali highway transformed what in the past was a dangerous expedition across the desert into a ride equally attractive to commercial trucks and road trip enthusiasts.

In the past, relations between Oman and Saudi Arabia had been lukewarm. Their common enterprise towards green energy has changed this. In 2020, the first country that Haitham bin Tariq visited after assuming the Omani throne was Saudi Arabia. In July of that year, Haitham signed a memorandum of understanding with Saudi King Salman bin Abdulaziz and Crown Prince Mohammed bin Salman that led to the creation of the ​​Omani-Saudi Coordination Council, an institution meant to coordinate political, economic, and security issues between the two countries. The council began a tightening of Saudi-Omani relations at all levels, marking the starting point of a thriving bilateral relationship in contrast to the inertia of regional organisations like the Gulf Cooperation Council (GCC). In the end, Haitham’s visit to Saudi Arabia reflected in the diplomatic realm what the development of Ibri II and the Rubaʿ al-Khali highway meant in industrial terms.

What Rafiqul and Hussain achieved by moving the camels a bit north was not just avoiding the hustle and bustle of construction. They facilitated a multi-million deal brokered by China. And with it, a reformulation of the bilateral relations between the Sultanate and Saudi Arabia, a major oil producer and one of the most dynamic states in the peninsula. The next question is, how will this friendship with Saudi Arabia affect the future of Oman?

Javier Guirado is a PhD candidate at Georgia State University focusing on contemporary Gulf history. This blog was developed through discussions at the Mapping Connections Institute, held in Beirut between 27th – 30th May 2024 as part of the ‘Inter-Asia Week’ (Inter-Asia Partnership). The views expressed are the personal perspectives of the writer and not attributable to the Mapping Connections partner institutions.