Orascom Construction, Técnicas Reunidas to expand Qurayyah IPP in $2.6bn Saudi Arabia deal

Orascom Construction PLC and Técnicas Reunidas have secured a major contract to expand the Qurayyah Independent Power Plant (IPP) in Saudi Arabia’s Eastern Province. The $2.6 billion deal strengthens the Kingdom’s power infrastructure, adding 3,010 megawatts (MW) of capacity while incorporating future-ready carbon capture technology. With this project, both companies reinforce their positions as leading players in the Middle East’s energy sector, capitalizing on Saudi Arabia’s push for energy diversification.

What Is the Qurayyah IPP Expansion Project?

The Qurayyah IPP Expansion Project involves the construction of a state-of-the-art combined cycle gas-fired power plant, designed to deliver high efficiency and lower emissions. The plant will include a 380-kilovolt electrical substation, enhancing grid stability and transmission efficiency. By integrating readiness for carbon capture, the facility aligns with Saudi Arabia’s broader strategy to transition toward a lower-carbon energy landscape while maintaining reliable power generation.

The project will be executed under an Engineering, Procurement, and Construction (EPC) contract signed with Hajr Two Electricity Company. This consortium includes ACWA Power, Saudi Electricity Company, and Haji Abdullah Alireza & Co. Ltd., all of whom play critical roles in Saudi Arabia’s energy infrastructure. The partnership underscores the Kingdom’s commitment to working with international firms to implement cutting-edge energy solutions.

How Does This Project Fit Into Saudi Arabia’s Energy Strategy?

Saudi Arabia has been aggressively expanding its energy infrastructure to meet growing domestic demand while positioning itself as a leader in sustainable energy development. The Qurayyah IPP Expansion Project is a crucial part of this initiative, ensuring stable power supply as the country diversifies into renewables. While the Kingdom has made significant strides in solar and wind energy, natural gas remains a key component of its energy mix, offering a cleaner alternative to oil-based power generation.

The expansion follows a series of high-profile energy investments aimed at modernizing the sector. Saudi Arabia has set ambitious targets under Vision 2030 to reduce dependence on crude oil while enhancing grid reliability. The inclusion of carbon capture readiness in the Qurayyah project indicates a strategic shift toward meeting international emissions standards, which is increasingly critical for energy exporters in a carbon-conscious global market.

Why Are Orascom Construction and Técnicas Reunidas Key Players in This Project?

Orascom Construction has an extensive track record in large-scale power infrastructure, with over 30 GW of completed and ongoing projects across the Middle East and Africa. The company has played a pivotal role in Egypt’s energy sector, constructing two 4.8 GW combined cycle gas-fired power plants. This expertise makes Orascom a strategic partner in Saudi Arabia’s efforts to enhance its power generation capacity.

Técnicas Reunidas, a Spain-based engineering giant, brings specialized experience in executing complex energy projects. The company has been strengthening its position in the Middle East, with the region contributing significantly to its project backlog. Técnicas Reunidas has projected that its recent contract wins will enable it to triple its net profit by 2026, reflecting strong demand for its engineering expertise.

Osama Bishai, CEO of Orascom Construction, stated that the company remains committed to geographic diversification, particularly in sectors such as power and water. He emphasized that the Qurayyah IPP Expansion Project aligns with Orascom’s long-term strategy of leveraging its expertise in large-scale energy developments.

What Is the Financial Impact on Orascom Construction and Técnicas Reunidas?

The Qurayyah IPP Expansion Project has generated significant investor interest, reflecting positively on the stock performance of both Orascom Construction and Técnicas Reunidas.

As of March 25, 2025, Orascom Construction (Nasdaq Dubai: OC) is trading at $5.55, within a 52-week range of $4.90 to $6.70. The company has a market capitalization of approximately $1.23 billion, a price-to-earnings (P/E) ratio of 4.68, and an earnings per share (EPS) of $1.19. Orascom also offers an attractive dividend yield of 7.57%, reinforcing its stability in the capital markets.

Técnicas Reunidas (BME: TRE) has seen its stock close at €17.05, marking a 2.53% increase from the previous trading session. The company’s stock has performed strongly over the past year, trading within a range of €7.14 to €17.21. With a market capitalization of €1.34 billion, a P/E ratio of 14.44, and an EPS of €1.15, Técnicas Reunidas is positioned for continued growth.

What Are Analysts Saying About This Deal?

Financial analysts view the Qurayyah IPP Expansion Project as a critical win for both companies. For Orascom Construction, the project reinforces its standing in the Middle East’s infrastructure development sector, aligning with its strategy of securing high-value contracts in key regional markets. For Técnicas Reunidas, the contract supports its revenue diversification efforts and strengthens its backlog, setting the stage for sustained profitability growth.

Industry experts have noted that Saudi Arabia’s commitment to large-scale energy projects will continue to provide lucrative opportunities for international contractors. The country’s emphasis on integrating advanced technologies—such as carbon capture—into new power plants signals a long-term approach to sustainable development.

Técnicas Reunidas has already outlined an ambitious roadmap for future earnings, stating that its order book in the Middle East and North Africa region remains strong. With Saudi Arabia expected to maintain its infrastructure spending despite global economic fluctuations, the company is well-positioned to capitalize on upcoming tenders.

How Does This Project Impact Saudi Arabia’s Energy Future?

The Qurayyah IPP Expansion Project is more than just an infrastructure upgrade; it represents Saudi Arabia’s evolving energy strategy. By combining conventional power generation with readiness for carbon capture, the project reflects a broader push toward sustainability without compromising energy security.

As the Kingdom continues to invest in renewable energy, natural gas-fired plants with lower emissions will play a transitional role in achieving net-zero ambitions. The Qurayyah expansion ensures that Saudi Arabia maintains a stable energy supply while accommodating future decarbonization technologies.

For Orascom Construction and Técnicas Reunidas, the project strengthens their foothold in one of the world’s most active energy markets. With both companies already securing major contracts across the Middle East, their involvement in the Qurayyah IPP Expansion Project reinforces their reputations as go-to engineering and construction firms for large-scale infrastructure projects.

The success of this project could also influence future energy tenders in the region. As Saudi Arabia continues to prioritize efficiency and sustainability, contractors with proven experience in delivering high-capacity power plants will remain in high demand.