The Gulf's Energy Transition- 2025 Review: Part 2

How Oil & Desalination Infrastructure Can be Repurposed Towards an Energy Transition Strategy — Lithium 

Grid stability, electric mobility, and the integration of renewable energy all hinge on reliable energy storage. In the Gulf, particularly in Saudi Arabia and the UAE, this imperative is shaping national strategies that focus on critical mineral sourcing and long-term supply security. Lithium is especially important to the Gulf's ambitions to localize energy supply chains and scale clean tech. Under Vision 2030, Saudi Arabia aims to source 50% of its electricity from renewables and electrify 30% of Riyadh's passenger vehicles by 2030. 

To support its EV ambitions, the kingdom has heavily invested in local manufacturing hubs, most notably through Lucid Motors and Ceer, both being backed by the Public Investment Fund (PIF). Saudi Arabia's first EV manufacturer, Ceer, is finalizing its factory, with vehicle production expected in Q4 2026, CEO James DeLuca told Al Arabiya. The company is working closely with chemicals leader SABIC and national mining company Ma'aden to localize materials sourcing. 

Combined with the rapid installations of utility-scale battery storage [read part 1], these efforts are driving a sharp rise in lithium demand. Analysts at the King Abdullah Petroleum Studies and Research Center estimate that Saudi Arabia's lithium carbonate equivalent demand could reach 15,700 tonnes annually by 2030, underscoring the urgency of securing a long-term supply. 

However, relying solely on imports and local conventional mining may not suffice strategically. The Gulf is therefore exploring pioneering models that complement its geology and existing infrastructure to support a practical energy transition. A promising example is the backing of upstream innovations aiming to leverage and repurpose oil-era infrastructure and industrial waste streams. Tapping into oilfields and desalination brines is central to these efforts. 

Every barrel of oil extracted produces several barrels of highly saline "produced water". Globally accounting for over 217 million barrels per day in 2024, it is typically viewed as a waste product. But this water often contains trace amounts of valuable lithium. By late 2024, researchers at King Abdullah University of Science and Technology (KAUST) developed a membrane-based Direct Lithium Extraction (DLE) process capable of recovering over 90% of lithium from brines as dilute as 20 ppm.  

Shortly after, at the Future Minerals Forum in January 2025, Aramco and Ma'aden announced the formation of a joint venture that includes plans to pilot DLE in existing facilities. This is in collaboration with the KAUST spin-out Lithium Infinity, which aims to achieve commercial lithium production by 2027.  

Another opportunity lies in the Gulf's vast desalination infrastructure, which produces nearly half the world's desalinated water. These plants discharge enormous quantities of waste into the sea, posing ecological risks, and which, like oilfield brines, also contain trace amounts of valuable materials. While lithium concentrations are much lower in desalination brine, the sheer volume makes extraction potentially viable. Notably, the daily volume of desalinated water produced by Saudi Arabia is equivalent to the global daily oil production, as reported by the Saudi Water Authority in November 2024.  

KAUST and Ma’aden are now running “water-plus-lithium” pilot projects to test membrane-selective recovery techniques at coastal sites. At the same time, UK-based Watercycle Technologies has also expressed interest in piloting its DLE technologies in the Gulf. 

Complementing these efforts, NEOM’s energy and water company ENOWA recently piloted a membrane-based crystallization system at the Duba Desalination Plant, which simultaneously recovers freshwater and isolates high-purity minerals. The systems operate at just 7 kWh/m³ as opposed to 75-80 kWh/m³ for standard thermal systems. 

With global seawater containing an estimated 230 billion tonnes of lithium, or 8,000 times the amount accessible from land-based reserves, DLE from desalination streams, if successful, could significantly alleviate pressures on conventional mining operations. This could enable more sustainable and geographically wider access to lithium and potentially other valuable materials.  

Pairing DLE with low-emission power remains essential in retaining climate benefits. In Sur, Oman, Veolia's desalination plant purifies over 130 million litres of water daily and is powered entirely by solar energy during daylight hours, demonstrating the technical feasibility of clean energy desalination at scale. The Gulf's growth rate for renewable energy capacity could prove decisive in enabling the production of potentially one of the world's cleanest lithium streams. Nonetheless, brine composition varies significantly between different oilfields and desalination sources, requiring site-specific membrane engineering and costly pre-treatment systems. 

It’s also worth mentioning that, globally, most DLE efforts remain in pilot or early commercial phases, and recent fluctuations in lithium prices have impacted investor confidence, reaching nearly $80,000 per tonne in 2022 and then collapsing to below $10,000 as of June 2025. Even so, the Gulf may be uniquely suited to derisk DLE technology due to its highly streamlined infrastructure and long-term policy planning. 

This exploration of DLE is unfolding alongside a broader industrial realignment. In May 2025, the United States and Saudi Arabia signed a landmark Memorandum of Cooperation (MOC) on critical minerals aimed at unlocking Saudi Arabia's estimated $2.5 trillion mineral wealth with US technology while strengthening bilateral energy and security ties. The deal promises Saudi Arabia three key accelerators: geophysical exploration using advanced imaging, transfer of US processing technology, and a $500 million workforce training program with universities and institutions such as Virginia Tech and the Colorado School of Mines. 

For Saudi Arabia, the MOC enhances industrial capacity, providing a foothold in reshaping global supply chains. For the US, Saudi Arabia's low-cost solar electricity, currently below $0.02/kWh, and ambitious planned infrastructure offer scalable, geopolitically aligned options. The MOC also offers a hedge against China's supply chain dominance, currently controlling over 60% of global lithium refining, nearly 90% of rare-earth processing, and 70-85% of battery manufacturing capacity. 

There's also a deeper economic narrative. While EV factories are being built across the Gulf, their increasingly automated nature means they will not necessarily deliver mass employment alone. Roles tend to focus mainly on assembly, supervision, and technical maintenance, highlighting, from a socioeconomic standpoint, the importance of localizing supply chains, including the extraction, refining, and synthesis of critical materials. 

Ultimately, it is unlikely that emerging innovations like DLE will entirely replace conventional mining. Rather, such approaches are more about providing regions, especially those heavily dependent on oil and petroleum exports, with pragmatic pathways to a clean energy transition and a bridge between legacy infrastructure and next-generation clean-tech value chains.  

Yet, a crucial question remains: Will initiatives that repurpose oil-era infrastructure truly enable a practical and just energy transition, or will they instead reinforce reliance on fossil fuels? 

Preview of Part 3 of the Gulf Energy Transition Series: Available July 14

Abundant sulfur stockpiles surrounding oil refineries offer another potentially significant opportunity. Researchers are increasingly highlighting sulfur's potential to enable next-generation Lithium-Sulfur (Li-S) batteries, characterized by higher energy densities, lower production costs, and the significant reduction of problematic materials such as nickel and cobalt. Lightweight Li-S batteries could also hold the key to the electrification of trucks and air transport.