The current investment climate in Saudi Arabia

Saudi Arabia

Bader Al Reziza, chairman of the Asharqia Chamber, talks to The Energy Year about the effect of the National Investment Strategy on Saudi Arabia’s investment climate and ways in which the Eastern Province can maintain its growth. The Asharqia Chamber is an organisation which supports and develops Saudi Arabia’s business sector and serves as a platform to enhance communication opportunities.

How has the National Investment Strategy affected Saudi Arabia’s investment climate?
Aimed at increasing investment and bettering Saudi Arabia’s competitive environment via a number of sub-strategies and initiatives, the National Investment Strategy (NIS) was revealed in October 2021, which aims to build on the country’s existing strengths in order to increase the quality and magnitude of national investment, thereby driving economic development in line with Vision 2030.
Green energy, technology, healthcare and biotechnology, improved means of transportation and logistics, and cross-cutting issues like innovative startups and entrepreneurship are among the most important industries today, alongside the more conventional ones.
Increased FDI, which flowed into the Saudi Arabia in 2021, can be attributed to the initiatives and investment incentives provided under the National Investment Strategy, such as the Shareek Program aimed to increase cumulative private investments to 5 trillion riyals [about USD 266 million] by 2030 and the Invest in Saudi platform, which allows investors to obtain licences from a website, in addition to the programme designed to entice foreign corporations to establish regional headquarters there.

How can the oil-dedicated Eastern Province maintain its buoyant growth amid the national economic diversification strategy?
As part of its Vision 2030, Saudi Arabia aims to triple the percentage of its non-oil GDP coming from exports by the year 2030, from 16% to at least 50%.
The Eastern Province is well positioned to play an active role in economic diversification and attracting private investment, as manifested by its natural resources and minerals; the quality of land, sea, and air transport; its development of modern communication services; the availability of water and electricity; and its competitiveness in the tourism sector.
The NIS aims to accelerate flagship deals by offering investors the right incentives, boosting the allure of public-private partnership and privatisation projects, and linking Invest Saudi with all investment possibilities in Saudi Arabia. The programme to attract the regional headquarters of international companies will also help.

What are the far-reaching implications of projects such as the King Salman Energy City and the Jafurah unconventional gasfield to Saudi Aramco’s growth journey?
The goal is to strengthen the position of Saudi Aramco as the most reliable energy provider and as a developer of the largest and most innovative mega-projects in the world. This city focuses on a number of crucial production areas including exploration, production, refining, petrochemicals, conventional electric power, water production and treatment, and the manufacturing of pumps and control valves.
Starting in early 2024, Saudi Aramco plans to extract 2.2 bcf [62.3 mcm] per day of sales gas from the field by 2036. Of this total, around 425 mcf [12 mcm] per day will come from ethane, accounting for nearly 40% of the current output. The company estimates the field will yield about 550,000 boepd of gas liquids and condensates.
The Jafurah field spans 170 kilometres in length and 100 kilometres in breadth, making it the biggest unconventional, non-associated gasfield in Saudi Arabia. Gas resources in the area are massive, with projections of 200 tcf [5.66 tcm] of rich raw gas that may be used as a feedstock in the petrochemical industries.

Which are the key takeaways of renewable energy projects within the Vision 2030 programme?
Saudi Arabia’s attempts to diversify its domestic energy mix are bolstered by the country’s favourable geographical and climatic conditions, which make the use of renewable energy sources economically feasible. The goal is to raise the percentage of natural gas and renewable energy sources to about 50% by 2030, while decreasing the usage of liquid fuel, and meeting Saudi Arabia’s obligations to reduce carbon dioxide emissions.
The National Renewable Energy Program (NREP) is a strategic initiative launched at His Majesty the King’s direction as part of Vision 2030. It also provides an opportunity for the establishment of a new renewable energy technology sector.
Capitalising on its geographic advantages, Saudi Arabia is obtaining the world’s lowest prices for renewable energy projects, particularly in wind and solar energy generation, thereby increasing its attractiveness as a destination for foreign investment.

How advanced is the strategy to become an exporter of hydrogen?
Saudi Arabia intends to become a worldwide provider of hydrogen. With a focus on blue hydrogen derived from renewable resources, the government has set a goal of producing 3 million tonnes of hydrogen annually by 2030 and 4 million tonnes by 2035. Hydrogen may also be created using a variety of home resources such as fossil fuels, biomass and water electrolysis.
NEOM intends to manufacture its first hydrogen supply by 2025. Saudi Aramco established the first Saudi hydrogen fueling station in Dhahran in 2019. In addition, in 2020, the firm started producing and shipping blue ammonia to Japan – the world’s first blue ammonia supply-chain demonstration – a key milestone for Saudi Arabia.

What is the strategy to attract international industrial corporations to set up shop in Saudi Arabia?
The goal of the Global Supply Chain Resilience Initiative (GSCRI) is to establish Saudi Arabia as a preferred destination for major international industrial corporations seeking to increase their competitive advantage. The programme’s goal is to make the most of the changes in global supply chains that are happening now as a result of the growing interest in resilience and the regionalisation and diversification of supply.
Through this initiative, Saudi Arabia aims to guarantee the efficient and long-term availability of supply chain access in all regions of the world. It hopes to attract key supply chains for the purpose of increasing its worldwide market share in the manufacturing and service sectors of the value chain. This all-encompassing initiative will highlight Saudi Arabia’s strengths, like its ready supply of raw materials and advantageous location at the crossroads of three continents, in order to attract key investors in certain value chains.

What are the Asharqia Chamber’s key services and how can you illustrate its growth?
The Asharqia Chamber was created in 1952. It has made great strides at various levels since its inception. One of the most visible markers of this progress is the membership growth, from 19 joint members in 1952 to more than 113,000 joint members towards the end of 2021.
Our strategy is to offer a comprehensive range of services that play a significant part in bolstering the private sector’s capacity to act as a driver of economic expansion and job creation. Specifically, the Chamber provides services such as developing economic investigations. We also provide specialist advice, legal counsel and training courses. Of course, we also have other activities, such as establishing business ties with key trade partners, hosting business forums and more.
The Asharqia Chamber has built a dedicated resource, the Investment and Study Center to attract local and foreign investment and meet international trade delegations. The Center formed strategic alliances with foreign commercial missions in Germany and Japan.
Through the TASHEEL and Make it simpler in English programmes, the Center has also formed collaborations with important energy businesses in the Eastern Province, such as the Saudi Basic Industries Corporation and the Sadara Chemical Company. The initiative intends to boost investment in the energy industry.

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