Description
Saudi Arabia Opportunities increase as Riyadh accelerates Vision 2030
In April 2016, Saudi Arabia’s Crown Prince Mohammed bin Salman al-Saud unveiled his vision for economic and social reform in the kingdom.
The launch of the Saudi Vision 2030 fired the starting gun for a new era of investment in the kingdom that is accelerating diversification, plugging the housing shortage, opening up tourism, and expanding the kingdom’s manufacturing base.
At the core of the Vision 2030 programme, are a series of flagship ‘gigaprojects’ that are driving growth, investment and job creation in the kingdom. These include the $500bn Neom future city, The Red Sea Project, Diriyah Gate, Qiddiya, Roshn and Al-Ula, which were announced in 2017. Others followed, such as King Salman Park, Riyadh Sports Boulevard, Jeddah Central and King Salman International Airport.
MEED estimates there are approximately $750bn worth of projects in the giga projects programme, of which about $40bn has been awarded to date. As such, we are still are the very early stages of this massive projects drive.
Investment returns
The new opportunities are not only in construction. The political, institutional, and financial reforms of the past six years are also generating prospects in new areas such as renewable energy, advanced technology, transport, shipbuilding, healthcare, food, and aerospace. Behind it all, is the kingdom’s new economic champion, the Public Investment Fund (PIF).
New challenges
The delivery of these large masterplan developments introduces huge new challenges for Saudi Arabia, for the PIF and for the kingdom’s projects industry.
Riyadh has a total projects pipeline of just over $1.2tn. To achieve this, it must place an estimated $569bn of construction contracts by 2025, according to projects tracker MEED projects. This represents a massive 230 per cent increase on the $112bn of awards made in the previous five years.
It is an unprecedented ramping up of activity and, unless action is taken, Saudi Arabia’s projects industry will be hit in the next 24 months by the nightmare of an overheating market – inflation, delays, disputes, bankruptcies – which could undermine the entire Vision 2030 agenda.
New opportunities
Riyadh is exploring ways to increase construction capacity in the kingdom, including plans to develop super-contractors involving local and international firms, or through acquiring or investing in local and regional contractors.
But the fastest way to build capacity is to attract international contractors to the market. Companies around the world can see the Saudi opportunity, but many are deterred by its reputation as a difficult place to do business.
Riyadh must rip up the kingdom’s construction playbook and restructure the industry to recruit construction firms as partners rather than contractors. The move to deliver projects through partnerships between government sponsors and contractors will entice international players back into the market.
Riyadh has shown that it is ready to innovate. Legislative updates, such as limiting government contracts to Saudi-headquartered companies and the newly launched public-private partnership law, are significant changes in the market.
Saudi Arabia 2023
Saudi Arabia 2023: A comprehensive review of the outlook for business and projects in the Middle East’s biggest market is a comprehensive guide for companies seeking to work in Saudi Arabia.
Covering oil & gas, petrochemicals, power, construction, water, manufacturing and transport, the report is a powerful resource for anyone seeking to find opportunities, understand risks and set strategy in Saudi Arabia.
The report is of high-value to anyone seeking to identify opportunities, understand risks and set strategy in the Middle East’s biggest projects market.
Table of Contents
Introduction
1.1 Domestic politics. 16
1.2 Economic transformation. 17
1.3 Energy transition and decarbonisation. 19
1.4 Regional relations. 21
1.5 Regional challenges. 23
Government
2.1 Overview.. 24
2.2 Domestic politics. 26
2.2.1 Crown Prince Mohammed bin Salman. 26
2.2.2 Cabinet reshuffles. 27
2.3 Regional diplomacy. 30
2.3.1 Gulf friends and foes. 30
2.3.2 Yemen 33
2.3.3 Beyond the Gulf 34
2.4 International relations. 36
2.4.1 Relations with the US. 36
2.4.2 Emerging friends: Russia and China. 38
2.4.3 Relations with the UK. 38
2.4.4 Diplomatic disputes. 38
2.4.5 G20 presidency. 39
2.5 Saudi Arabia and global oil markets. 39
2.5.1 Saudi Aramco’s stock market listing. 40
2.6 Vision 2030 and the PIF. 41
2.6.1 PIF’s net zero ambition. 41
2.6.2 Social reforms. 42
Economy
3.1. Overview.. 44
3.2 GDP 46
3.2.1 GDP by sector 47
3.3 Inflation. 48
3.4 Oil production. 49
3.5 Government finances. 51
3.5.1 Budget 2023. 53
3.5.2 Sticking to Vision 2030. 54
3.5.3 Gigaprojects and industrialisation. 54
3.5.4 Strong non-oil performance. 55
3.5.5 Increased borrowing. 55
3.5.6 Austerity politics. 56
3.5.7 Anti-corruption drive. 56
3.5.8 Government debt 56
3.6 Trade flows. 59
3.7 Banking and monetary policy. 61
3.7.1 Interest rates. 62
3.8 Stock market 63
3.9 Foreign direct investment 66
3.10 Labour market 68
3.11 Economic outlook. 71
3.11.1 The global oil market 71
3.11.2 Medium-term strategy. 73
3.12 Saudi Aramco privatisation. 75
3.13 The IMF view.. 77
3.14 Credit ratings agencies. 77
3.15 Economic forecast 79
3.15.1 GDP outlook. 79
3.15.2 Saudi budget outlook. 80
3.15.3 Saudi government debt outlook. 81
3.15.4 Exports, imports and the current account 83
Projects market
4.1 Market overview. 86
4.1.1 Historic value of contract awards 2013–2022. 86
4.1.2 Contract awards by sector, 2013–2022 ($m) 89
4.1.3 Contract awards by sector, 2013–2022 (%) 90
4.1.4 Contract awards by sector, 2020–2022. 91
4.2 Spending drivers. 92
4.2.1 Projects market by status. 92
4.2.2 Biggest contract awards in 2022. 94
4.3 Megaprojects. 97
4.4 Outlook. 106
4.4.1 Projects market by sector 106
4.4.2 Future construction projects by subsector 107
4.4.3 Contract awards forecast 108
4.4.4 Award pipeline. 109
4.5 Leading clients. 111
4.6 Leading contractors. 113
PPP in Saudi Arabia
5.1 Commentary. 116
5.2 Policy & regulations. 121
5.2.1 Vision 2030. 121
5.2.2 National Transformation Programme. 122
5.2.3 PPP Law and Regulations. 123
5.2.4 PPP regulator 126
5.3 History. 127
5.4 PPP programme and projects. 128
5.4.1 Power 128
5.4.2 Water and wastewater 135
5.4.3 Transport 144
5.4.4 Education. 149
5.4.5 Healthcare. 150
5.4.6 Aviation 152
5.4.7 Housing 157
Oil and gas
6.1 Market overview.. 160
6.1.1 Aramco increased project investment in 2022 and plans for more. 160
6.1.2 Vision 2030 Targets. 163
6.2 Industry structure. 164
6.3 Saudi Aramco. 166
6.3.1 Aramco becomes world’s most valuable company. 166
6.3.2 Riyadh mulls second Aramco stock listing. 167
6.3.3 In-Kingdom Total Value Add (IKTVA) programme. 170
6.4 Upstream Oil 173
6.4.1 Resource depletion. 174
6.4.2 Export infrastructure. 175
6.4.4 Oil production. 176
6.4.5 Zuluf upstream scheme. 178
6.5 Gas 181
6.5.1 Gas production. 181
6.5.2 Wasit gas development 186
6.5.3 The Jafurah gas project 186
6.5.3 Shale gas. 187
6.5.4 Gas demand. 189
6.6 Refining. 191
6.6.1 Other major refinery projects. 193
6.7 Projects Market 195
6.7.1 Hydrocarbon awards project trends. 195
6.7.2 Existing hydrocarbon projects (underway) 197
6.7.3 Upcoming oil and gas projects (planned and unawarded) 199
6.8 Leading clients and contractors. 202
6.8.1 Leading clients. 202
6.8.2 Leading contractors. 204
Petrochemicals
7.1 Market overview.. 207
7.1.1 Refining petrochemicals integration initiative. 210
7.1.2 Aramco’s Sabic acquisition. 211
7.2 Key Companies. 213
7.2.1 Sabic 213
7.2.2 Saudi Aramco. 216
7.2.3 Other major producers. 219
7.3 Projects Market 221
7.3.1 Petrochemicals project market trends (historic) 221
7.3.2 Projects pipeline (future) 224
7.4 Leading clients and contractors. 227
7.4.1 Leading clients. 227
7.4.2 Leading contractors. 228
Mining and natural resources
8.1 Market overview.. 230
8.2 Strategic objectives. 235
8.3 Industry structure. 238
8.3.1 Saudi Arabian Mining Company (Maaden) 238
8.3.2 Talent and experience. 243
8.4 Investment 244
8.5 Gold and base metals. 247
8.5.1 Maaden gold production. 248
8.5.2 Exploration projects. 249
8.5.3 Recent and upcoming projects. 250
8.5.4 Base metals (Copper) 251
8.6 Phosphate. 252
8.6.1 Maaden Phosphate Company. 252
8.6.2 Location of major Phosphate mines. 254
8.6.3 Phosphate projects. 255
8.7 Bauxite. 257
8.7.1 Bauxite projects. 257
8.8 Industrial minerals. 258
8.9 Exploration. 260
8.10 Projects market 261
8.10.1 Mining projects completed. 261
8.10.2 Major mining projects planned and underway. 262
Industry
9.1 Market overview.. 264
9.2 Strategic objectives. 267
9.3 Diversification. 268
9.3.1 Incentives for manufacturing. 270
9.3.2 Recent incentives and programmes. 271
9.3.3 Industrial cities. 273
9.3.4 Major challenges of the industrial sector 276
9.3.5 Employment 277
9.4 Automotive. 278
9.5 Polysilicon. 281
9.6 Cement 282
9.7 Steel 286
9.8 Aluminium.. 290
9.9 Fertilisers. 291
9.10 Defence. 293
9.11 Hydrogen. 298
9.12 Projects market 301
9.12.1 Industrial project market trends (Historic) 301
9.12.2 Industrial projects under execution. 302
9.12.3 Industrial projects pipeline (Future) 304
Power and renewables
10.1 Market overview.. 307
10.1.1 Strategic objectives. 308
10.1.2 Energy transition strategy and targets. 309
10.1.3 Renewable energy integration. 311
10.2 Industry structure. 312
10.2.1 Government 312
10.2.2 Private power 314
10.2.3 Sector reform.. 316
10.3 Demand. 318
10.3.1 Power consumption. 318
10.3.2 Demand forecast 320
10.4 Supply. 323
10.4.1 Installed generation capacity. 323
10.4.2 Transmission & distribution network. 327
10.4.3 International electrical interconnection. 331
10.5 Projects market 333
10.5.1 Project trends. 333
10.5.2 Power generation projects. 336
10.5.3 Decommissioning programme. 352
10.5.4 Storage project 353
10.5.5 Transmission projects. 354
10.7 Leading clients and contractors. 358
10.7.1 Leading clients. 358
10.7.2 Leading contractors. 359
Water and desalination
11.1 Market overview.. 361
11.2 Strategic Objectives. 363
11.3 Market structure. 367
11.4 Water demand and supply. 373
11.5 Desalination projects. 384
11.6 Water transportation. 391
11.7 Decommissioning. 394
- Wastewater. 395
12.1 Market overview.. 396
12.2 Strategic objectives. 399
12.3 Market structure. 400
12.4 Wastewater demand. 407
12.5 Wastewater treatment 410
12.6 Wastewater projects. 415
Construction
13.1 Market overview.. 425
13.2 Strategic objectives. 428
13.3 Project trends and pipeline. 434
13.3.1 Project trends. 434
13.3.2 Pipeline. 436
13.4 PIF Project delivery companies. 438
13.5 Construction cash flow.. 440
13.5.1 Saudi Arabia construction cash flow. 440
13.5.2 Saudi Arabia project activity monitor 441
13.5.3 Saudi Arabia construction market sustainability. 442
13.6 Sector analysis. 443
13.6.1 Real Estate. 443
13.6.2 Housing. 446
13.6.3 Healthcare. 449
13.6.4 Education. 450
13.6.5 Roads 451
13.7 Leading clients and contractors. 453
13.7.1 Leading clients. 453
13.7.2 Leading contractors. 454
Tourism
14.1 Market overview.. 457
14.2 Strategic objectives. 463
14.3 Key trends. 466
14.4 Cultural tourism.. 468
14.5 Hospitality. 469
14.6 Leisure. 471
14.7 Retail 472
14.8 Leading clients and contractors. 473
14.8.1 Leading clients. 473
14.8.2 Leading contractors. 474
Rail
15.1 Market overview.. 476
15.2 Strategic objectives. 478
15.3 Structure of the rail sector 480
15.4 Opportunities, outlook and challenges. 481
15.5 Mainline rail infrastructure. 484
15.5.1 North-South Railway. 484
15.5.2 Saudi Landbridge. 485
15.5.3 Other lines. 486
15.6 Metro/light rail transit 487
15.6.1 Urban rail – PPP. 487
15.6.2 Dammam Metro. 488
15.6.3 Riyadh Metro. 488
15.6.4 Mecca Metro. 490
15.6.5 Medina Metro. 492
15.6.6 Jeddah Metro. 493
15.7 Monorail 495
15.8 Leading clients and contractors. 496
15.8.1 Leading clients 496
15.8.2 Leading contractors. 497
Aviation
16.1 Market overview.. 499
16.2 Strategic objectives. 506
16.3 Market liberalisation. 508
16.4 Privatisation of the aviation sector 510
16.5 Airport projects market 511
16.5.1 Projects under execution. 512
16.5.2 Planned and unawarded projects. 515
16.6 Leading clients and contractors. 518
16.6.1 Leading clients. 518
16.6.2 Leading contractors. 519
Ports
17.1 Market overview.. 521
17.2 Strategic objectives. 525
17.3 Sector drivers. 526
17.4 Major ports. 528
17.4.1 JIP 528
17.4.2 King Abdul Aziz Port 529
17.4.3 Other notable ports. 530
17.5 Port–rail links. 534
17.6 Privatisation. 535
17.7 Public–private partnerships. 537
17.8 Projects market and investments. 539
17.8.1 Projects under execution. 541
17.8.2 Planned port projects. 543
17.9 Leading clients and contractors. 546
17.9.1 Leading clients 546
17.9.2 Leading contractors. 547
Doing Business
18.1 Foreign Direct Investment (FDI) in Saudi Arabia. 552
18.2 Trading with Saudi Arabia. 556
18.3 Doing business with the public sector 561
18.4 Saudi Arabia’s Privatisation Push. 563
18.5 Taxation. 569
18.6 Employment law.. 572
18.7 Intellectual property. 574
18.8 Enforcing contracts, resolving disputes, and liquidating a business. 576
18.9 New Mining Law, 2021. 578
18.10 New Competition Law, 2019. 579
18.11 New Franchise Law, 2019. 580
Disclaimer 581
Immanuel Cappano, Siatec –
I would never have survived my first 6 months in the Middle East without the information in this report. It gave me almost everything I needed. I have now secured 4 big consultancy contracts for SIATEC. I would not have been able to do this without MEED’s information