Saudi Public Investment Fund looks for more global alliances

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Public Investment Fund Managing Director Yasir Al-Rumayyan pictured at the Future Investment Initiative in Riyadh. (AFP)
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Updated 25 October 2017
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Saudi Public Investment Fund looks for more global alliances

RIYADH: Saudi Arabia’s Public Investment Fund (PIF) is looking for further international partnerships as part of its ambitious aim to become the largest sovereign wealth fund in the world.
Yasir Al-Rumayyan, PIF managing director, said that global investment alliances would be a central part of a four-legged strategy.
He was speaking as PIF formally announced a $20 billion alliance with the US investment fund BlackRock to put money into what he called “conventional investment” like infrastructure and large-scale construction projects, and on top of the $45 billion agreed with Japan’s SoftBank.
“We will continue to see partnerships with the rest of the world, and conventional investments will not go away,” he said at the opening session of a major conference hosted by the PIF in Riyadh, the Future Investment Initiative.
He added that PIF is targeting annual returns of between 3 and 9 percent across its portfolios in the long term.
“PIF is a long-term fund. We are looking beyond cyclicality,” he said.
Al-Rumayyan spelled out the rest of the strategy. “We want to grow and diversify revenue across all investments. We want to localize the economy of Saudi Arabia for the future employment of citizens, and we want to expand in new sectors, like waste management, real estate and entertainment.”
Panelists included the CEO of Saudi Aramco, Amin Nasser, BlackRock Chairman Larry Fink, IMF Managing Director Christine Lagarde and Victor Chou, CEO of First Eastern Investment Group.
They were quizzed on their outlook for investment returns as individuals and states worldwide grapple with how to ensure sufficient retirement funds during an extended period of low growth across global economies.
Al-Rumayyan said that some assets could reach annual returns in the low teens.
“We don’t want to be a sitting duck to be shot down by only being in conventional investments. We want to go beyond — that is what Vision 2030 is all about,” he said.
He also revealed that he wants the Future Investment Initiative to become an annual event, which would help the Kingdom prepare for the future.
Questioned on the long-term prospects for the oil economy in the face of the renewable and alternative fuels industry, Nasser said it would take decades for the oil and gas industry to be significantly affected by these changes.
BlackRock’s Fink warned: “Long-term growth rates are decelerating quite rapidly and this is going to  present pension funds with bigger liability issues  —  but this is also one of the reasons we have to address this issue of retirement today with expected returns — whether it’s 4, 6 or 8 (percent).
“It means you have to put money away sooner to get to the expected pool of money you want in retirement.”
Asked about his own forecasts for what was possible and realistic as an investment return, he said: “The BlackRock Investor Institute came out with a 10-year forecast of 4 per cent with a balanced portfolio. I tend to think it will be closer to 6 percent.  We’re in a world of low inflation.”
Hundreds of the biggest names in global business are attending the event in Riyadh, which concludes tomorrow.


Saudi oil refinery in Gwadar to help Islamabad save $3 billion a year

Updated 17 February 2019
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Saudi oil refinery in Gwadar to help Islamabad save $3 billion a year

  • The refinery would produce up to 300,000 barrels per day once completed
  • Saudi Arabia is also setting up reservoirs for liquified natural gas in Pakistan, says Petroleum Minister Ghulam Sarwar Khan

ISLAMABAD: Pakistan expects to agree a deal to build an oil refinery and petrochemical complex at the Balochistani deep-sea Port of Gwadar, during the first state-level visit by Saudi Arabia’s Crown Prince Mohammed bin Salman.

The deal will see Pakistan join with Saudi Aramco to build the facility, expected to cost $10 billion.

“We are working on feasibility studies for the establishment of the oil refinery and petrochemical complex in Gwadar, and will be ready to start by early 2020,” Pakistan’s Minister for Petroleum Ghulam Sarwar Khan told Arab News on Thursday.

Once established, the project will help the South Asian nation cut its annual crude oil imports by up to $3 billion annually, in addition to creating thousands of job opportunities in the impoverished western province.

The country spends more than $16 billion each year on importing 26 million tons of petroleum products, including 800 million cubic feet of liquified natural gas (LNG) from Saudi Arabia, the UAE and other Gulf countries.

Khan claimed the refinery would produce up to 300,000 barrels per day once completed.

“The Saudi authorities have asked us to complete all the initial work on the project on a fast track, as they want to set it up as early as possible,” he said.

A Saudi technical team, including Energy Minister Khalid Al-Falih, has visited Gwadar twice in recent months to examine the site for the refinery, getting briefings from Pakistani officials on security in the area near the border with Iran.

“We will ensure complete security for Saudi investments and people working on the project. A detailed security plan has already been chalked up with help of the security agencies,” Khan added.

Pakistan currently has five oil refineries, but they can only satisfy half of its annual demand. Islamabad and Riyadh have long maintained strong ties, with the latter repeatedly offering the former financial assistance. Last year, the Kingdom guaranteed Pakistan $3 billion in foreign currency support for a year, and a further loan worth up to $3 billion in deferred payments for oil imports, to help stave off an economic crisis. The Islamic Republic also received $3 billion from the UAE to protect its foreign reserves.

Khan added that the Pakistani-Arab Refinery Co. (PARCO) was also setting up an oil refinery at Khalifa Point, near the city of Hub in Balochistan. 

“The work on this project is at an advanced stage. Land for it has been acquired and other formalities are being fulfilled,” he said.

Khan hopes the world’s perception of Pakistan will change upon completion of these deals, after years of war in the surrounding region. Exxon Mobil returned to Pakistan last month after 27 years, and started offshore drilling with $75 million of initial investments. 

“All results of the drilling are positive so far, and we expect huge oil and gas reserves to be discovered soon,” he said.

“More foreign companies are contacting us to invest in offshore drilling and exploration. Saudi Arabia is also setting up reservoirs for LNG in Pakistan. More Saudi investment will come to Pakistan with the passage of time.”