Saudi Arabia announces $500 billion city of robots and renewables

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Klaus Kleinfeld will be the president of the new project.
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The wind and sun will allow NEOM to be powered solely by regenerative energy
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NEOM commands a unique location to bring together the best of Arabia, Asia, Africa, Europe and America
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NEOM is developed to be independent of the Kingdom’s existing governmental framework
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Overlooking the waterfront of the Red Sea to the South and the West, and the Gulf of Aqaba, NEOM enjoys an uninterrupted coastline stretching over 468 km
Updated 25 October 2017

Saudi Arabia announces $500 billion city of robots and renewables

LONDON: Saudi Arabia on Tuesday announced plans to build a $500 billion mega city on the Kingdom’s Red Sea coast, as part of a huge national push to diversify its economy.
The 26,500 square kilometers zone, known as Neom, will focus on industries including energy and water, biotechnology, food, advanced manufacturing and entertainment, Saudi Crown Prince Mohammed bin Salman said yesterday.
“The focus on these sectors will stimulate economic growth and diversification by nurturing international innovation and manufacturing, to drive local industry, job creation, and GDP growth in the Kingdom,” said Prince Mohammed, who is also the Chairman of the Public Investment Fund (PIF).
“Neom will attract private as well as public investments and partnerships. The zone will be backed by more than $500 billion over the coming years by the Kingdom of Saudi Arabia, the Saudi Arabian Public Investment Fund, local as well as international investors,” he added.
The business and industrial city will be located in the Kingdom’s northwestern region and is the world’s first zone to extend across three countries, stretching its borders into neighboring Jordan and Egypt.
Adjacent to the Red Sea and the Gulf of Aqaba, and near maritime trade routes that use the Suez Canal, the zone will power itself solely with wind power and solar energy.
The city aims to offer its inhabitants “an idyllic lifestyle paired with excellent economic opportunities that surpass that of any other metropolis. It will attract Saudi Arabians and expatriates, as do all other global societies,” PIF said in a statement.

Neom is the latest project in an ambitious plan to prepare Saudi Arabia for the post-oil era, and follows of plans sell shares in oil giant Saudi Aramco, create the world’s largest sovereign wealth fund and lift the long-standing ban on female drivers.
“Neom will be constructed from the ground-up, on greenfield sites, allowing it a unique opportunity to be distinguished from all other places that have been developed and constructed over hundreds of years,” he said.
PIF said in a statement that the first phase of the city would be complete in 2025. “(Neom) seeks to seize the great economic opportunities of the future by investing in them with confidence and vigor,” the investment body said.
“Neom provides a key opportunity to minimize GDP leakage by allowing those that normally would invest outside, to give them an option of investing locally, hence minimizing the GDP exodus that happens because of limited local investment opportunities,” PIF said in a statement.
The Kingdom has established a special authority to oversee Neom.
Wes Schwalje, COO of Dubai-based research and strategy center Tahseen Consulting, said: “Neom is bringing the same level of disruption to urban planning and economic development as Uber has brought to the technology sector. Investment is strongly influenced by stability, openness, and institutional quality.
“With the announcement of Neom, the Public Investment Fund and Saudi Arabia is communicating to the world that the Kingdom is open for business.”


Oil up after drone attack on Saudi field, but OPEC report caps gains

Updated 19 August 2019

Oil up after drone attack on Saudi field, but OPEC report caps gains

LONDON: Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemen’s Houthi militia and as traders looked for signs of progress in US-China trade negotiations.
Price gains were, however, capped to some degree by an unusually downbeat OPEC report that stoked concerns about growth in oil demand.
Brent crude, the international benchmark for oil prices, was up 85 cents, or about 1.4%, at $59.49 a barrel at 1225 GMT.
US West Texas Intermediate (WTI) crude futures were up $1.01, or 1.8%, at $55.88 a barrel.
A drone attack by the Iran-backed Houthi militia on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected.
“The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions,” said Giovanni Staunovo, oil analyst for UBS.
Iran-related tensions appeared to ease after Gibraltar released an Iranian tanker it seized in July, though Tehran warned the United States against any new attempt to seize the tanker in open seas.
Concerns about a recession also limited crude price gains.
Meanwhile, China’s announcement of key interest rate reforms over the weekend has fueled expectations of an imminent reduction in corporate borrowing costs in the struggling economy, boosting share prices on Monday.
US energy firms this week increased the number of oil rigs operating for the first time in seven weeks despite plans by most producers to cut spending on new drilling this year.
“WTI in recent weeks has performed relatively better than Brent... Pipeline start ups in the United States have been supportive for WTI, while the ongoing trade war has had more of an impact on Brent,” said Warren Patterson, head of commodities strategy at Dutch bank ING.
The Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020.
It is rare for OPEC to give a bearish forward view on the market outlook.
“Such a bearish prognosis will heap more pressure on OPEC to take further measures to support the market,” said Stephen Brennock of oil broker PVM.