Saudi Arabia seeks to attract $427bn with industrial program

(Khalid Al-Falih, pictured earlier this month, said the Kingdom would announce projects worth SR70 billion. (File photo/Reuters)
Updated 28 January 2019

Saudi Arabia seeks to attract $427bn with industrial program

  • The move is aimed at diversifying the economy away from oil and creating jobs
  • There are plans to announce projects in the military, chemicals and small businesses industries worth $50 billion

RIYADH: Saudi Arabia aims to attract private sector investments worth SR1.6 trillion ($427 billion) over the next decade through an industrial development program aimed at diversifying the economy, Energy Minister Khalid Al-Falih said on Saturday.
Investments will be made through the National Industrial Development and Logistics Program (NIDLP), one of the programs set out under Vision 2030, a wider reform strategy led by Crown Prince Mohammed bin Salman and intended to wean the economy off hydrocarbons and create jobs for Saudis.
Falih said the kingdom would on Monday announce projects worth 70 billion riyals that are “ready for negotiations” under the NIDLP to boost industry, mining, energy and logistics.
At a later stage, it plans to announce projects in the military, chemicals and small businesses industries worth $50 billion, he added without giving a timeframe.
“The (NIDLP) program targets 1.6 trillion Saudi riyals ... it is quite ambitious but it is over a 10-year period so we have got the time to do it,” Falih told a press conference.
The program will seek to raise money from both domestic and foreign investors.
“We will have a huge contribution from the private sector outside the kingdom, but we will leave the bigger share for the Saudi private sector,” Falih said.
The program will integrate the mining, industry and energy sectors, which Falih said were each vital to the kingdom’s plan to empower the private sector and make it the main driver for economic growth.
After decades of spending on development projects, the government has made attracting greater foreign investment a cornerstone of its Vision 2030 plan.
But foreign investors have been rattled in recent months by Saudi Arabia’s deteriorating relations with Western governments after the murder of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October.
Transport Minister Nabeel Al-Amudi told the press conference that NIDLP would launch 60 initiatives in the logistics sector, including five new airports and 2,000 km of railways, and aims to attract more than 135 billion riyals of investments.
“We aim by 2020 that the logistics sector contributes 221 billion riyals to GDP,” he said.
Under Vision 2030 the kingdom aims to have the private sector operate much of its transport infrastructure, including airports and sea ports, with the government keeping a role as regulator. ($1 = 3.7503 riyals) (Writing by Hesham Hajjali, Ghaida Ghantous and Marwa Rashad; Editing by Edmund Blair and Clelia Oziel)


Oil slumps more than 4% on coronavirus fears

Updated 28 February 2020

Oil slumps more than 4% on coronavirus fears

  • Traders fret about impact of spreading virus on crude demand, particularly from China

LONDON: World oil prices tumbled by more than 4 percent on Thursday, as traders fretted about the impact of spreading coronavirus on crude demand, particularly from key consumer China.

Brent oil for April delivery tanked almost 4.2 percent to $51.20 per barrel, while New York’s WTI crude for the same month dived nearly 5 percent to $46.31.

“Concerns that the virus will prompt a global slowdown, weaker consumer confidence and reduced travel has raised concerns about lower demand, weighing on prices,” said CMC Markets analyst Michael Hewson.

Investors are growing increasingly fearful about the economic impact of the new coronavirus or COVID-19 outbreak. 

The virus continues to spread meanwhile, with Brazil reporting Latin America’s first case, and Denmark, Estonia, Greece, Georgia, Norway and Pakistan following suit.

Around 2,800 people have died in China and more than 80,000 have been infected. There have been more than 50 deaths and 3,600 cases in dozens of other countries, raising fears of a pandemic.

The spread of the virus to large economies including South Korea, Japan and Italy has raised concerns that growth in fuel demand will be limited. 

Consultants Facts Global Energy forecast oil demand would grow by 60,000 barrels per day in 2020, a level it called “practically zero,” due to the outbreak.

US President Donald Trump sought to assure Americans on Wednesday evening that the risk from coronavirus remained “very low,” but global equities resumed their plunge, wiping out more than $3 trillion in value this week alone.

“The negative price impact would intensify if the coronavirus were declared pandemic by the World Health Organization, something that looks imminent,” said PVM Oil Associates analyst Tamas Varga.

“The mood is gloomy and the end of the tunnel is not in sight – there is no light ahead just darkness. Not even a refreshingly positive weekly US oil report was able to lend price support.”

Gasoline stockpiles dropped by 2.7 million barrels in the week to Feb. 21 to 256.4 million, the Energy Information Administration (EIA) said on Wednesday, amid a decline in refinery throughput. Distillate inventories fell by 2.1 million barrels to 138.5 million.

US crude oil stockpiles increased by 452,000 barrels to 443.3 million barrels, the EIA said, which was less than the 2-million-barrel rise analysts had expected.

The crude market is watching for possible deeper output cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+.

“Oil is in freefall as the magnitude of global quarantine efforts will provide severe demand destruction for the next couple of quarters,” said Edward Moya, senior market analyst at OANDA. 

“Expectations are growing for OPEC+ to deliver deeper production cuts next week.”

OPEC+ plans to meet in Vienna on March 5-6.