KSA, UAE lead military R&D spending in GCC to build domestic capacity

KSA, UAE lead military R&D spending in GCC to build domestic capacity
Ahmed bin Abdulaziz Al-Ohali, governor of the Kingdom’s General Authority for Military Industries, known as GAMI, said that R&D spending will be increased from 0.2 percent to around 4 percent of armaments expenditure by 2030. (Shutterstock)
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Updated 04 March 2022

KSA, UAE lead military R&D spending in GCC to build domestic capacity

KSA, UAE lead military R&D spending in GCC to build domestic capacity
  • Kingdom plans to spend over $20 billion for its military industry, with more than half of it going into R&D over the next decade

RIYADH: In a region where military threats abound, GCC countries are moving toward strengthening their military Research and Development capabilities, also known as R&D, as part of their strategy to ramp up the domestic manufacturing capacity of weapons and advanced military systems.

Saudi Arabia and the UAE are leading the movement, with the massive allocation of funds—a large sum of it will be spent locally.

The Kingdom is investing heavily in its local defense industries as part of the broader diversification plans outlined under Vision 2030. Last year, a senior Saudi military official reiterated that the Kingdom plans to spend over $20 billion for its military industry, with more than half of it will go into R&D over the next decade.

Ahmed bin Abdulaziz Al-Ohali, governor of the Kingdom’s General Authority for Military Industries, known as GAMI, said that R&D spending will be increased from 0.2 percent to around 4 percent of armaments expenditure by 2030.

In the UAE, too, the Ministry of Defense is streamlining its domestic military capabilities. Last year, it signed an agreement with Tawazun, delegating the management of defence and security R&D planning and execution.

The defense and security acquisitions authority for the UAE Armed Forces and Abu Dhabi Police, Tawazun, will foster economic growth and the development of the UAE defense and security industry.

“A key dynamic that shapes the current defense market in the GCC is that it is robust in several types of weapons and enabling systems, including aircraft, drones, maritime and littoral systems, and anti-air and anti-munition defense,” said Nick Heras, deputy director, Human Security Unit, at Newsline Institute, in an interview with Arab News.

He added that some of the other emerging technologies include systems for intelligence, surveillance and reconnaissance, artificial intelligence, munitions, computer systems, and information warfare tools. Led by the UAE and KSA, the regional countries are consolidating their military industry and R&D platforms by initiating various measures off late.

In 2019, for instance, Abu Dhabi placed several state-run companies under a single organization to restructure its defense industry. Around 25 businesses with combined annual revenue of $5 billion were consolidated under a new conglomerate, called EDGE, which will position the country as a global player.

Some of the companies placed under EDGE include the Abu Dhabi Ship Building and the Advanced Military Maintenance Repair and Overhaul Center. The latter is a joint venture with Lockheed Martin Corporation and Sikorsky, a Lockheed Martin subsidiary.

A similar venture was formed in the UAE in 2014 when Mubadala and Tawazun launched Emirates Defense Industries Company, known as EDIC, which consolidated a dozen government-owned companies under one organization. EDIC is now part of EDGE.

“EDGE is at the moment the most advanced conglomerate in the region in the field of defense industry, and it plays the role of a model for the Saudis with SAMI and the Qataris with Barzan Holdings,” said Jean Loup Semaan, a senior research fellow at the Middle East Institute of the National University of Singapore, in an interview with Arab News.

Some of the major UAE defense firms operate nonetheless in independence of EDGE. These include Aquila Aerospace, which modifies aircraft for spying, and Calidus, a producer of light-attack aircraft, according to a report by the International Institute for Strategic Studies (IISS).

In Saudi, too, several entities have been created to manage and oversee the budding military industry.

In 2017, the Kingdom established the GAMI, which oversees military research and development and procurement. It is also a regulator and licensor for the military industry in Saudi Arabia.

In the same year, the state-owned Saudi Public Investment Fund, commonly known as PIF, launched the national Saudi Arabian Military Industries, or SAMI, as part of the Kingdom’s 2030 Vision.

“The GCC market is still developing, and there is a lot of room for growth. It is also a competitive market with a diverse array of countries in it, including all three great powers—China, Russia, and the United States, and European states such as Britain, France, Germany, Italy, and Spain, and rising powers including Turkey and even India,” said Heras.

Through its partnership with the UAE and Bahrain, Israel is also beginning to grab a share of the market, including potentially in R&D in partnership with the UAE, he added.

Whether EDGE or SAMI, all these regional projects have several goals, including building talent within the UAE and Saudi Arabia, respectively.

EDGE aims to attract “elite industry experts and talent from around the globe, to help on a wide spectrum of modern product development,” the company reportedly said in a press statement during the launch.

EDGE, which has five core specialties—platforms and systems, missiles and weapons, cyber defense, electronic warfare and intelligence, and mission support, employs over 12,000 people.

Whereas Saudi is expected to create around 100,000 jobs for the locals in the military sector as part of Vision 2030.

“There is definitely a strategy both in the UAE and KSA to foster their local defense industry in coordination with the education system,” said Samaan, giving the example of the Mohammed bin Zayed University for Artificial Intelligence.

But he pointed out that R&D is a long process, “so it’s too early to see a significant contribution from the local universities to the development of military technologies.”

In his previous interview with Arab News, Al-Ohali underlined the importance of forming a healthy ecosystem that included academic institutions, research centers, universities, public and private institutions in order to ensure the sustainability of the local military industry.

He added that the vision was to establish partnerships with academic institutions in order to overcome the local skills gap in strategic areas, such as engineering and skilled labor.

Yet, one challenge that GCC countries may face while building their own R&D sector is that military research is often a matter of national security. This makes other international players often hesitant to share their military innovations.

“R&D sharing is one of the tricky subjects in the global arms trade. Companies have to navigate complicated export control laws, and especially for classified type systems, it can be a burdensome process,” said Heras.

He explained that sharing research and development is often a national security decision that is weighed against the potential commercial opportunities.

“China and some countries such as Turkey have an advantage in this regard because the military technology they sell is often tied to the commercial benefit of the state or to companies close to the elites of the governing regime, which balances the national security concerns they might have,” concluded Heras.


Oil Updates — Crude edges up; Japan raises gasoline subsidy; Venezuela to aid the reconstruction of damaged Cuban port

Oil Updates — Crude edges up; Japan raises gasoline subsidy; Venezuela to aid the reconstruction of damaged Cuban port
Updated 13 sec ago

Oil Updates — Crude edges up; Japan raises gasoline subsidy; Venezuela to aid the reconstruction of damaged Cuban port

Oil Updates — Crude edges up; Japan raises gasoline subsidy; Venezuela to aid the reconstruction of damaged Cuban port

RIYADH: Oil prices rose on Wednesday, recovering from six-month lows hit the previous day, as a larger-than-expected drop in US oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.

Brent crude futures rose 56 cents, or 0.6 percent, to $92.90 a barrel by 0415 GMT. 

West Texas Intermediate crude futures climbed 62 cents, or 0.7 percent, to $87.15 a barrel.

The contracts slumped about 3 percent on Tuesday as weak US housing starts data spurred concerns about a potential global recession.

Japan raises gasoline subsidy for oil distributors

Japan raised its gasoline subsidy for oil distributors to 33.8 yen (25.2 cents) a liter for the seven days from Thursday, compared with 31.4 yen a week earlier, the industry ministry said on Wednesday.

The temporary subsidy program was adopted in January to cushion a blow from high crude prices because of tight global supplies, while the Ukraine conflict that began on Feb. 24 added further pressure.

Venezuela to support reconstruction of Cuban port damaged by oil fire

Venezuelan President Nicolas Maduro said on Tuesday that Venezuela would support Cuba in the reconstruction of its only supertanker port in Matanzas, which was partially destroyed by a fire after lightning struck one of its crude tanks.

Cuba has long relied on the 2.4 million-barrel Matanzas terminal, about 130 km from Havana, for most imports and storage of crude and heavy fuel oil.

Maduro directed Venezuela’s oil minister and the president of state-run PDVSA to get in touch with the corresponding Cuban authorities “to begin the design of the reconstruction of the supertanker yard,” he said in a speech honoring the Venezuelan firefighters sent to combat the blaze.

Mexico also sent personnel to put out the fire.

“We are going to design where it will be built, where the loading yard will be and begin the construction,” Maduro said.

Australia’s Santos approves $2.6bn Alaska oil project

Santos Ltd. said on Wednesday it will move ahead in developing a $2.6 billion Alaskan oil project, a surprise decision for the market that drove its shares down despite the Australian energy producer posting a record first-half profit.

The company also said it was in advanced talks with shortlisted parties to sell a 5 percent stake in its prized asset, PNG LNG in Papua New Guinea, and reap an estimated $1.5 billion, which analysts expect will be used to fund the Pikka project in Alaska.

Santos CEO Kevin Gallagher said Pikka, co-owned by Spain’s Repsol SA, was “the right project at the right time in the right location,” forecasting a strong 19 percent internal rate of return based on an oil price of $60 a barrel.

“Low-carbon oil projects like Pikka Phase 1 respond to new demand for OECD supply and are critical for global and United States energy security that has been highlighted since the Russian invasion of Ukraine,” Gallagher said in a statement.

Analysts had thought Santos would sell its 51 percent stake in Pikka rather than go ahead with the 80,000 barrels per day project as it has its hands full working on a major gas project and potential oil development in Australia.

However, Santos said on Wednesday the oil development in Australia, Dorado, would not go ahead this year due to inflationary pressures and supply chain uncertainty.

Shell to shut Gulf of Mexico crude pipes for 2 weeks

Shell on Tuesday said it plans to shut for two weeks in September a key crude oil pipeline in the Gulf of Mexico that supplies oil to Louisiana refineries.

The Odyssey and Delta crude pipelines in September will be shut for planned maintenance early-to-mid September, Shell said in a statement.

The pipelines transport Heavy Louisiana Sweet crude from offshore oilfields and switching to other pipelines is not an option, Shell added.

The Odyssey pipeline in the eastern Gulf of Mexico has 220,000 barrels per day capacity and is connected to the Delta pipeline with deliveries into terminals in Louisiana and to Shell’s Norco refinery, according to the company’s website.

(With input from Reuters) 


Saudi insurers report improved first-half profits on lower claims

Saudi insurers report improved first-half profits on lower claims
Updated 7 min 19 sec ago

Saudi insurers report improved first-half profits on lower claims

Saudi insurers report improved first-half profits on lower claims

RIYADH: Major Saudi-listed insurers released first-half earnings results on Wednesday, with three reporting improved profits due to lower claims.

Alinma Tokio Marine Co. turned in a profit of SR2.4 million ($639,339) in the first half of 2022, erasing over SR3.2 million in losses from the first half of 2021, according to a bourse filing.

Saudi Enaya Cooperative Insurance Co. managed to narrow its losses by 53 percent to SR14 million, while Amana Cooperative Insurance Co. narrowed its losses by 50 percent to SR31 million.

Meanwhile, Wataniya Insurance saw its losses increase by 44 percent to SR37 million in the first half of 2022, bucking the trend, owing to a decrease in net underwriting income.


Al Jouf Cement names new CEO as Jamal Al Amer resigns

Al Jouf Cement names new CEO as Jamal Al Amer resigns
Updated 31 min 53 sec ago

Al Jouf Cement names new CEO as Jamal Al Amer resigns

Al Jouf Cement names new CEO as Jamal Al Amer resigns

RIYADH: Al Jouf Cement Co., a Saudi-based cement producer, has appointed Abdul Karim Al-Nuhair as its new CEO effective Aug. 21, according to a bourse filing.

Al-Nuhair will replace previous CEO Jamal bin Salem Al-Amer, who resigned on Aug. 16 to continue serving the company as president ex-executive advisor.  

Prior to joining Al Jouf, Al-Nuhair held several leadership positions in joint-stock companies. He holds a bachelor’s degree in industrial management from King Fahd University of Petroleum and Minerals.


ACWA Power to sign $2.4bn deal for 1,500MW wind project in Uzbekistan

ACWA Power to sign $2.4bn deal for 1,500MW wind project in Uzbekistan
Updated 15 min 58 sec ago

ACWA Power to sign $2.4bn deal for 1,500MW wind project in Uzbekistan

ACWA Power to sign $2.4bn deal for 1,500MW wind project in Uzbekistan

RIYADH: ACWA Power Co. said it will sign today a $2.4 billion deal with the government of Uzbekistan for a 1,500-megawatt wind project, a bourse filing revealed.

“This project would be the biggest single site onshore wind project in the region and the world and will contribute 19 percent to Uzbekistan’s overall renewable energy goals,” the PIF-owned energy giant said in a bourse filing.

To be located in Karakalpakstan, Uzbekistan, the facility seeks to power 1.65 million households and offset 2.4 million tons of carbon emissions per year.

Expected to achieve a financial close by the end of 2023, the project is likely to be fully commissioned by the first quarter of 2026.

The agreement duration is 25 years and will be signed with the Uzbekistani Ministry of Energy and Ministry of Investment & Foreign Trade.


Samsung awards NEOM insurance contract to Saudi-listed Wataniya

Samsung awards NEOM insurance contract to Saudi-listed Wataniya
Updated 40 min 21 sec ago

Samsung awards NEOM insurance contract to Saudi-listed Wataniya

Samsung awards NEOM insurance contract to Saudi-listed Wataniya

RIYADH: Wataniya Insurance Co. has won an SR53.6 million ($14 million) deal to provide insurance coverage to NEOM’s tunnel infrastructure, one of the world’s largest transportation and infrastructure projects.

The Saudi-listed firm said in a bourse filing that the Contractors’ All Risk insurance contract was awarded by Samsung C&T Corp. Saudi Arabia.

In a separate filing, the insurer reported that its losses widened by 44 percent to SR37 million in the first half of 2022, as it incurred higher claims of SR199 million.