Saudi Arabia’s industrial production rises by 16.8% in August: GASTAT

Update Saudi Arabia’s industrial production rises by 16.8% in August: GASTAT
Mining and quarrying helped drive the growth (Shutterstock)
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Updated 10 October 2022

Saudi Arabia’s industrial production rises by 16.8% in August: GASTAT

Saudi Arabia’s industrial production rises by 16.8% in August: GASTAT

RIYADH: Saudi Arabia’s Industrial Production Index increased by 16.8 percent in August compared to the same period a year ago, according to the latest General Authority for Statistics report.

The growth in IPI was primarily driven by high production in the three subsectors — mining and quarrying, manufacturing, and electricity and gas supplies, official data showed.

The growth of the IPI turned positive in May 2021, and it has been growing continuously since then. This comes after negative trends witnessed during 2019 and 2020 due to the impacts of the pandemic.

IPI is an economic indicator that reflects the relative changes in the volume of industrial output, according to GASTAT.

According to the report, mining and quarrying grew by 15.5 percent in August from a year ago as the Kingdom increased its oil production to its highest level by more than 11 million barrels per day in August 2022.

When compared with July 2022, mining and quarrying witnessed a month-on-month growth of 2.2 percent in IPI activity, showed the data. 

The report further noted that the manufacturing activity increased by 22 percent compared to the same month of the previous year, while electricity and gas supplies increased by 11.3 percent.

Compared with the previous month, manufacturing activity recorded month-on-month growth of 3.9 percent in August, while electricity and gas grew by 10.6 percent.

Even though Saudi Arabia’s IPI is still showing positive trends, its growth has slowed down for the fourth month in a row from a 26.7 year-on-year growth recorded in April 2022.

The Kingdom’s IPI growth at 16.8 percent in August has been the slowest since January of this year when industrial production grew by 11.1 percent year-on-year. 

The GASTAT report showed that the IPI in Saudi Arabia amounted to 139.1 in August, the highest since June of 2018 when the index totaled 141.1.

Mining and quarrying witnessed an IPI growth of 135.8 in August, the highest since November 2018 when it amounted to 135.9. 

While the IPI of manufacturing, and electricity and gas amounted to 147.8 and 155.8 respectively, showed the report. 

The former last reached this peak in September 2019 at 150.4, whereas the latter reached this peak prior to 2018, as shown by GASTAT data.


China’s 1st homemade passenger plane completes maiden commercial flight

China’s 1st homemade passenger plane completes maiden commercial flight
Updated 20 sec ago

China’s 1st homemade passenger plane completes maiden commercial flight

China’s 1st homemade passenger plane completes maiden commercial flight

BEIJING: China’s first domestically made passenger jet flew its maiden commercial flight on Sunday as China looks to compete with industry giants such as Boeing and Airbus in the global aircraft market.

The C919 plane, built by the Commercial Aviation Corporation of China, carried about 130 passengers on the flight, according to the state-owned newspaper China Daily. The jet took off Sunday morning from Shanghai Hongqiao Airport and landed in Beijing less than two hours later.

The flight was operated by state-owned China Eastern Airlines, and the side of the plane was emblazoned with the words: “The World’s First C919.”

The inaugural flight comes as COMAC looks to break into the single-aisle jet market in a direct challenge to Airbus and Boeing. Airbus’s A320 and Boeing’s B737 jets are the most popular aircraft for domestic and regional flights.

While COMAC designed many of the C919’s parts, some of its key components, including its engine, are still sourced from the West.

According to state media reports, the company plans to build 150 C919 planes yearly for the next five years.

The C919, which has been in development for 16 years, has a maximum range of about 3,500 miles and is designed to carry between 158 and 168 passengers.

Over 1,200 C919 jetliners have been ordered, COMAC says, with China Eastern Airlines under contract to buy five of them.


Biden, McCarthy reach tentative deal to raise debt ceiling

Biden, McCarthy reach tentative deal to raise debt ceiling
Updated 28 May 2023

Biden, McCarthy reach tentative deal to raise debt ceiling

Biden, McCarthy reach tentative deal to raise debt ceiling

WASHINGTON: President Joe Biden and House Speaker Kevin McCarthy reached an “agreement in principle” to raise the nation’s legal debt ceiling late Saturday as they raced to strike a deal to limit federal spending and avert a potentially disastrous US default.

Support from both parties will be needed to win congressional approval next week before a June 5 deadline.

The Democratic president and Republican speaker reached the agreement after the two spoke earlier Saturday evening by phone, said McCarthy.

“The agreement represents a compromise, which means not everyone gets what they want,” Biden said in a statement late Saturday night. “That’s the responsibility of governing,” he said.

Central to the package is a two-year budget deal that would hold spending flat for 2024 and impose limits for 2025 in exchange for raising the debt limit for two years, pushing the volatile political issue past the next presidential election.

The agreement would limit food stamp eligibility for able-bodied adults up to age 54, but Biden was able to secure waivers for veterans and the homeless.

The two sides had also reached for an ambitious overhaul of federal permitting to ease the development of energy projects and transmission lines. Instead, the agreement puts in place changes in the National Environmental Policy Act that will designate “a single lead agency” to develop economic reviews in hopes of streamlining the process.

The deal came together after Treasury Secretary Janet Yellen told Congress that the United States could default on its debt obligations by June 5 — four days later than previously estimated — if lawmakers did not act in time to raise the federal debt ceiling.

Both sides have suggested one of the main holdups was the Republican effort to expand work requirements for recipients of food stamps and other federal aid programs, a longtime goal that Democrats have strenuously opposed.

Biden has said the work requirements for Medicaid would be a nonstarter. He seemed potentially open to negotiating minor changes on food stamps, now known as the Supplemental Nutrition Assistance Program despite objections from rank-and-file Democrats.

Americans and the world were uneasily watching the negotiating brinkmanship that could throw the US economy into chaos and sap world confidence in the nation’s leadership.

Anxious retirees and others were already making contingency plans for missed checks, with the next Social Security payments due next week.

Yellen said failure to act by the new date would “cause severe hardship to American families, harm our global leadership position and raise questions about our ability to defend our national security interests.”

The president, spending part of the weekend at Camp David, continued to talk with his negotiating team multiple times a day, signing off on offers and counteroffers.


ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023
Updated 27 May 2023

ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023

ADNOC Drilling on fleet expansion spree as it eyes over $3bn revenue in 2023
  • The company grew the fleet by 16 rigs in 2022, bringing the total to 115, CEO tells Arab News

RIYADH: On the back of a strong first-quarter performance, ADNOC Drilling plans to go big on its expansion strategy as it eyes 20 percent year-on-year growth in revenue this year. 

As a sole drilling partner to Abu Dhabi National Oil Co., ADNOC Drilling launched a bold fleet expansion program to enable the energy giant achieve its production targets. 

In an interview with Arab News, the CEO of the Middle East’s largest national drilling company, Abdulrahman Abdulla Al-Seiari, said they grew the fleet by 16 rigs in 2022, bringing the total to 115. 

“We will add a further 27 rigs by 2024, bringing our fleet to 142 rigs, and with these additional rigs will come additional revenue,” he told Arab News. 

Sharing the financial projections for the rest of the year, Al-Seiari said they expect to make a total revenue of between $3 and $3.2 billion in 2023. 

“We guided the market to expect EBITDA in the range of $1.35 to $1.5 billion with a margin of 45 percent to 47 percent. We will see record net income between $850 million and $1 billion,” he said. 

This comes after the drilling firm recorded a 19 percent year-on-year growth in revenue to $716 million in the first quarter.   

Its net income increased by 25 percent year-on-year to $219 million, which Al-Seiari said “clearly demonstrates the success of our strategy to expand both our drilling fleet and our service offering.” 

He attributed this rise in revenue to ADNOC’s accelerated production capacity growth which he said, “directly translates into an acceleration of drilling activity.” 

SPEEDREAD

• ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain.

• The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services.

• The drilling firm looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030.

“To enable this growth, we are growing our drilling fleet to deliver the wells required. When these rigs go onto our long-term contracts, they provide long-term cashflow and earnings visibility to shareholders while providing protection from market volatility,” he explained.   

ADNOC Drilling’s oilfield services business has also significantly grown in recent years and in the first quarter of 2022, the company achieved record OFS revenue of $123 million. 

Continuing that rapid expansion, the CEO said the segment grew by a massive 43 percent in the first quarter of 2023 to $126 million. The company attributed the growth to increased activity volume across the entire portfolio. 

ADNOC Drilling said its OFS capabilities offer comprehensive drilling and completion services that span the entire drilling value chain. 

The business division has helped the firm create considerable savings in well time and cost while delivering better well economics, ensuring cost-effective services. 

Talking about the growth prospect of the drilling industry, Al-Seiari said: “It is in very good shape in the UAE.” 

While ADNOC’s production capacity growth will deliver big gains for ADNOC Drilling in the short term, he said it plans to unlock Abu Dhabi’s “unconventional” oil and gas reserves and deliver gas self-sufficiency for the UAE that will “cement long-term earnings potential.” 

“We are the key enabler of gas self-sufficiency and will drill the thousands of wells needed to access the trillions of standard cubic feet of recoverable unconventional gas resources.”

Strong order book 

Since its initial public offering in October 2021, the company has secured more than $12 billion in contract backlog. In April 2023, it won another contract for integrated drilling services worth $412 million — the first of a number of anticipated significant awards in 2023.   

Talking about their future plans, Al-Seiari said they are “hugely ambitious” and are constantly evaluating opportunities for growth. 

“The pipeline of opportunities in Abu Dhabi is vast and remains our number one priority; however, the expansion of operations beyond our borders is a component of our mid-to-long-term strategy.” 

Decarbonization plan 

The drilling firm, which claims to have the world’s longest well with a total length of 50,000 feet, looks to play a key role in helping ADNOC achieve its target of reducing carbon intensity by 25 percent by 2030. 

“We are 100 percent committed to the delivery of maximum energy with minimum emissions,” said the CEO.    Explaining the company’s decarbonization plan, Al-Seiari said it rests on three broad streams of complementary activity which include continually driving greater efficiencies, minimizing the emissions of the drilling fleet, and addressing emissions associated with the global supply chain.   

“We are adding batteries to our fleet so providing hybrid power. These hybrid-powered drilling rigs can reduce emissions by up to 15 percent. Additionally, we are connecting our rigs to the grid where infrastructure allows,” he said. 

ADNOC Drilling is also supporting local manufacturing and procuring equipment and services from within the UAE — a move that helps the firm decarbonize its supply chain.


Developing aviation infrastructure key to achieving Vision 2030 goals: report

Developing aviation infrastructure key to achieving Vision 2030 goals: report
Updated 28 May 2023

Developing aviation infrastructure key to achieving Vision 2030 goals: report

Developing aviation infrastructure key to achieving Vision 2030 goals: report
  • Kingdom has the potential to become a gateway connecting Asia Pacific to Europe and America, says expert

RIYADH: The launch of the Kingdom’s strategic plans to become a global tourism and logistics hub has added a new impetus to its fast-evolving aviation industry, which can be bolstered by investing in innovative technologies, suggested a report issued by the King Abdullah Petroleum Studies and Research Center.

Speaking to Arab News, Abdulrahman Alwosheel, a research associate at the Riyadh-based center and co-author of the report, said due to its strategic geopolitical location, the Kingdom has all the potential to become a gateway connecting Asia Pacific to Europe and America, which will also help it achieve its tourism goals as envisaged in Vision 2030.

“There are several areas where Saudi Arabia can focus to enhance its aviation industry by improving infrastructure, increasing connectivity, investing in innovation and technology, developing a skilled workforce, and promoting tourism,” said Alwosheel. 

The researcher said following the decision to allow tourist visas the Kingdom has made incredible progress in the tourism sector. 

The KAPSARC report said advancement in the Kingdom’s aviation sector is key to achieving the goals outlines in Vision 2030. Saudi Arabia’s National Tourism Strategy aims to attract 100 million visitors by 2030 and increase the tourism sector’s contribution to the gross domestic product to more than 10 percent. 

On the other hand, Saudi Arabia’s National Logistics Strategy, launched by Crown Prince Mohammed bin Salman in 2021, aims to position the Kingdom as a global logistics hub connecting three continents and improve transportation services. The strategy also seeks to improve the capabilities of the Kingdom’s air cargo sector by doubling its capacity to more than 4.5 million tons by 2030. 

Alwosheel said further improvement in domestic transport could also play a crucial role in elevating the tourism sector in Saudi Arabia, which is already progressing steadily compared to its regional counterparts. 

 “Unlike the neighboring countries, such as Qatar, Bahrain, and the UAE, in which domestic transport needs are more limited, in Saudi Arabia, domestic transport can play a vital role in supporting growth by promoting and developing domestic tourism, including the development of aviation infrastructure and services,” he added. 

The researcher pointed out that strategic alliances and joint ventures involving air carriers, manufacturers, airports, and government agencies could enable the aviation industry to leverage individual assets and skills to achieve the Kingdom’s goals.

Sustainability and challenges

The report emphasized the importance of sustainability in the overall development process of the aviation sector in the Kingdom. The think tank said unexpected circumstances caused by the COVID-19 pandemic such as a drop in demand, disruption of the airline industry, and the resultant financial losses served as a wake-up call to promote sustainable pathways.

Alwosheel noted that the cost factor is one of the major challenges the aviation industry should address while propagating the use of sustainable aviation fuel. 

“SAF is more expensive than traditional fossil-based fuels, which can create a financial burden for airlines. However, with increasing demand and production, technological maturity, feedstock availability, and diversity, the cost of SAF is expected to decrease,” said Alwosheel. 

According to the International Air Transport Association, the production of sustainable aviation fuel is estimated to meet just 2 percent of the sector’s needs by 2025. 

SAF is produced in tiny quantities from feedstocks such as cooking oils and animal waste and costs two to five times more than traditional jet fuels.

Alwosheel added that SAF will become more cost competitive if governments, along with customers and suppliers of SAF and airports work together and devise ways to promote technological advancements in the fuel’s production. He also pointed out that integrating SAF production plants with existing oil and gas industries could help reduce capital costs. 

“SAF production must be aligned with the region’s conditions since the production of biofuels could be limited. However, integrating it with the existing industries (petrochemical) can help reduce capital costs in developing facilities dedicated to producing SAF by considering co-processing pathways,” the researcher said. 

He said another challenge for SAF uptake is the strict certification standards to ensure that it is sustainable and does not harm the environment. 

With continued investment in research and development, increasing facilities for production and availability, and developing a robust certification system, the aviation industry can successfully embrace SAF.

Abdulrahman Alwosheel, Research associate at King Abdullah Petroleum Studies and Research Center

“The development of a certification system that is universally recognized can be challenging. Consequently, with continued investment in research and development, increasing facilities for production and availability, and developing a robust certification system, the aviation industry can successfully embrace SAF,” said Alwosheel. 

The ‘Passenger Load Factor’

Passenger Load Factor is “the percentage of available seating capacity filled with passengers, regardless of the seating capacity designation made by the airline or the cabin layout.” 

According to the KAPSARC report, PLF is instrumental in assessing the profitability of airlines since it indicates that an airline has sold most of its available seats, which allows it to divide its costs among the total passengers carried. 

Andres Guzman, a fellow researcher at KAPSARC, said that Saudi Arabia’s PLF has significantly improved, highlighting the Kingdom’s growth in the aviation sector.

“In fact, the lower PLF dilutes the benefits that aircraft manufacturers have made in the last years in improving fuel efficiency by considering new technology engines when the performance of the aviation sector is expressed in terms of the number of passengers instead of (the number of ) seats available,” said Guzman. 

According to the researcher, making the aviation sector sustainable requires concerted efforts from all stakeholders including airline carriers, aircraft manufacturers, consumers, airports, and governments. 

Guzman said despite financial challenges, aircraft fleet renewal has considerably improved the performance of the aviation sector, as newer aircraft are more fuel efficient, and they offer improved safety and reduced maintenance costs. 

“As sustainability has become a global concern, governments and financiers could foster a smoother transition of fleet renewal programs by offering financial incentives in compliance with legislation on emissions reduction,” he said.


Saudi Arabia’s healthcare sector bets big on digital transformation

Saudi Arabia’s healthcare sector bets big on digital transformation
Updated 27 May 2023

Saudi Arabia’s healthcare sector bets big on digital transformation

Saudi Arabia’s healthcare sector bets big on digital transformation
  • KSA to restructure the sector by enhancing its capabilities as a value-based ecosystem

CAIRO: Saudi Arabia is leading the digitalization wave in the wellness space by improving quality care, patient experience, and sustainable health development on par with the best in the world.

The Kingdom aims to restructure the health sector by enhancing its capabilities as an effective, integrated, value-based ecosystem focused on the patient’s health.

It is committed to investing heavily in the health technology sector to meet these ambitious goals. The 2023 budget allocated over SR180 billion ($50.3 billion) to healthcare and social development, reflecting the government’s commitment to this initiative. 

Much of this budget is directed toward digital health initiatives to enhance accessibility, efficiency, and transparency within the healthcare system.

Among these initiatives was creating a unified national electronic health record system, which acts as a comprehensive database to ensure patient data is accessible to medical professionals nationwide, enabling seamless cooperation and swift decision-making.

Investment in telemedicine platforms is also prioritized, ensuring healthcare access even in remote areas.

Under Vision 2030, the government has also been working toward privatizing the healthcare industry, focusing on 290 government hospitals and 2,300 primary health centers in the Kingdom.

Changing landscape

In an interview with Arab News, Jalil Abbadi, CEO of Altibbi, an Amman-based digital health platform, explained that the government’s decentralization initiatives would significantly enhance the sector and escalate healthcare technology.

“Hospitals and large corporations are working on their health tech solutions, and smaller companies are focusing on the consumer side,” Abbadi explained.

He added that as hospitals and clinical centers decentralize, they will focus on driving profits, increasing the incentive to adopt healthcare technology to automate and digitalize their work for more efficient operations. 

FASTFACTS

• The 2023 budget allocated over SR180 billion to healthcare and social development, reflecting the government’s commitment to this initiative.

• Much of this budget is directed toward digital health initiatives to enhance accessibility, efficiency, and transparency within the healthcare system.

• Among these initiatives was creating a unified national electronic health record system, which acts as a comprehensive database to ensure patient data is accessible to medical professionals nationwide.

Altibbi is one of the largest digital health platforms in the Middle East, raising more than $52.4 million in funding since its inception.

With the Kingdom reducing its dependency on hospital care and moving toward preventive health services, it aims to digitalize 70 percent of patient activities by 2030.

Abbadi explained that digital health consultations and activities are still low compared to Vision 2030’s targets, but “growth is happening very fast.”

“The government is pushing for digital health very fast, especially with policies that mandate the adoption of health tech and the legalization of many aspects around digital healthcare. So I think that 70 percent is very achievable soon,” Abbadi stated.

Startups are fueling the health tech sector with digital tools such as artificial intelligence, the Internet of Things, and big data analytics being integrated into healthcare services to predict, prevent and manage diseases more effectively.

Saudi Arabia’s health tech sector presents a roadmap for a future where digital health solutions are central to holistic and patient-centric care. This pioneering transformation is not only an investment in the health of its people but also a catalyst for economic diversification and sustainable development.

Digital health priorities

According to a report by the Saudi government, the proportion of people in Saudi Arabia aged 60 or more is predicted to be 25 percent of the total population of 40 million by the end of 2050, which calls for an urgent need to revolutionize healthcare delivery.

Chronic diseases such as cardiovascular conditions and obesity are prevalent in this demographic, which has led to a surge in digital solutions to address these challenges.

Sacha Haider, partner at the UAE-based venture capital firm Global Ventures, explained that the next generation of health tech in the Kingdom lies in preventative healthcare and longevity.

Speaking with Arab News, Haider said that 50 percent of the Saudi population is overweight, over 20 percent suffer from obesity and 7 million Saudis have Type 2 diabetes.

She further explained that consultations and check-ins would significantly activate health tech and digital health in the Kingdom.

“Chronic patients who have illnesses such as diabetes or thyroid will have their check-ins done over video conferencing. As the provider pushes that down and says this is more effective and cost-efficient, we’ll see higher adoption,” she added. 

In the wake of the COVID-19 pandemic, the industry has adopted digital technologies to enhance patient experiences and improve the quality of care. Saudi-based platforms like Nala and Cura are prime examples of successful digital health services companies, offering everything from instant consultations to tailored digital care programs.

Moreover, Saudi Arabia’s Ministry of Health has launched apps like Mawid, Tabaud, and Seha, which provide virtual consultations, thus eliminating the need for physical hospital visits.

Haider and Abbadi acknowledged the Kingdom’s efforts in introducing high-value digital health solutions.

The concept of express clinics within pharmacies has also gained momentum, providing instant primary care services. These clinics offer services ranging from consultation, measuring blood glucose and blood pressure, skincare analysis, weight management, and vaccination.

The digital health market in Saudi Arabia is projected to grow by 9.06 percent from 2023 to 2027, resulting in a market volume of $1.16 billion, according to global data firm Statista.