Cairo to Jeddah sector ranks 2nd busiest international route of 2023

This falls in line with the Kingdom’s aim of developing and upgrading all aviation sectors, including Saudi airlines, logistics services, cargo assistance, and other support divisions to boost its tourism efforts and aviation strategy in line with Vision 2030.
This falls in line with the Kingdom’s aim of developing and upgrading all aviation sectors, including Saudi airlines, logistics services, cargo assistance, and other support divisions to boost its tourism efforts and aviation strategy in line with Vision 2030.
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Updated 21 December 2023
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Cairo to Jeddah sector ranks 2nd busiest international route of 2023

Cairo to Jeddah sector ranks 2nd busiest international route of 2023

RIYADH: The Cairo to Jeddah sector has been ranked as the second busiest international route during 2023, with 4.8 million seats, according to a report.

Launched by global travel data provider firm the Official Airline Guide, the report indicated a 2 percent capacity difference between first and second place.

This comes as 2023’s busiest international airline route was Kuala Lumpur to Singapore with 4.9 million seats.

This falls in line with the Kingdom’s aim of developing and upgrading all aviation sectors, including Saudi airlines, logistics services, cargo assistance, and other support divisions to boost its tourism efforts and aviation strategy in line with Vision 2030.

“Saudi Arabia is leading globally through aviation, achieving the highest increase in connectivity out of any country and outperforming global aviation growth rates,” the Kingdom’s Minister of Transport and Logistics Services, Saleh Al-Jasser, said at the Saudi Aviation Strategy Steering Committee. 

“The aviation sector is making a significant contribution to the Kingdom’s National Transport and Logistics Strategy, connecting Saudi Arabia to the world in support of Vision 2030,” Al-Jasser added. 

During the same event, General Authority of Civil Aviation President Abdulaziz Al-Duailej said: “2023 has been a record-breaking year for Saudi aviation — with the Kingdom carrying more passengers and connecting with more destinations than ever before.”

Al-Duailej added that this transformation is being led through the Saudi Aviation Strategy, which aims to target 330 million passengers, establish connectivity with 250 destinations, and hold a cargo capacity of 4.5 million tons by 2030. 

“The achievements are a testament to the work of the entire aviation sector and to the alignment achieved through the steering committee,” Al-Duailej highlighted. 

The report by OAG also reveals that Hong Kong to Taipei is the third busiest international route in 2023, with 4.6 million seats. This same route was also the most active in 2019, and capacity has dropped by 43 percent since then.

In addition to this, most routes in the international top 10 for 2023 have a capacity ranging between 9 percent and 43 percent below their 2019 levels.

Moreover, half of the flight paths in the top 10 busiest international routes did not appear on the same list in 2019.

Localized aircraft production is projected to grow 126 percent in Saudi Arabia over the next 20 years, said the head of an international organization dedicated to women in aviation earlier this week. 


Saudi Arabia’s petrochemical growth accelerates with strategic investments and Vision 2030

Saudi Arabia’s petrochemical growth accelerates with strategic investments and Vision 2030
Updated 05 October 2024
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Saudi Arabia’s petrochemical growth accelerates with strategic investments and Vision 2030

Saudi Arabia’s petrochemical growth accelerates with strategic investments and Vision 2030

RIYADH: Saudi Arabia’s rise as a global leader in the petrochemicals industry is a product of strategic foresight, substantial investments, and a commitment to economic diversification, experts have told Arab News. 

As the Kingdom seeks to reduce its dependence on oil revenue, its petrochemicals sector has emerged as a cornerstone of its industrial strategy, playing a pivotal role in Vision 2030.

Strategic investments, advanced infrastructure, and cost advantages have rapidly positioned the nation as a global leader in chemicals and plastics production, significantly boosting the sector in just a few years.

Hector Casas, principal at Arthur D. Little Middle East, highlighted in an interview with Arab News that Saudi Arabia’s petrochemical capacity is expected to “double in the next five years, from approximately 75 million tonnes per year to more than 140 million tonnes per year.”

The Kingdom’s access to competitive energy prices will drive this expansion and strengthen its position as a major player in the global petrochemical industry, making it exceptionally competitive in the sector.

“This growth encompasses projects in both basic petrochemical products and high-specialty products that add more value to the oil molecule,” he said.

Nadim Haddad, partner in the Energy Practice IMEA and global head of Oil and Gas at Oliver Wyman, added: “Saudi Arabia is acquiring assets globally in the petrochemical industry that will further cement its role as a pioneer and leader of the industry.”

The global petrochemical market is expected to grow significantly in the coming years, driven by rising demand for plastics, chemicals, and advanced materials in emerging markets. 

“Saudi Arabia is strategically positioned to capitalize on these opportunities, reinforcing its status as a global petrochemical powerhouse,” added Casas.

As part of Vision 2030, Saudi Arabia aims to diversify its economy, with the petrochemicals industry playing a key role in reducing reliance on oil and driving industrial growth through technological advancement and strategic partnerships.

Foundations of the petrochemical industry

The foundations of Saudi Arabia’s petrochemical industry are deeply intertwined with the history of its oil and gas sector. Following the discovery of vast oil reserves in the 1930s, the Kingdom quickly recognized the potential of petrochemicals as a means to add value to its hydrocarbon resources.

The establishment of Saudi Basic Industries Corporation – also known as SABIC – in 1976 marked a turning point, as the Kingdom began to channel its abundant natural gas resources into the production of chemicals and plastics.

SABIC has grown into one of the world’s largest and most diversified chemical companies, with operations spanning over 50 countries. Its success is driven by a strategic focus on vertical integration within the hydrocarbon value chain, allowing the company to produce a wide range of petrochemical products at competitive costs. 

This leadership not only reflects Saudi Arabia’s natural resource wealth but also its strategic investments in infrastructure, research, and human capital development.

Casas emphasized the significance of Saudi Arabia’s strategic investment in downstream petrochemical industries, particularly the acquisition of SABIC: “With the energy transition, the demand for oil as fuel will potentially start to decrease, while the demand for petrochemical-based products like plastics and synthetic fibers is increasing.”

He added: “Saudi Arabia is cognizant of this shift and understands that it possesses potentially more oil reserves than could be exploited, given expected trends in demand.”

Haddad highlighted the importance of the Kingdom’s integration with the oil and gas value chain which he said is built on the availability of feedstock to build an advantageous cost position on the global market.

“Jubail Industrial City, one of the largest industrial cities with state-of-the-art infrastructure, played a key role in building the foundation that helped accelerate the growth of the petrochemical industry,” Haddad explained.

Economic diversification and Vision 2030

The government’s focus on economic diversification is driving significant investments in the sector, including the development of new production facilities, the expansion of existing capacities, and the adoption of advanced technologies that enhance efficiency and sustainability.

Vision 2030 envisions Saudi Arabia as a global industrial hub, attracting foreign investment and fostering innovation in high-value industries. The petrochemicals industry, with its vast potential for value addition, is a key component of this vision. 

The Kingdom’s strategic location at the crossroads of Europe, Asia, and Africa, combined with its state-of-the-art infrastructure, makes it an ideal destination for investors seeking to capitalize on the growing demand for petrochemicals in emerging markets.

Haddad underscored the importance of downstream investments in this strategy: “Downstream investments in chemicals are one of the key pillars of Saudi Arabia’s industrialization strategy, creating the link between the petrochemical industry and end uses.”

He went on to explain that these investments will allow Saudi Arabia to capture the economic value-add that it was previously unable to capture, localize value chains, reduce reliance on imports, and increase the diversification of its exports.

Expanding production capacity and technological innovation

Saudi Arabia’s petrochemical sector has seen remarkable growth in recent decades, with production capacity reaching approximately 118 million tonnes annually. This has been driven by continuous investments in infrastructure, technology, and capacity expansion.

The Kingdom’s focus on producing more advanced specialty products, such as performance polymers, engineering plastics, and high-value chemicals, reflects its commitment to moving up the value chain and capturing a larger share of the global market.

Technological innovation plays a crucial role in the competitiveness of Saudi Arabia’s petrochemical industry. The Kingdom is investing heavily in research and development to drive innovation across the value chain.

SABIC’s dedicated R&D centers, located in strategic regions around the world, are at the forefront of developing new materials and processes that enhance efficiency, reduce environmental impact, and create value-added products. 

As Casas pointed out: “Saudi Arabia is very active in R&D and technology in the petrochemical sector. SABIC’s R&D program and Home of Innovation are a clear showcase of this.”

Moreover, Saudi Aramco, the world’s largest integrated energy and chemicals company, is making significant strides in integrating its upstream and downstream operations. 

The acquisition of a 70 percent stake in SABIC for $69.1 billion has further strengthened Aramco’s downstream capabilities, positioning it as a global leader in the production of petrochemicals. 

Casas noted the strategic impact of this acquisition: “The acquisition of SABIC by Aramco has not only positioned the latter as a major petrochemical player worldwide but also enabled significant optimization and synergies in procurement, supply chain, manufacturing, marketing, and sales.”

In terms of technological advancements, ADL’s expert highlighted four key fronts: “The development of mega-scale oil-to-chemical complexes, the focus on high-specialty chemicals, the digital transformation to drive efficiencies, and the emphasis on emissions reduction and sustainability.” 

These advancements are crucial for Saudi Arabia to maintain its competitive edge in the global market.

Strategic partnerships and international collaborations

Saudi Arabia’s petrochemical industry has benefited significantly from strategic partnerships and international collaborations. Joint ventures with leading global companies have been instrumental in bringing advanced technologies, expertise, and capital to the Kingdom. 

These partnerships have not only enhanced Saudi Arabia’s production capabilities but also facilitated the transfer of knowledge and technology, which is critical for the industry’s long-term growth.

One of the most notable examples of such collaboration is the Sadara Chemical Company, a joint venture between Saudi Aramco and Dow Chemical. 

Established with an investment of $20 billion, Sadara is the largest integrated chemical complex in the world built in a single phase. The facility produces a wide range of value-added chemicals and plastics, many of which are being produced in Saudi Arabia for the first time. 

Sadara’s success underscores the importance of international partnerships in driving innovation and expanding the Kingdom's petrochemical portfolio.

Haddad elaborated on the role of such partnerships: “Joint ventures and partnerships are not new to Saudi Arabia's petrochemical sector; there is a rich history of collaborations that have significantly accelerated the industry’s development.”

“These collaborations will facilitate the development of technologies that promote cleaner operations and products,” he added.

Environmental sustainability and green initiatives

Saudi Arabia’s petrochemical industry is increasingly focused on sustainability and reducing its environmental footprint. The Kingdom is investing in technologies that improve energy efficiency, reduce emissions, and enable the production of more sustainable products. 

Carbon capture, utilization, and storage is one area where Saudi Arabia is making significant advancements. By capturing carbon dioxide emissions from industrial processes and utilizing them in the production of chemicals and fuels, the Kingdom is reducing its carbon footprint while creating new revenue streams.

Green hydrogen is another area where Saudi Arabia is leading the way. The Kingdom’s abundant solar and wind resources provide a competitive advantage in the production of this fuel, which is produced using renewable energy sources. 

The development of the Neom Green Hydrogen Project is a key component of Saudi Arabia’s strategy to become a global leader in sustainable energy. 

The project aims to produce 650 tonnes of hydrogen per day by 2025, making it the largest such facility in the world.

“Saudi Arabia's petrochemical industry is firmly committed to integrating environmental sustainability into its operations,” Casas said, highlighting the Kingdom’s efforts in sustainability.

He added: “SABIC, for instance, has committed to achieving carbon neutrality from operations under its control by 2050 and is actively pursuing carbon capture technologies to decarbonize its operations.”


Saudi energy minister takes part in G20 meetings in Brazil

Saudi energy minister takes part in G20 meetings in Brazil
Updated 05 October 2024
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Saudi energy minister takes part in G20 meetings in Brazil

Saudi energy minister takes part in G20 meetings in Brazil

RIYADH: Saudi Energy Minister Prince Abdulaziz bin Salman emphasized the importance of balancing economic growth, energy security, and climate change mitigation as he met with G20 counterparts in Brazil, the Saudi Press Agency reported.
Prince Abdulaziz joined the 7th Energy Transitions Working Group, the 15th Clean Energy Ministerial, and the 9th Mission Innovation Ministerial meetings.
Sustainable energy policies, just energy transitions, and cooperation to address climate change were discussed at the gatherings.

The last meeting, in Foz do Iguaçu, concluded on Friday.

Prince Abdulaziz highlighted the Kingdom’s leadership in carbon technologies and its ambition to become a global leader in circular carbon economy technologies and clean energy production and export.
The Kingdom is progressing well to up its renewable energy capacity to 44 gigawatts by the end of 2024.
Saudi Arabia is also establishing a hydrogen production center in Ras Al-Khair Industrial City and launching a large-scale carbon capture and storage project with an annual capacity of 9 million tons by 2027.
The Saudi initiative line up with the G20 goals of promoting  sustainable energy transitions, energy security, and environmental sustainability.


Saudi Arabia’s official reserves highest in 21 months at $470bn

Saudi Arabia’s official reserves highest in 21 months at $470bn
Updated 04 October 2024
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Saudi Arabia’s official reserves highest in 21 months at $470bn

Saudi Arabia’s official reserves highest in 21 months at $470bn

RIYADH: Saudi Arabia’s official reserve assets reached SR1.76 trillion ($469.83 billion) in August, the highest in 21 months and a 10 percent increase year-on-year, according to recent data.

Figures released by the Saudi Central Bank, known as SAMA, show these holdings include monetary gold, special drawing rights, the International Monetary Fund’s reserve position, and foreign reserves. 

The latter, comprising currency and deposits abroad as well as investments in foreign securities, made up 95 percent of the total, amounting to SR1.67 trillion in August. This category led the growth with 10.62 percent increase during this period. 

August data also showed that special drawing rights, making up 5 percent of the total at SR79.35 billion, increased by 2 percent. 

Created by the IMF to supplement member countries’ official reserves, SDRs derive their value from a basket of major currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound sterling. They can be exchanged among governments for freely usable currencies when needed. 

SDRs provide additional liquidity, stabilize exchange rates, act as a unit of account, and facilitate international trade and financial stability. 

The IMF reserve position totaled around SR13 billion, but decreased by 9 percent during this period. This category represents the amount a country can draw from the IMF without conditions. 

Saudi Arabia’s reserves, which include foreign exchange holdings, are among the highest in the world. According to Fitch Ratings, the Kingdom’s reserve coverage ratio, as of February, stood at 16.5 months of current external payments.

This high ratio is a testament to the Kingdom’s ability to meet its external financial obligations for an extended period, ensuring that the country remains resilient in the face of global economic uncertainties.

This also serves as a financial buffer, enabling it to navigate external pressures, such as fluctuations in oil prices, geopolitical tensions, or shifts in global market dynamics.

They also also play a key role in enhancing investor confidence in Saudi Arabia’s economy, as they signal the government’s capacity to meet its obligations and maintain economic stability.

For international investors, the combination of high reserves, a diversified economy, and strong fiscal management make Saudi Arabia an attractive destination for investment.

In addition to its fiscal strength, Saudi Arabia benefits from a high level of government and debt ratings which allow the Kingdom to access global capital markets with ease, raising funds through bond issuances and sukuk at competitive rates.

This financial flexibility ensures that the country can continue to finance its ambitious Vision 2030 projects, such as NEOM, the Red Sea Project, and the development of new urban centers, without disrupting its overall economic stability.

Saudi Arabia is undergoing a transformative expansionary strategy as part of its Vision 2030 framework, which seeks to diversify the nation’s economy away from its heavy reliance on oil revenues.

Sectors such as tourism, technology, infrastructure, and renewable energy are considered pivotal to the Kingdom’s long-term economic stability and require substantial investment to meet the Vision’s targets. 

As a result, government expenditures have risen significantly in recent years, and forecasts suggest the possibility of a fiscal deficit in the medium term as spending continues to expand.

Despite these spending challenges, Saudi Arabia is in a strong fiscal position. The Kingdom’s favorable government and debt ratings, combined with substantial foreign reserves, allow the country to manage the increased expenditures and potential deficits effectively.

Saudi Arabia has ample room to raise debt through various financial instruments, such as bonds and sukuk, to fund its large-scale development projects without encountering significant financial stress.

This capability has been further supported by the government’s prudent fiscal management, which continues to focus on maintaining the country’s overall economic health while ensuring that Vision 2030 projects are adequately financed.

The Ministry of Finance, in its pre-budget 2025 report, emphasized that the government intends to take advantage of favorable market conditions to implement alternative financing activities that can stimulate economic growth.

The strategy behind this approach is not only to provide the necessary funding for key projects but also to diversify the Kingdom’s financing channels.

By doing so, the government aims to maintain market efficiency, deepen its financial markets, and attract new investors, both domestically and internationally.

Moreover, the government’s fiscal policy is designed to strengthen its financial position by maintaining safe levels of reserves, which are essential for protecting the economy against external shocks.


Oil Updates – prices set for 10% weekly rise as Middle East tensions heat up

Oil Updates – prices set for 10% weekly rise as Middle East tensions heat up
Updated 04 October 2024
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Oil Updates – prices set for 10% weekly rise as Middle East tensions heat up

Oil Updates – prices set for 10% weekly rise as Middle East tensions heat up

LONDON: Oil prices rose sharply on Friday, and were on track for 10 percent weekly gains as investors weighed the prospect of a wider Middle East conflict disrupting crude flows after President Biden said the US was discussing an Israeli attack on Iranian oil facilities.

Brent crude futures were up $1.09, or 1.4 percent, at $78.71 a barrel, as of 2:20 p.m Saudi time. US West Texas Intermediate crude futures were up $1.08, also 1.5 percent, at $74.79 a barrel.

“While Iran has ‘saved face’ by its rocket attack on Israel on Tuesday, fears are growing that Israel might target Iranian oil infrastructure under its response, which could provoke further retaliation dragging neighboring states into the conflict,” Panmure Gordon analyst Ashley Kelty said.

The US is discussing whether it would support Israel strikes on Iran’s oil facilities as retaliation for Tehran’s missile attack on Israel, President Joe Biden said on Thursday, while Israel’s military hit Beirut with new airstrikes in its battle against Lebanese armed group Hezbollah. Biden said later in the day on Thursday he would not negotiate in public when asked if he had urged Israel not to attack Iran’s oil facilities.

Biden’s comments contributed to a 5 percent rally in oil prices on Thursday, as Israel weighs its options after arch-foe Iran launched its largest-ever assault on Tuesday.

“The market had already had a substantial amount of short positioning and low amounts of net length in the market – leaving the market prone to price spikes higher,” StoneX analyst Alex Hodes said.

Concerns over oil supply that drove up prices earlier in the week have also been tempered by OPEC’s spare production capacity and the fact that global crude supplies have yet to be disrupted by the Middle East unrest.

Meanwhile, Libya’s eastern-based government and Tripoli-based National Oil Corp. announced on Thursday the reopening of all oilfields and export terminals after a dispute over leadership of the central bank was resolved, ending a crisis that had heavily reduced oil production.

This would allow the country to more than double its production levels, restoring them to about 1.2 million bpd.


How AI is transforming the banking industry and leading the fight against fraud

How AI is transforming the banking industry and leading the fight against fraud
Updated 03 October 2024
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How AI is transforming the banking industry and leading the fight against fraud

How AI is transforming the banking industry and leading the fight against fraud
  • Banks in Saudi Arabia and the UAE are adopting AI-driven programs to help improve accuracy, efficiency, and security
  • AI is already facilitating faster decision-making and personalized services, boosting customer satisfaction and driving innovation

RIYADH: Artificial intelligence is transforming the banking industry by creating seamless customer experiences, automatically detecting fraudulent activity, and completing time-consuming tasks normally performed by humans.

According to a report published this year by McKinsey, generative AI could add between $200 billion and $340 billion a year in value across the global banking sector, largely through increased productivity.

Earlier this year, Riyad Bank announced the launch of its new “Center of Intelligence,” which will introduce AI technologies and services to the Saudi banking sector.

Using machine learning and modeling, the center will offer a cutting-edge environment for AI-driven research, innovation and analysis. It will also use machine-learning techniques and solutions to improve the efficiency and effectiveness of the bank’s investments and operations.

Mazen Pharaon, chief digital officer at Riyad Bank, called AI “a strategic asset and game changer” for the industry.

“It’s also instrumental in helping us offer exceptional financial services to our customers and financial performance to our shareholders,” he told Arab News.

AI offers significant advantages over traditional, human-led methods, including enhanced efficiency, accuracy and scalability, Pharaon said.

“It enables us to process large volumes of data rapidly, delivering insights that would be challenging to obtain through conventional techniques.

“AI also facilitates accelerated decision-making and personalized services, boosting customer satisfaction and driving innovation.

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“Additionally, AI helps us identify new business opportunities, reducing costs and improving risk management by identifying potential issues before they escalate.”

Money management has not been entirely handed over to the machines, however. AI-driven automated decisions at Riyad Bank are complemented by human oversight to guarantee accountability and ethical compliance.

“While AI excels at processing vast amounts of data and identifying patterns at scale, our experts are involved in reviewing and validating key decisions and their expected impact,” Pharaon said.

“This hybrid approach allows us to leverage AI’s power while preserving the essential human supervision and oversight in banking.”

Riyad Bank’s long-term vision is to extend AI across all business areas.

“Our aspiration at Riyad is to embed the use of AI, data science and advanced analytics in the bank’s DNA and overall processes,” Pharaon said.

Mashreq Bank, a privately owned bank based in the UAE, also uses AI-backed digital solutions, which analyze customer data to provide personalized financial recommendations and insights across various platforms.

Fernando Morillo, the group head of retail banking at Mashreq, believes AI will be integral to the future of banking services.

“We utilize AI in various ways to enhance customer experience and streamline operations,” Morillo told Arab News.

DID YOU KNOW?

• AI could add up to $340 billion annually to the global banking sector through increased productivity.

• Riyad Bank’s ‘Center of Intelligence’ will introduce AI technologies to enhance research, investments and operational efficiency.

•AI-backed digital solutions at Mashreq Bank improve customer experience, offer personalized financial advice and detect fraudulent activity.

“We have launched a chatbot in the UAE, which is also being rolled out to other markets. This AI-powered chatbot can understand customer intent, translate it into actions, and provide 24/7 support.

“Our AI-backed chatbot has the ability to handle more than 80 different scenarios, anticipating customer needs and proactively offering solutions.”

Because data protection is a growing concern for every business, Mashreq offers advanced encryption techniques to ensure secure data-sharing protocols, and conducts regular security audits to safeguard customers’ information.

“Additionally, we implement rigorous testing and validation of our algorithms to ensure they meet ethical standards and regulatory requirements.”

Mashreq Bank uses AI-backed digital solutions. (Supplied)

Morillo said the ability of machine-learning models to continuously adapt to recognize new fraud tactics significantly reduces the risk of fraudulent activities and enhances overall security for customers.

“AI algorithms help us in analyzing vast amounts of data in real-time to identify patterns and anomalies that may indicate fraudulent activity,” he said. “This allows us to detect suspicious transactions, prevent fraudulent account openings, and reduce false positives.”

But Morillo does not believe that AI will replace humans entirely. Indeed, employees will still be needed to review AI activities and make adjustments as needed.

“While AI can provide insights, recommendations, and even decisions, ultimately humans supervise these systems to ensure decisions are fair, accurate, and compliant,” he said.

“This oversight is essential for maintaining accountability and addressing any ethical concerns that may arise.”