PIF’s THE RIG to optimize maritime operations with local partnerships
International Maritime Industries is preparing to provide boats and additional offerings to Oil Park Development Co.
Alliance will support THE RIG in reaching its operational goals, confirming its position as a premier adventure tourism destination
Updated 01 October 2024
Arab News
RIYADH: Saudi Arabia’s offshore adventure tourism is set to gain momentum as THE RIG partners with maritime companies to enhance logistics and provide ferries and key services.
The development coincides with the International Maritime Industries preparing to provide boats and additional offerings to Oil Park Development Co., the entity entrusted with advancing the Public Investment Fund project.
This undertaking seeks to enhance maritime operations and improve visitor experiences, according to a statement.
The partnership came during a visit by an OPDC delegation led by CEO Raed Bakhrji to IMI, where they met the organization’s head, Abdullah Al-Ghamdi.
The meeting marks a formal commitment to develop the maritime logistics and infrastructure essential for seamless accessibility to THE RIG.
This alliance will support THE RIG in reaching its operational goals, confirming its position as a premier adventure tourism destination.
It also aligns with THE RIG’s goal to contribute to solidifying Saudi Arabia’s role as a leading tourist destination known for its unique proposition, in addition to providing employment opportunities that can improve the quality of life in the Eastern Province.
Announced in 2021 by PIF, THE RIG initiative poses the world’s first adventure tourism destination on an offshore platform inspired by the oil industry’s architecture and design.
Bakhrji said: “Our collaboration with IMI will deliver a superior maritime experience at THE RIG. Their expertise will ensure smooth operations, enhancing the overall visitor journey.
“This initiative underscores our commitment to operational excellence and the establishment of a world-class adventure tourism destination that is aligned with Saudi Vision 2030 by fostering the growth of the Kingdom’s vibrant maritime and tourism sectors,” he added.
Al-Ghamdi said: “We are delighted to collaborate with OPDC’s visionary team as their selected provider of maritime services for THE RIG.”
He added:“Through this partnership, IMI is showcasing its dedication to ongoing expansion and advancement, leveraging our extensive experience as a premier global provider of maritime products and services. This collaboration empowers various sectors and entities to achieve their objectives and drive value for the national economy.”
OPDC was established to lead the development of THE RIG, in line with the PIF Strategy 2021-2025, to diversify and enrich the Kingdom’s tourism and entertainment experiences, increase investment within those sectors, and diversify the economy.
PIF launches Adeera to redefine Saudi hospitality with local brands
Updated 11 sec ago
Miguel Hadchity
RIYADH: Saudi Arabia is making a significant move to develop its own homegrown hospitality brands with the launch of Adeera, a new hotel management company fully owned by the Public Investment Fund.
This new venture aims to introduce a variety of local hotel brands designed to meet the needs of a diverse range of visitors, from mid-range options to ultra-luxury accommodations.
As Saudi Arabia continues to position itself as a major global tourism destination, the launch of Adeera comes at a crucial time.
According to a press release, the company is poised to unlock new business opportunities within the Kingdom’s hospitality sector by focusing on the unique Saudi experience.
Adeera will work closely with hotel developers to maximize the involvement of the local private sector, creating a platform for the growth of homegrown hospitality brands.
Khalid Johar, co-head of PIF’s Local Real Estate Portfolio, emphasized the significance of the launch. “The timing of Adeera’s introduction aligns perfectly with Saudi Arabia’s expansion in hospitality and tourism. The company has the opportunity to help propel the sector forward by introducing innovative hotel brands, supporting the Kingdom’s growing reputation as a world-class tourism destination.”
Johar also highlighted that Adeera’s distinct focus on Saudi culture and traditions would give the company a competitive edge in a rapidly evolving market. The goal is to create an authentic Saudi hospitality experience that resonates with both local and international visitors, celebrating the Kingdom’s rich heritage while offering world-class service.
The launch of Adeera marks another key step in PIF’s broader efforts to diversify Saudi Arabia’s economy and drive sustainable growth.
The press release noted that this move follows several significant investments by PIF in the tourism and real estate sectors. These investments include the luxury boutique hotel company Boutique Group, which specializes in transforming historic and cultural palaces into upscale boutique hotels; Dan, an agri-tourism company; and Asfar, a tourism investment firm.
Saudi Arabia’s National Tourism Strategy is an ambitious plan aimed at attracting 150 million visitors and generating 10 percent of the country’s gross domestic product from tourism by 2030. PIF’s investments are aligned with this vision, focusing on strategic sectors such as infrastructure, real estate, technology, and renewable energy to help establish Saudi Arabia as a leading global investment hub.
In addition to strengthening local industries, PIF is also focused on fostering innovation, creating employment opportunities, and attracting international investment. Through these initiatives, the fund aims to ensure sustainable economic growth and enhance the Kingdom’s competitiveness on the global stage.
The Kingdom’s hotel sector is already experiencing significant growth. According to recent data from the Central Bank of Saudi Arabia, spending in hotels saw a notable week-on-week increase of 11.4 percent from Nov. 10 to 16, reaching SR399.7 million ($106.4 million).
This follows an 8.5 percent increase in hotel spending during the week of Oct. 13-19, despite a broader decline in point-of-sale transactions, as reported by SAMA.
This upward trend in hotel spending underscores the growing demand for high-quality accommodations and further highlights the potential for continued growth within the hospitality sector.
With Adeera, Saudi Arabia is poised to take a leading role in shaping the future of its hospitality industry, blending the best of modern hotel management with a deep respect for its cultural and historical roots.
Saudi Arabia, UAE banks to post strong credit growth in 2025: Fitch Ratings
Fitch Ratings projected banks in the Kingdom will witness a financing growth of around 12% in 2025
Report said that the gradual execution of giga-projects should continue to underpin banks’ interest
Updated 5 min 4 sec ago
Nirmal Narayanan
RIYADH: Banks operating in Saudi Arabia and the UAE are expected to post strong credit growth in 2025, driven by high crude prices and the expansion of the non-oil economy, according to an analysis.
In its latest report, Fitch Ratings projected that banks in the Kingdom will witness a financing growth of around 12 percent in 2025, about twice the average of the Gulf Cooperation Council region.
The US-based agency added that corporates will account for almost 65 percent to 70 percent of new financing among Saudi banks in 2025.
The analysis echoes similar views to those put forward by Moody’s in November, which predicted that Saudi Arabia’s Vision 2030 initiative, aimed at diversifying the Kingdom’s economy, could accelerate the growth of the banking sector in the country.
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In its report, Fitch Ratings said: “The operating environment for banks in the Kingdom is underpinned by high oil prices and government spending, which support the country’s giga-projects and the Vision 2030 strategy, resulting in solid non-oil gross domestic product growth.”
It added: “Fitch Ratings forecasts real non-oil GDP growth to average a still strong 4.5 percent over 2024–2025, compared to 5 percent over 2022–2023. We expect the sector’s financial metrics to remain strong in 2025.”
The report said that the gradual execution of giga-projects should continue to underpin banks’ interest in this segment, although the current share of giga-project-related financing is minor for most rated banks.
However, the credit rating agency warned that the net foreign assets of banks in the Kingdom could continue to be negative in 2025 due to high-cost domestic term deposits and increased demand for foreign currencies.
Regional outlook
According to the analysis, banks in the Middle East region are expected to maintain sound profitability, solid liquidity, and adequate capital buffers for their risk profiles in 2025, while asset quality should remain stable.
In November, a report released by S&P Global said that banks in the GCC are expected to maintain strong asset quality, profitability, and ample liquidity through 2025 thanks to solid capitalization and well-managed balance sheets.
S&P Global, however, warned that heightened geopolitical tensions and a sharp drop in oil prices could negatively affect the creditworthiness of financial institutions in the region.
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UAE
Fitch said that banks in the UAE will enjoy favorable business and operating conditions in 2025 thanks to high oil prices and increased economic activities.
The analysis added that banks in the Emirates will achieve a loan growth of around 9 percent in 2025, a figure well above the GCC average but slightly below its Arab neighbor, Saudi Arabia.
“We expect UAE banks’ funding and liquidity to remain strong and deposits will continue growing in line with lending. Liquidity will continue to be supported by large government deposits, driven by the sovereign’s solid net external assets position, still-strong fiscal metrics and recurring hydrocarbon revenues,” added Fitch.
Egypt
The report highlighted the growth of the banking sector in Egypt and said that general business and operating conditions for financial institutions in the country are expected to improve next year.
According to Fitch, falling inflation, improved investor confidence, and healthy foreign currency liquidity conditions are some of the major factors that could strengthen the banking sector in Egypt in 2025.
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Bahrain
In Bahrain, credit growth among banks is expected to be reasonable, albeit still modest, compared to GCC peers, at around 4.5 percent in 2025.
“Fitch expects the business environment for banks in Bahrain to remain adequate, underpinned by some operating condition improvements. Lower lending rates should ease pressures on the sector’s corporate loan books, in particular real estate and contracting,” said the report.
The credit rating agency predicted stable asset quality metrics for Bahraini banks in 2025, with lower rates providing relief to corporate borrowers and households and the sector profitability to remain sound.
Kuwait
According to the report, the banking sector’s credit growth in Kuwait is expected to hover between 5 percent and 6 percent in 2025, albeit hindered by still-high interest rates and only moderate real non-oil GDP growth.
The analysis revealed that liquidity among Kuwaiti banks will remain strong next year due to large and stable deposits from government-related entities and gains from high oil prices.
Oman
Fitch revealed that Oman’s Vision 2040 program aimed at diversifying the country’s economy could open more opportunities for banks in the future.
“Oman’s Vision 2040 will provide growth opportunities for banks and ensure a healthy lending pipeline in key sectors of the economy, as well as reduce banks’ reliance on government spending in the long run. However, the absence of a deep capital market limits access for corporates to funding sources other than the country’s domestic banks,” said the study.
The analysis added that liquidity among Omani banks will continue to be supported by stable government and government-related entity deposits, while high oil prices are expected to support the growth in customer deposits.
Qatar
In Qatar, the general business and operating environment for banks are projected to improve in 2025.
The report revealed that the credit growth among Qatari banks could pick up to 5.5 percent next year but will remain below that of Saudi Arabia and the UAE due to their particularly strong operating conditions.
Jordan
In Jordan, the market conditions of banks are expected to remain challenging next year, while the sector will witness a lending growth of 3.5 percent.
“The operating environment for banks in Jordan remains challenging due to below-potential and structurally weak real GDP growth, and high unemployment and geopolitical risks, which negatively affect tourism and exports,” concluded Fitch.
Fitch affirms Saudi Aramco at ‘A+’ with stable outlook
Updated 10 December 2024
Reem Walid
RIYADH: Fitch Ratings has reaffirmed Saudi Aramco’s long-term issuer default ratings at “A+” for both foreign- and local-currency ratings, with a stable outlook, reflecting the oil giant’s strong financial standing and its crucial role in the Saudi economy.
The rating is underpinned by Aramco’s robust financial profile, though it is capped by the rating of its majority shareholder, the Saudi government, which owns 81.48 percent of the company. The Public Investment Fund holds an additional 16 percent. According to Fitch, this structure influences Aramco’s ratings due to the government’s significant stake and control.
Fitch assigned Aramco a standalone credit profile of “aa+,” highlighting its solid financial position. The agency also gave the company a short-term IDR of “F1+,” which is aligned with the sovereign rating.
The affirmation comes after Aramco’s strong performance in 2023, when its total liquid production averaged 10.7 million barrels per day, and its hydrocarbon output reached 12.8 million barrels of oil equivalent per day. This performance outpaced major global peers, including Shell, TotalEnergies, and BP.
In its statement, Fitch noted that Aramco’s rating is constrained by Saudi Arabia’s rating, in line with Fitch’s Government-Related Entities Rating Criteria. This is due to the government’s substantial influence over Aramco, particularly its regulation of production levels in accordance with OPEC+ commitments.
Fitch also emphasized the company’s “Very Strong” governance, reflecting the government’s strategic oversight, including the ability to determine Aramco’s maximum sustainable oil production capacity.
Aramco’s conservative financial management further bolsters its credit profile, with the company’s leverage expected to remain lower than that of other major global oil and gas companies. Fitch also praised Aramco’s sustainable dividend policy, which is set to include a base dividend of $81.2 billion in 2024, with additional performance-linked payouts.
“Under our oil price assumptions, we expect Saudi Aramco’s capital expenditures and base dividend payments to be broadly covered by operating cash flow. We also assume that the company has the flexibility to adjust its dividend commitment if oil prices decline or if capital expenditures exceed current forecasts,” Fitch said.
In 2024, Aramco is expected to pay total dividends of $124 billion, including $43.1 billion in performance-linked payouts, reflecting record cash flows from 2022-23. Fitch forecasts a reduction in capital expenditures from $50 billion in 2024 to $35 billion by 2028, with annual dividends projected to decrease to $82 billion over the same period.
The agency also highlighted Aramco’s critical role in Saudi Arabia’s economy, noting the company’s importance as a key provider of feedstock for power generation and other essential industries, in addition to its vast reserves and production capacity.
Fitch anticipates that the Saudi government would provide support if needed, although the company’s strong financial position has historically not required direct state intervention.
On a national level, Fitch assigned Aramco a long-term rating of “AAA (sau)” based on its substantial reserve base, strong profitability, and market position.
The company’s standing was also compared favorably to other prominent Saudi entities, such as Saudi Basic Industries Corp. and Saudi Electricity Co., within Fitch’s National Scale Rating framework.
Robust manufacturing sector lifts Saudi industrial index by 5%: GASTAT
Updated 10 December 2024
MIGUEL HADCHITY
RIYADH: Saudi Arabia’s industrial production index rose by 5 percent year on year in October, driven by robust growth across key economic sectors, official data showed.
According to figures from the General Authority for Statistics, the index also edged up 0.4 percent month on month, reaching 106.9 points.
The mining and quarrying sub-index, which includes oil production, recorded a slight 0.4 percent annual increase, with oil output ticking up to 8.97 million barrels per day from 8.94 million a year earlier.
Despite the annual increase, monthly performance for this sector remained stable with no significant changes recorded between September and October.
The manufacturing sector continued its robust growth, recording a 12.4 percent year-on-year increase in October. This expansion was primarily driven by a 32.6 percent surge in the production of coke and refined petroleum products compared to the same month of 2023.
Saudi Arabia’s industrial production, central to Vision 2030, is driving economic diversification through manufacturing and non-oil growth.
Other contributors to the sector’s growth included the manufacture of chemicals and chemical products, which rose by 0.6 percent, and food products, which grew by 4.8 percent.
On a month-to-month basis, the manufacturing sub-index advanced by 1.1 percent, driven by a 2.7 percent increase in coke and refined petroleum products and a 0.2 percent rise in chemicals and chemical products.
Other manufacturing activities exhibited varied growth rates. The manufacture of non-metallic mineral products increased by 1.8 percent year-on-year and 0.8 percent month-on-month.
Basic metals manufacturing expanded by 4.3 percent annually and 1 percent compared to the previous month.
Paper and paper product manufacturing saw an 11 percent annual rise and a 1.1 percent monthly increase, while the production of electrical devices grew by 9.2 percent year-on-year and 0.1 percent month on month.
Furniture manufacturing posted notable growth, rising 14.4 percent annually and 0.5 percent monthly. Other economic activities within the manufacturing sector recorded a 4.3 percent year-on-year increase and a 0.3 percent monthly uptick.
In the utilities sector, the sub-index for electricity, gas, steam, and air conditioning supply rose by 6.2 percent year on year. Similarly, the sub-index for water supply and sewerage as well as waste management activities climbed by 8.4 percent over the same period.
These sectors also recorded positive monthly growth. The sub-index for electricity, gas, steam, and air conditioning supply rose by 0.9 percent compared to September 2024, while the water supply, sewerage, and waste management sub-index increased by 1.4 percent.
In October, oil-related activities expanded by 5.4 percent year on year and 0.5 percent month on month.
Non-oil activities also showed solid growth, rising 4 percent annually and 0.3 percent monthly. This highlights Saudi Arabia’s commitment to diversifying its industrial base as part of its Vision 2030 initiative.
The IPI tracks changes in industrial output, using the International Standard Industrial Classification framework to monitor sectors such as mining, manufacturing, utilities, and waste management.
ISLAMABAD: The Pakistan Stock Exchange (PSX) crossed 111,000 points during intra-day trading on Tuesday, analysts said, amid hopes of an interest rate cut.
The benchmark KSE-100 index climbed 1,482.06 points, or 1.35 percent, to reach 111,452.44 points from the previous close of 109,970.38 points, making it the 10th consecutive session when shares traded in green at the market.
Analysts credited the rally to positive sentiment prevailing in the market amid an optimistic overall outlook.
“Not unusual to see profit-taking come through after the steep recent increase,” Raza Jafri, head of equities at Intermarket Securities, told Arab News. “The overall outlook remains bullish though on reducing interest rates and the government’s commitment to reforms.”
Pakistan had slashed interest rate by 250 basis points in November to help revive a sluggish economy, amid a major drop in the annual inflation rate. The State Bank has slashed interest rate by 700 basis points (bps) in four consecutive meetings since June, bringing it to 15 percent.
According to a poll by Topline Securities, 71 percent of participants expect the central bank to announce a minimum rate cut of 200bps at the upcoming Monetary Policy Committee meeting on Dec. 16.
Arif Habib Corporation CEO Ahsan Mehanti said stocks remained bullish after National Savings Schemes rates were cut, amid speculation of further reductions.
“Robust economic indicators, rupee stability and recovery in global equities on receding geo-political tensions played a catalyst role in record surge at the PSX,” he told Arab News.
Pakistan’s annual consumer inflation also dropped to 4.9 percent in November below government projections, primarily due to a high base from the previous year. This marked a decline from 7.2 percent in October and a significant fall from the nearly 40 percent multi-decade high recorded in May 2023.
