Saudi Mega Projects
As most of you will be aware from the countless news articles and government statements, the Kingdom of Saudi Arabia is in an age of unprecedented reform, with the Crown Prince MBS the driving force behind these changes. From renewable energy to high end tourism, Saudi Arabia is surging forward with their efforts to reduce the economy’s dependence on oil. Another pathway for the diversification is through a number of mega projects that were announced last year.
The Red Sea Project
Focused on high level tourism and entertainment, the Red Sea Project will consist of luxury hotels, residential blocks and a large network of transport links through both sea and air. Sprawling across 200km of pristine coastline and 50 previously untouched individual islands, the Red Sea Project is located in an area of incredible natural beauty and great care will be taken to preserve this as the project moves forward.
Initially announced on the 31st of July 2017, the Red Sea Project is backed by the Public Investment fund (PIF) and has been registered as a standalone company with John Pagano, former MD for Development of Canary Wharf in London at the helm.
The Project will find itself with special jurisdiction, being a semi-autonomous region could potentially allow some of the more conservative social restrictions to be lifted, although this has not been confirmed.
Al Qiddiya Entertainment City
The Al Qiddiya project, situated 40km southwest of the circa five million people that currently live in the city of Riyadh, aims to capture some of the $20-30 billion dollars that is spent abroad every year by Saudi nationals looking for entertainment by providing local alternatives at home; a Six Flags theme park, waterpark, motor sports facilities, safari area and a number of vacation homes will all be included in the project.
At an estimated cost of $8 billion, the first foundation stone of Qiddiya was laid by King Salman in April 2018 with the first phase of construction expected to be completed in 2022. Controlled by the Qiddiya Investment Company, another PIF owned business, the Entertainment City will reportedly provide 55,000 jobs and is headed up by Michael Reininger who brings 30 years of project management experience and has previously worked on large scale expansions of Disney resorts in North America and Europe and high-speed rail systems.
NEOM is the crown jewel of the Saudi mega projects and is reported to be of special interest to the Crown Prince. Covering an area of 26,500km² and spreading into the territories of both Jordan and Egypt, NEOM is also reported to be a semi-autonomous region, with relaxed social norms and improved business regulations Saudi Arabia is trying to make NEOM as attractive to foreign investment as possible.
NEOM will be deigned to be run on 100% renewable energy and the PIF has partnered with the American company Softbank to produce the world’s largest solar farm and battery. The focus of NEOM is to be a driving force behind diversification and the city will heavily rely on advanced technologies essentially becoming a smart city, interconnected and green.
At an estimated cost of $500 billion, the project is an ambitious one, heavily reliant on foreign investment and a high oil price for success but with the experienced team under Nadhmi Al-Nasr, who oversaw the expansion of the Ghawar oil field and has held senior positions in Aramco and the King Abdullah University of Science and Technology, there is every chance that this project will be completed.
Although an embryonic sector at this stage, it is worth noting Saudi Arabia’s significant ambitions in the renewable energy space. As a part of Vision 2030 and MbS’ stated vision to turn the Kingdom into a ‘hub’ for various resources for the region, 2018 saw tenders issued for eight renewable energy projects totalling $7 billion.
There is a stated desire to build solar farms with a capacity of 200GW by 2030. In October 2018 it was reported that these plans had been abandoned, however this has been refuted by the Saudi Ministry of Energy, Industry and Mineral Resources (MEIM). Such a project would be quite the achievement but is not realistic given that last year total global solar panel production was around 100GW.
Nonetheless, progress has been made in the renewables space in 2018. In November, it was announced that construction had begun on the Kingdom’s first solar project. The $320 million 300MW Sakaka PV IPP project is the first renewable energy project to begin under the King Salman Renewable Energy Initiative, and when completed in 2019, is expected to generate enough power to offset 430,000 tonnes of carbon dioxide per year and power as many as 45,000 homes in the Al Jouf area.