Saudi Arabia 2021 – Trends, Opportunities and Challenges for Business in the Middle East’s Biggest Market – MEED Insights

New opportunities emerging in Saudi Arabia’s transformation

It is five years since, Saudi Arabia’s Crown Prince Mohammed bin Salman al-Saud unveiled Vision 2030, a national agenda for economic and social reform aimed at launching an new era of investment in the kingdom that would accelerate diversification, plug the housing shortage, open up tourism, and expand the kingdom’s manufacturing base.

Five years on, and despite the impact of the Covid-19 pandemic, Vison 2030 is delivering an economic surge that is creating exciting opportunities for companies and investors in almost every area of the economy. It is also bringing new challenges.

Project opportunities

For real estate developers and construction companies, many of these opportunities are emerging on the vision’s real estate gigaprojects such as Neom future city, Qiddiya entertainment city, Diriyah Gate, Amaala and the Red Sea Project. And while significant project contracts are already being awarded, it is clear that the best is yet to come. Thousands of project packages are in the pipeline that will drive project spending and business opportunities for many years.

PPP and Privatisation

The new opportunities are not only in construction. The wide-ranging political, institutional, and financial reforms of the past five years are also generating prospects in new areas such as renewable energy, advanced technology, transport, shipbuilding, healthcare, food, and aerospace. Behind it all, is the kingdom’s new economic champion, the Public Investment Fund (PIF).

The Impact of Covid-19

In 2020, Riyadh’s ambitions were knocked by Covid-19, particularly its impact on travel and tourism. Even the annual Hajj and Umrah pilgrimages, which generate as much as $12bn a year in revenues, were reduced to a fraction of normal levels.

Despite its deep impact, Covid has not fundamentally changed the direction of travel for Riyadh. While short-term challenges centre on the fiscal problems of reduced oil income and the need to raise non-oil revenues and cut spending, structural reform, diversification, and job creation remain the long-term goals.

Fiscal Consolidation

The events of 2020 narrowed Riyadh’s fiscal space to balance these priorities. Despite making cuts and raising new revenue streams such as the increased 15 per cent VAT rate, fiscal consolidation remains high on the agenda. A return to budget surpluses appears increasingly remote and has added urgency to the privatisation programme.

This year began with a bang as the government rewrote the functions of the central bank to make economic growth part of its mandate, and likely precipitating further transfers of the kingdom’s foreign reserves to the PIF. The move signals Riyadh’s intent to mobilise all available asset pools to accelerate future-focused investments.

Challenges for Business

While Saudi Arabia’s banks must grapple with the financial fallout from the pandemic, localisation targets place new obligations on companies. Legislative updates, such as limiting government contracts to Saudi-headquartered companies and the newly launched public-private partnership law, will require companies to quickly adapt in an increasingly competitive environment.

Nonetheless, most companies would rather face these challenges in a high-reward market like Saudi Arabia than take on the risks presented by the regional decline in new opportunities.

Written by MEED, the Middle East market experts within the GlobalData Group, "Saudi Arabia 2021" report is a comprehensive guide for companies seeking to work in Saudi Arabia.

Covering oil & gas, petrochemicals, power, construction, water, manufacturing and transport, the report is a powerful resource for anyone seeking to find opportunities, understand risks and set strategy in Saudi Arabia.

The report is of extreme high-value to anyone seeking to identify opportunities, understand risks and set strategy in the Middle East’s biggest projects market.

Scope

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Reasons to buy

Detailed assessment of the long term opportunities for business and projects in the Middle East’s biggest market

A comprehensive review of the impact of Covid-19 on the Saudi market

Outlook for policy and investment in the kingdom

Projects opportunities with client and procurement details

Investment drivers and client spending plans

Understand risks and set strategy in the Mena oil and gas market

Complete assessment of the economic outlook for the kingdom

Update on the Vision 2030 reform agenda

Detailed analysis of all the major business sector in the kingdom including: oil & gas; power & water; construction, petrochemicals, transport and more

Table of Contents

1. The impact of Covid-19 on Saudi Arabia

1.1 Overview

1.2 Covid-19 in Saudi Arabia

1.3 Economic outlook

1.4 Impact of Covid-19 on government expenditure

1.5 Impact of Covid-19 on Vision 2030

1.6 Impact of Covid-19 on project spending

2. Government

2.1 Overview

2.2 Domestic politics

2.3 Regional diplomacy and conflict

2.4 International relations

2.5 Saudi Arabia and global oil markets

2.6 Vision 2030

2.6.1 Social reforms

3. Economy

3.1. Overview

3.2 GDP

3.3 Inflation

3.4 Oil production

3.5 Government finances

3.6 Trade flows

3.7 Banking and monetary policy

3.8 Stock market

3.9 Foreign direct investment

3.10 Labour market

3.11 Economic outlook

3.12 Saudi Aramco privatisation

3.13 The IMF view

3.14 Credit ratings agencies

3.15 Economic forecast

4. Vision 2030

4.1 Overview

4.2 Vision 2030: Progress report

4.3 Vision 2030 themes

4.4 Vision 2030 targets

4.5 National Transformation Programme (NTP)

5. Projects market

5.1 Overview

5.2 Contract awards

5.3 Spending drivers

5.4 Megaprojects

5.5 Outlook

5.6 Leading clients

5.7 Leading contractors

6. PPP in Saudi Arabia

6.1 Overview

6.2 Policy & regulations

6.3 History

6.4 PPP programme and projects

7. Oil and gas

7.1 Overview

7.1.1 Impact of Covid-19

7.1.2 Vision 2030 Targets

7.2 Market structure

7.3 Saudi Aramco

7.4 Upstream Oil

7.5 Gas

7.6 Refining

7.7 Projects Market

7.8 Leading contractors

8. Petrochemicals

8.1 Market overview

8.2 Key Companies

8.3 Projects Market

8.4 Leading Contractors

9. Mining and natural resources

9.1 Market overview

9.1.1 Impact of Covid-19

9.2 Market structure

9.2.1 Saudi Arabian Mining Company (Maaden)

9.3 Investment

9.4 Gold and base metals

9.5 Phosphate

9.6 Aluminium and bauxite

9.7 Industrial minerals

9.8 Exploration

9.9 Vision 2030 targets

9.10 Talent and experience

10. Industry

10.1 Market overview

10.2 Diversification

10.3 Automotive

10.4 Polysilicon

10.5 Cement

10.6 Steel

10.7 Aluminium

10.8 Fertilisers

10.9 Defence

10.10 Projects market

11. Power and renewables

11.1 Overview

11.2 Market structure

11.3 Privatisation

11.4 Supply and demand trends

11.5 Power generation projects

11.6 Efficiency drive

11.7 Transmission and distribution network

11.8 International electrical interconnection

11.9 Leading contractors

12. Water and desalination

12.1 Market overview

12.2 Market structure

12.3 Water demand and supply

12.4 Desalination projects

12.5 Water transportation

12.6 Decommissioning

13. Wastewater

13.1 Market overview

13.2 Market structure

13.3 Wastewater demand

13.4 Wastewater treatment

13.5 Wastewater projects

14. Construction

14.1 Overview

14.2 Projects market

14.3 Contractors and the government

14.4 Public-private Partnership (PPP) projects

14.5 Real estate

14.6 Healthcare

14.7 Education

14.8 Roads

15. Tourism

15.1 Overview

15.2 Vision 2030 and the tourism sector

15.3 Key trends

15.4 Cultural tourism

15.5 Hospitality

15.6 Leisure projects

15.7 Retail projects

16. Rail

16.1 Overview

16.2 Railway masterplan

16.3 Structure of the rail industry

16.4 Opportunities and challenges

16.5 Mainline rail infrastructure

16.6 Metro/light rail transit

16.7 Monorail

17. Aviation

17.1 Market overview

17.2 Market liberalisation

17.3 Airport projects

18. Ports

18.1 Market overview

18.2 Sector drivers

18.3 Major ports

18.4 Projects and investments

18.5 Port-rail links

18.6 Privatisation

18.7 Public-private partnerships

18.8 Vision 2030 targets

19. Doing Business

19.1 Foreign Direct Investment (FDI) in Saudi Arabia

19.2 Trading with Saudi Arabia

19.3 Doing business with the public sector

19.4 The role of Saudi Aramco IPO and tourism in reforms and privatisation

19.5 Saudi Arabia’s Privatisation Push

19.6 Taxation

19.7 Employment law

19.8 Intellectual property

19.9 Enforcing contracts, resolving disputes, and liquidating a business

19.10 New Competition Law, 2019

19.11 New Franchise Law, 2019

Disclaimer

List of Tables

Table 1: Council of Ministers

Table 2: Saudi GDP by economic sector, 2019

Table 3: Government budgets 2020-2021 (SRbn)

Table 4: Vision 2030 goals under the theme 'A Thriving Economy'

Table 5: Phase 1 of the NTP

Table 6: Spending plans by entity under phase 1 of NTP

Table 7: Biggest contracts awarded in 2020

Table 8: Biggest contract awards in Q1 2021

Table 9: Largest projects due for award in 2021-2022

Table 10: Pipeline of PPP projects in Saudi Arabia

Table 11: NCP Mandate for PPP Projects

Table 12: Major active power PPP projects in Saudi Arabia*

Table 13: List of bidders with prices for the 300MW PV solar project at Sakaka

Table 14: List of bidders with prices for category A and B Projects

Table 15: Projects under Round 3 of NREP

Table 16: Water infrastructure investment programme

Table 17: SWPC Contracts between 2019 and 2020

Table 18: Planned IWPs

Table 19: Planned ISTPs

Table 20: Planned IWTPs

Table 21: Planned Railway PPP Projects

Table 22: Saudi Arabia key facts and figures, 2019

Table 23: Saudi Arabia crude oil exports by region, 2019 (%)

Table 24: Fuel price reforms, January 2018

Table 25: Aramco domestic refining joint ventures

Table 26: Aramco overseas refining joint ventures

Table 27: Saudi Arabia major refinery projects

Table 28: Top oil and gas projects in pre-execution phases

Table 29: Selected petrochemicals projects underway

Table 30: Top petrochemical projects planned

Table 31: Saudi Arabia’s top petrochemicals sector contractors ($m)

Table 32: Maaden production output in Q1-Q3 2020

Table 33: Geographical sales breakdown between international and domestic sales, SR million

Table 34: Key Saudi mining companies

Table 35: Maaden subsidiaries & joint ventures in Saudi Arabia, December 2019

Table 36: Maaden gold production (ounces), 2016-2019

Table 37: Major gold and copper projects

Table 38: Phosphate projects

Table 39: Aluminium and bauxite projects

Table 40: Selected pre-execution industrial projects in Saudi Arabia

Table 41: Saudi Arabia power and renewables sector key facts, 2020

Table 42: SEC Privatisation – Functions of new unbundled companies

Table 43: Major active thermal power generation plants in Saudi Arabia*

Table 44: Saudi Arabia, major power projects (excluding renewables) under execution by value ($m)

Table 45: Saudi Arabia, major planned power projects (excluding renewables) by value ($m)

Table 46: Repdo renewable energy projects by capacity (MW) and value ($m)

Table 47: List of bidders with prices for the 300MW PV solar project at Sakaka

Table 48: List of bidders with price for the 400MW wind scheme at Dumat al-Jandal

Table 49: Repdo third round projects

Table 50: Saudi Arabia, renewable energy projects ($m) under execution

Table 51: Saudi Arabia, upcoming renewable energy projects ($m)

Table 52: Selected T&D contract awards, 2019-2020

Table 53: Transmission & distribution infrastructure, 2015−2019

Table 54: Number of transmission substations, 2014-2019

Table 55: Saudi Arabia upcoming power transmission projects by value ($m)

Table 56: Technical bidders for the Saudi Arabia-Egypt Interconnection

Table 57: Saudi Arabia leading contractors by value

Table 58: Saudi Arabia water sector key facts

Table 59: Existing IWPPs

Table 60: Planned IWPs

Table 61: Saudi Arabia, total water demand (million cubic meters/year)

Table 62: Saudi Arabia, New SWPC desalination projects

Table 63: Major desalination plants operated by SWCC and other organisations

Table 64: Major SWCC desalination plants under construction

Table 65: Future projects

Table 66: Saudi Arabia, desalination projects in the pre-execution stage ($m)

Table 67: Planned SWCC transmission pipelines

Table 68: Planned ISTPs

Table 69: Cities under NWC's mandate

Table 70: Planned O&M clusters

Table 71: Existing and planned large-scale STPs

Table 72: Existing and projected wastewater flow in Saudi Arabia by region

Table 73: Existing and projected wastewater flow in Saudi Arabia by city

Table 74: Wastewater treatment standards in Saudi Arabia

Table 75: TSE contracts*

Table 76: TSE MoUs

Table 77: NWC estimated capital spending programme, 2013−2017

Table 78: Saudi Arabia, major wastewater projects in the pre-execution stage ($m)

Table 79: Selected major contract awards in 2020

Table 80: Major construction projects under execution

Table 81: Major construction projects on hold in Saudi Arabia

Table 82: Largest construction projects due for award in 2021

Table 83: Major real estate projects expected to be awarded in 2021

Table 84: The $68bn Saudi Housing Project – packages planned and underway

Table 85: Selected healthcare projects planned

Table 86: Unawarded education projects

Table 87: Unawarded road projects

Table 88: Major tourism projects on hold

Table 89: Major tourism contract awards in 2020

Table 90: Tourism contract awards in Q1 2021

Table 91: Largest tourism projects due for award in 2021

Table 92: Unawarded cultural tourism projects

Table 93: Selected hospitality projects planned

Table 94: Selected leisure projects planned

Table 95: Selected retail projects planned

Table 96: Saudi Arabia major railway projects planned and underway ($m)

Table 97: North-South Railway projects planned and underway

Table 98: Major metro projects in Saudi Arabia

Table 99: Consortiums on the Riyadh Metro

Table 100: Riyadh Metro projects planned and underway

Table 101: Mecca Metro packages

Table 102: Medina Metro Project

Table 103: Jeddah Metro phase 1

Table 104: Jeddah LRT and tramway: phase 1

Table 105: Jeddah Metro Project

Table 106: Hajj pilgrims to Mecca, 2012-2019

Table 107: Key airports current and planned capacity

Table 108: Saudi Arabia airport projects under execution

Table 109: Saudi Arabia airport projects in pre-execution phase

Table 110: Port cargo throughput (tonnes), 2015-2020

Table 111: Container volume throughput (TEUs), 2015-2020

Table 112: Ports projects under execution

Table 113: Planned ports projects

Table 114: Ease of Doing Business Ranks in the MENA Region

Table 115: FDI flows, 2016-2020

Table 116: Monthly fee for foreign employees (SR)

List of Figures

Figure 1: Covid-19 tracker of Mena region

Figure 2: Saudi GDP 2010-2020

Figure 3: GDP by sector, 2019 (% of total)

Figure 4: Saudi inflation, 2010−2020 (% change in average consumer prices)

Figure 5: Saudi crude oil and natural gas production, 2005−2019

Figure 6: Government finances, 2010−2020

Figure 7: Sama assets, 2000−2020 (SRbn)

Figure 8: Government non-oil revenue, 2001−2020 (% of total revenue)

Figure 9: Saudi commercial banks’ holdings of government bonds 2000−2020 (SRbn)

Figure 10: Saudi government gross debt, 2000−2020

Figure 11: Saudi trade flows 2009−2019 (SRbn)

Figure 12: Commercial bank assets and deposits, 2010−2020 (SRbn)

Figure 13: Three-month Saudi interbank offered rate, Q1 2010−Q1 2021 (%)

Figure 14: Tadawul performance, 2010−2020

Figure 15: Foreign direct investment, net inflows 2006-2020 ($m)

Figure 16: Saudis in public and private sector jobs, 2005-2019

Figure 17: Non-Saudis in the workforce, 2014-2019

Figure 18: Average price of Opec oil basket, 2008−2019 ($ / barrel)

Figure 19: Saudi crude oil production – year-on-year change (m b/d), Q1 2016-Q1 2021

Figure 20: Saudi oil price and production forecast, 2017−2022

Figure 21: Saudi GDP forecast to 2026

Figure 22: Saudi government revenue and expenditure projections, 2019−2023 (SRbn)

Figure 23: Saudi government debt projections, 2019−2023 (SRbn)

Figure 24: Saudi imports, exports and current account, 2019−2026

Figure 25: Saudi current account balance ($bn), 2019−2026

Figure 26: Total value of contract awards, 2011−2020 ($m)

Figure 27: Contract awards by sector, 2011−2020 ($m)

Figure 28: Contract awards by sector, 2011−2020 ($m)

Figure 29: Contract awards by sector, 2018−2020 ($m)

Figure 30: Unawarded projects market by status (%)

Figure 31: Projects market by sector* ($m)

Figure 32: Future transport projects by subsector* ($m)

Figure 33: Saudi Arabia contracts award forecast 2021-2023 ($m)

Figure 34: Top 20 clients by the value of contracts under execution ($bn)

Figure 35: Top 20 contractors by the value of contracts under execution ($bn)

Figure 36: Saudi Arabia PPP framework timeline

Figure 37: Key Sectors Identified for Private Sector Participation

Figure 38: NTP 2020 Major Objectives

Figure 39: Leading power developers by equity capacity, August 2018 (MW)

Figure 40: SWCC Privatisation Roadmap

Figure 41: Saudi Arabia upstream projects by award value ($m), 2011-2020

Figure 42: Saudi Arabia upstream project pipeline ($m) by stage

Figure 43: Saudi recoverable crude oil reserves, 2012-2019 (billion barrels)

Figure 44: Saudi recoverable gas reserves, 2012-2019 (tcf)

Figure 45: Saudi Arabia downstream projects by award value ($m), 2011-2020

Figure 46: Saudi Arabia downstream project pipeline ($m) by stage

Figure 47: Location of the neutral zone

Figure 48: Saudi Arabia crude oil exports by region, 2019 (%)

Figure 49: Saudi oil and gas fields

Figure 50: Saudi crude oil production, 2012-2019 (million b/d)

Figure 51: Mena unconventional gas potential

Figure 52: Saudi Arabia oil consumption, 2012-2019 (thousand barrels a day)

Figure 53: Oil and gas contract awards by sector, 2011-2020 (%)

Figure 54: Planned oil and gas projects (%)

Figure 55: Saudi Arabia’s top oil and gas sector contractors

Figure 56: Top petrochemical producers in Saudi Arabia

Figure 57: Sabic subsidiaries

Figure 58: Petrochemical contract awards by sector, 2011-2020 (%)

Figure 59: Planned petrochemical projects by stage ($m)

Figure 60: Main geological structures

Figure 61: Maaden assets

Figure 62: Maaden assets, 2011-2020 (SR bn)

Figure 63: Maaden sales, 2011-2020 (SR bn)

Figure 64: Maaden sales by commodity (SR bn), 2016-2020

Figure 65: Railways supporting Ras Al-Khair minerals city

Figure 66: Maaden workforce, 2011-2019

Figure 67: Main non-oil exports in Saudi Arabia (% of total), 2017-2019

Figure 68: Challenges faced by Saudi Arabia Industries (%), 2018

Figure 69: Kingdom of Saudi Arabia Automotive value chain

Figure 70: Cement sales YTD 2019-2020 (thousand tonnes)

Figure 71: Saudi clinker production and inventory, December 2019 and 2020 (thousand tonnes)

Figure 72: Saudi Cement Sector Market Share, December 2020

Figure 73: Saudi Arabia, steel production and usage (thousand tonnes), 2011-2019

Figure 74: Saudi Arabia industrial market contract awards, 2011-2020 ($m)

Figure 75: Institutional structure of decision-making in the Saudi Arabia energy sector

Figure 76: Saudi Arabia’s electricity industry structure, 2020

Figure 77: Saudi Arabia annual power consumption (GWh), 2015-2020

Figure 78: Saudi Arabia power consumption by sector (per cent), 2019

Figure 79: Saudi Arabia, projected demand of annual power consumption (GWh), 2021-2030

Figure 80: Power peak demand growth, 2010-2019 (%)

Figure 81: Power demand forecast, 2000−2030 (MW)

Figure 82: Saudi Arabia, cumulative installed capacity by energy source (MW), 2015-2020

Figure 83: Saudi Arabia, cumulative installed capacity by energy source (MW), 2021-2030

Figure 84: Saudi Arabia, annual power generation by energy source (GWh), 2015-2020

Figure 85: Saudi Arabia, annual power generation by energy source (GWh), 2021-2030

Figure 86: Saudi Arabia ownership of installed capacity (%), 2019

Figure 87: Available generating capacity by fuel, 2019 (%)

Figure 88: NREP 2030 Renewables Target

Figure 89: Renewable energy generation contract awards ($m), 2011−2020

Figure 90: Distribution of power generating units by years of service, 2019

Figure 91: Per capita consumption (kWh), 2009-2019

Figure 92: Transmission & Distribution contract awards, 2011−2020 ($m)

Figure 93: Increase in transmission capacity, 2014−2019 (MVA)

Figure 94: Saudi Arabia, urban water demand per capita (Litres/ capita/ day)

Figure 95: Saudi Arabia, water demand reduction levers

Figure 96: Saudi Arabia, national urban water supply mix, 2030 (million cm/d)

Figure 97: Saudi Arabia, 2030 target supply sources

Figure 98: Saudi Arabia, national urban water demand and ground and surface water production (million cm/d), 2020-2026

Figure 99: Saudi Arabia, existing and committed desalination water supply (million cm/d), 2020-2026

Figure 100: Saudi Arabia, desalination supply, demand and gap (million cm/d); 2020-2026

Figure 101: Saudi Arabia, four main supply groups

Figure 102: Saudi Arabia, drinking water consumption (million cm/d), 2007-2019

Figure 103: Saudi Arabia, drinking water consumption by city (cm/d), 2019

Figure 104: Saudi Arabia, under construction and planned desalination plants and pipelines

Figure 105: Saudi Arabia, future desalination strategy

Figure 106: Saudi Arabia desalinated water demand and supply (2020−2022)

Figure 107: Age of desalination plants, all licensees

Figure 108: Desalination plants and major transportation lines in Saudi Arabia

Figure 109: Wastewater collected for treatment and required capacity (million cm/d)

Figure 110: Total wastewater treatment capacity by 2030 (million cm/d)

Figure 111: TSE customer categories and uses

Figure 112: Demand for TSE in Riyadh, Jeddah, Madinah, Mecca and Greater Dammam, 2012−2030 (thousand cm/d)

Figure 113: Forecast of TSE usage in the kingdom’s six major cities, 2011−2030 (cm/d)

Figure 114: Cumulative volume of water saved due to leak detection (cubic metres)

Figure 115: NWC capital expenditure requirements for five major cities/groups, 2013−2017 (SRm)

Figure 116: Projected investment in selected areas, 2016−2020 ($m)

Figure 118: Saudi Arabia construction contract awards, 2010-2020

Figure 119: Planned construction projects, by stage ($m)

Figure 120: Most active clients by contracts under execution ($bn)

Figure 121: Most active contractors by work underway ($bn)

Figure 122: Education projects by stage ($m)

Figure 123: Saudi Arabia tourism contract awards, 2011−2020

Figure 124: Unawarded tourism projects by status ($m)

Figure 125: Hospitality projects by status ($m)

Figure 126: Planned rail networks in Saudi Arabia to 2040

Figure 127: Riyadh Metro network

Figure 128: Mecca Metro

Figure 129: Jeddah transport masterplan

Figure 130: Principal airports in Saudi Arabia

Figure 131: Airport passenger numbers (millions), 2010-2020

Figure 132: International airport passengers (thousands), 2015-2018

Figure 133: Busiest airports, Saudi Arabia, 2019 and 2020

Figure 134: Aircraft movements at Saudi Arabia’s international airports, 2015-2018

Figure 135: Domestic capacity share by the airline (% of seats), August 2018

Figure 136: International capacity share by the airline (% of seats), August 2018

Figure 137: Saudi Arabia ports

Figure 138: Annual cargo throughput at Saudi ports (million tonnes), 2015-2019

Figure 139: Key indicators of doing business in Saudi Arabia, 2020

Figure 140: Doing business in Saudi Arabia

Figure 141: FDI inflows and stock ($m), 2016−2020

Figure 142: Foreign investment projects statistics

Figure 143: Number of new foreign investment projects by sector and country (Q4 2020)

Figure 144: Foreign direct investment in stock, 2010 & 2019

Figure 145: Saudi imports and exports (SRm), 2015−2020

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