MEED SaudiArabia2019 Report Linked Compressed

SAUDI ARABIA 2019
Trends, opportunities and challenges

in the Middle East's biggest market
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TRUSTED UNIQUE DETAILED
Written by MEEDs experts, with Includes unique expert Detailed assessment of the
chapters from Colin Foreman, analysis of how the market is outlook, opportunities and
Andrew Roscoe, Jennifer changing and the impact of challenges in all of the major
Aguinaldo, Indrajit Sen. Curated these market changes. business areas.
and reviewed by Richard
Thompson.
"The quality of information provided by MEED Insight enabled us to quickly focus on

critical areas as well as providing in-depth research into future opportunities."
Anne Bunch
Consultancy company based in Dubai
300+ pages mega projects 10 key business sectors review on the Vision 2030
Contents
Preface .................................................................................................................................................... 2
1 Executive summary........................................................................................................................ 10
2 Economic transformation ............................................................................................................... 13
Vision 2030: Progress Report ............................................................................................... 16
2.1.1 Social reforms ................................................................................................................... 17
2.1.2 Transformational megaprojects ......................................................................................... 17
2.1.3 The rise of the PIF ............................................................................................................. 19
2.1.4 Aramco IPO ....................................................................................................................... 19
2.1.5 Privatisation and PPPs ...................................................................................................... 20
2.1.6 Corruption crackdown ....................................................................................................... 21
2.1.7 NTP 2.0 ............................................................................................................................. 21
Vision 2030 targets ............................................................................................................... 22
2.2.1 Economy ........................................................................................................................... 23
2.2.2 Project spending................................................................................................................ 23
2.2.3 Public Investment Fund (PIF) ............................................................................................ 23
2.2.4 Oil & gas ............................................................................................................................ 23
2.2.5 Tourism & culture .............................................................................................................. 24
2.2.6 Housing ............................................................................................................................. 24
2.2.7 Healthcare ......................................................................................................................... 24
2.2.8 Education .......................................................................................................................... 24
2.2.9 Small and medium-sized enterprises (SMEs) ................................................................... 24
2.2.10 Labour market ............................................................................................................... 25
2.2.11 Private sector development ........................................................................................... 25
2.2.12 Defence ......................................................................................................................... 25
2.2.13 Mining ............................................................................................................................ 25
2.2.14 Renewable energy & waste management .................................................................... 25
2.2.15 Transport & logistics ...................................................................................................... 26
2.2.16 GCC .............................................................................................................................. 26
2.2.17 Food & agriculture ......................................................................................................... 26
2.2.18 Digital economy ............................................................................................................. 26
National Transformation Programme (NTP) ......................................................................... 27
2.3.1 National Project Management Office ................................................................................ 28
2.3.2 NTP targets ....................................................................................................................... 28
3 Government ................................................................................................................................... 33
Change in the ruling family.................................................................................................... 33
Relations with the US ............................................................................................................ 36
Regional diplomacy and conflict............................................................................................ 36
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Kuwait Projects 2016
3.3.1 Yemen ............................................................................................................................... 38
3.3.2 Arms sales ......................................................................................................................... 38
Diplomatic disputes ............................................................................................................... 38
Saudi Arabia and global oil markets ..................................................................................... 39
Economic and social development ....................................................................................... 40
Social reforms ....................................................................................................................... 41
4 Economy ........................................................................................................................................ 43
GDP ....................................................................................................................................... 43
4.1.1 GDP by sector ................................................................................................................... 44
Inflation .................................................................................................................................. 45
Oil production ........................................................................................................................ 46
Government finances ............................................................................................................ 47
4.4.1 Anti-corruption drive .......................................................................................................... 48
4.4.2 Government debt............................................................................................................... 49
Trade flows ............................................................................................................................ 51
Banking and monetary policy ................................................................................................ 52
4.6.1 Interest rates ..................................................................................................................... 53
Stock market ......................................................................................................................... 53
Foreign direct investment ...................................................................................................... 54
Labour market ....................................................................................................................... 55
The economy in 2018-20 ...................................................................................................... 57
4.10.1 The oil market................................................................................................................ 58
4.10.2 Budget 2019 .................................................................................................................. 60
4.10.3 Medium-term financial strategy ..................................................................................... 62
MEED forecast to 2020 ......................................................................................................... 65
4.11.1 GDP ............................................................................................................................... 65
4.11.2 The budget .................................................................................................................... 66
4.11.3 Government debt........................................................................................................... 68
4.11.4 Exports, imports and the current account ..................................................................... 69
Saudi Aramco IPO ................................................................................................................ 70
The IMF view ......................................................................................................................... 71
Credit ratings agencies ......................................................................................................... 72
5 Projects market .............................................................................................................................. 73
Spending drivers ................................................................................................................... 76
Outlook .................................................................................................................................. 77
Leading contractors ............................................................................................................... 78
Leading clients ...................................................................................................................... 79
Megaprojects ......................................................................................................................... 80
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6 Oil and Gas .................................................................................................................................... 84
Overview ............................................................................................................................... 84
Vision 2030 targets ............................................................................................................... 87
Market structure .................................................................................................................... 87
Saudi Aramco ........................................................................................................................ 88
6.4.1 Aramco IPO ....................................................................................................................... 91
6.4.2 Aramco’s Downstream Strategy........................................................................................ 92
Upstream oil .......................................................................................................................... 93
6.5.1 Revised Proven Reserves ................................................................................................. 93
6.5.2 Oil Production .................................................................................................................... 94
6.5.3 Resource depletion ........................................................................................................... 95
6.5.4 Exploration ........................................................................................................................ 99
6.5.5 Export infrastructure .......................................................................................................... 99
Natural gas .......................................................................................................................... 100
6.6.1 Liquified Petroleum Gas (LPG) ....................................................................................... 103
6.6.2 Wasit gas development ................................................................................................... 103
6.6.3 Fadhili Gas Plant ............................................................................................................. 103
6.6.4 Unconventional gas ......................................................................................................... 104
6.6.5 Shaybah NGL .................................................................................................................. 105
6.6.6 Empty Quarter ................................................................................................................. 105
6.6.7 Midyan project ................................................................................................................. 106
6.6.8 Gas demand .................................................................................................................... 106
6.6.9 Fuel reforms .................................................................................................................... 106
Refining ............................................................................................................................... 107
6.7.1 Refinery projects ............................................................................................................. 110
Projects market ................................................................................................................... 112
6.8.1 Leading contractors ......................................................................................................... 115
7 Petrochemicals ............................................................................................................................ 117
Petrochemical Industry overview ........................................................................................ 117
Feedstock issues ................................................................................................................ 118
Refining petrochemicals integration initiative ...................................................................... 119
Key companies .................................................................................................................... 121
7.4.1 Sabic ............................................................................................................................... 121
7.4.2 Saudi Aramco .................................................................................................................. 124
7.4.3 Sipchem .......................................................................................................................... 125
7.4.4 Tasnee ............................................................................................................................ 125
7.4.5 Chevron Phillips .............................................................................................................. 126
Projects market ................................................................................................................... 126
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8 Mining and natural resources ...................................................................................................... 128
Investment ........................................................................................................................... 132
Gold and base metals ......................................................................................................... 134
8.2.1 Base Metals ..................................................................................................................... 136
Phosphate ........................................................................................................................... 136
Aluminium and bauxite ........................................................................................................ 138
Industrial minerals ............................................................................................................... 139
Exploration .......................................................................................................................... 139
Vision 2030 targets ............................................................................................................. 140
Talent and experience ......................................................................................................... 141
9 Industry ........................................................................................................................................ 142
Diversification ...................................................................................................................... 143
9.1.1 Incentives ........................................................................................................................ 144
9.1.2 Industrial cities................................................................................................................. 145
9.1.3 Challenges ...................................................................................................................... 148
9.1.4 Employment .................................................................................................................... 149
Automotive .......................................................................................................................... 150
Polysilicon ........................................................................................................................... 151
Cement ................................................................................................................................ 152
Steel .................................................................................................................................... 154
Aluminium............................................................................................................................ 157
Fertilisers ............................................................................................................................. 158
Defence ............................................................................................................................... 159
9.8.1 Vision 2030 targets and impact ....................................................................................... 160
Outlook ................................................................................................................................ 162
10 Power ...................................................................................................................................... 165
Overview ............................................................................................................................. 165
Market Structure .................................................................................................................. 166
Supply and demand ............................................................................................................ 167
10.3.1 Installed Capacity ........................................................................................................ 167
10.3.2 Power Generation ....................................................................................................... 170
10.3.3 Power Consumption .................................................................................................... 171
10.3.4 Peak Load Demand .................................................................................................... 172
Power generation projects .................................................................................................. 175
Upcoming projects .............................................................................................................. 176
Conversion projects ............................................................................................................ 177
Steam plants ....................................................................................................................... 178
Decommissioning ................................................................................................................ 178
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Private power market .......................................................................................................... 179
Developers ...................................................................................................................... 182
SEC privatisation ............................................................................................................. 183
SWCC privatisation ......................................................................................................... 185
Fuel sources .................................................................................................................... 185
Nuclear ............................................................................................................................ 186
Energy efficiency ............................................................................................................. 187
Transmission & distribution ............................................................................................. 189
11 Renewable energy .................................................................................................................. 194
Overview ............................................................................................................................. 194
NREP projects ..................................................................................................................... 198
Other projects ...................................................................................................................... 200
12 Desalination............................................................................................................................. 203
Market structure .................................................................................................................. 204
Supply/demand ................................................................................................................... 204
Saline Water Conversion Corporation ................................................................................ 206
Private developers .............................................................................................................. 208
Future private projects ........................................................................................................ 210
Decommissioning ................................................................................................................ 211
Future projects .................................................................................................................... 212
Privatisation ......................................................................................................................... 213
13 Wastewater ............................................................................................................................. 214
Management contracts ........................................................................................................ 215
13.1.1 Future private sector partnerships .............................................................................. 218
Past and future spending .................................................................................................... 219
13.2.1 PPP water projects ...................................................................................................... 221
13.2.2 Water masterplans ...................................................................................................... 221
Groundwater........................................................................................................................ 223
Treated sewage effluent ...................................................................................................... 223
Marafiq ................................................................................................................................ 226
14 Construction ............................................................................................................................ 228
Overview ............................................................................................................................. 228
Projects market ................................................................................................................... 230
14.2.1 Major projects under execution ................................................................................... 230
14.2.2 Projects on hold........................................................................................................... 230
14.2.3 Projects pipeline .......................................................................................................... 231
14.2.4 Leading clients ............................................................................................................ 232
Contractors and the government......................................................................................... 233
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14.3.1 Leading contractors ..................................................................................................... 234
PPP projects........................................................................................................................ 235
Real estate .......................................................................................................................... 236
14.5.1 Major project pipeline .................................................................................................. 237
14.5.2 Housing ....................................................................................................................... 240
Healthcare ........................................................................................................................... 243
Education ............................................................................................................................ 244
Roads .................................................................................................................................. 245
15 Tourism ................................................................................................................................... 248
Overview ............................................................................................................................. 248
Vision 2030 and the tourism sector ..................................................................................... 254
Cultural tourism ................................................................................................................... 255
Hospitality ............................................................................................................................ 256
Leisure projects ................................................................................................................... 258
Retail projects...................................................................................................................... 260
16 Rail .......................................................................................................................................... 262
Railway masterplan ............................................................................................................. 263
Structure of the rail industry ................................................................................................ 264
Mainline rail infrastructure ................................................................................................... 266
16.3.1 North-South Railway ................................................................................................... 266
16.3.2 Haramain high-speed railway...................................................................................... 269
16.3.3 Saudi Landbridge ........................................................................................................ 269
16.3.4 Other lines ................................................................................................................... 269
16.3.5 Mainline railways – PPP .............................................................................................. 270
Metro/light rail transit ........................................................................................................... 271
16.4.1 Urban rail – PPP.......................................................................................................... 271
16.4.2 Riyadh Metro ............................................................................................................... 272
16.4.3 Mecca Metro................................................................................................................ 275
16.4.4 Medina Metro .............................................................................................................. 276
16.4.5 Jeddah Metro .............................................................................................................. 277
16.4.6 Dammam Metro........................................................................................................... 280
Monorail............................................................................................................................... 280
17 Aviation .................................................................................................................................... 282
Airport projects .................................................................................................................... 285
17.1.1 Planned and unawarded projects................................................................................ 289
Market liberalisation ............................................................................................................ 291
17.2.1 Privatisation of the aviation sector .............................................................................. 293
18 Ports ........................................................................................................................................ 296
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Sector drivers ...................................................................................................................... 298
Major ports .......................................................................................................................... 298
Projects and investments .................................................................................................... 300
Port-rail links........................................................................................................................ 302
Privatisation ......................................................................................................................... 302
Public private partnerships (PPP) ....................................................................................... 303
Vision 2030 targets ............................................................................................................. 303
19 Doing Business ....................................................................................................................... 304
Foreign direct investment in Saudi Arabia .......................................................................... 305
Trading with Saudi Arabia ................................................................................................... 306
Doing business with the public sector ................................................................................. 310
Saudi Arabia’s Privatisation Push ....................................................................................... 311
Taxation............................................................................................................................... 312
Employment law .................................................................................................................. 313
Intellectual property ............................................................................................................. 315
Enforcing contracts, resolving disputes, and liquidating a business ................................... 315
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The second biggest area of activity is the government services sector, which is essentially
funded by oil revenues and includes items such as public administration, defence and other
activities.
The third largest area of activity is financial and business services, followed by wholesale
and retail trade, restaurant and hotels – a sector which is being boosted by growing
demand for services for pilgrims and should also benefit from the ongoing development of
the general tourism industry – and then manufacturing industry, such as petrochemicals,
steel and aluminium.
Saudi GDP by sector, 2017 (% of total)
Utilities, 1.6 Oil and gas, 28.2
Community, social
& personal
services, 2.3
Agriculture, 2.5
Construction, 6.0 Govt services ,

19.1
Transport &
communications,
6.4
Manufacturing, 9.7
Finance, real
estate & business
Trade, restaurants services, 13.1
& hotels, 10.7
Source: Sama
Inflation
Saudi inflation, 2007−2018 (%)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
-1.0
-2.0
Source: IMF
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After two challenging years in which the value of contracts awarded in Saudi Arabia
plummeted to about half of the 2010–15 average, the kingdom’s projects industry received
a welcome boost in October 2017 from Crown Prince Mohammad bin Salman’s
announcement of a series of mega-projects aimed at transforming the Saudi economy.
These mega-projects included the $500bn Neom project. However, there are doubts about
how quickly such schemes will move forward.
Overall, between 2010 and 2018, Saudi Arabia awarded close to $366bn of contracts
across all sectors; $228bn of contracts are still under execution.
Total value of contract awards, 2010−18 ($m)

70,000
58,299 57,624
60,000
49,591 50,896
50,000
40,354
40,000
31,560
30,000 27,320 28,810
21,389
20,000
10,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: MEED Projects
Contract awards by sector, 2010−18 ($m)

140,000 130,712
120,000
100,000
82,267
80,000
60,000
47,087
40,000 29,458
26,164 24,545
20,000 16,176
9,434
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74
Ministry of Housing. Saudi Arabia and South Korea have signed an agreement to build
100,000 houses in the Al-Fursan region over the next seven years.
Another major deal due to be signed this year is a $16bn contract for the construction of
the Mecca Metro by the Makkah Mass Rail Transit Company (MMRTC), which involves
four new metro lines – A, B, C and D – complementing the Al-Mashaaer Al-Mugaddassah
metro line.
Largest projects due for award in 2019

Budget
Owner - Project Status Completion
($m)
PIF - Neom: Infrastructure and Utilities 100,000 Study 2025
MOH - Dahiyat Alfursan 20,000 Study 2025
MMRTC - Mecca Metro 16,000 Bid Evaluation 2030
Jeddah Metro Company - JPTP: Jeddah Metro 13,000 Main Contract PQ 2023
PIF - Red Sea Project 10,000 Main Contract PQ 2030
Makkah Region Development Authority - Al
10,000 Study 2025
Faisaliah City
GACA - KAIA: Phase 2 10,000 Study 2026
REPDO - Renewable Energy Program: Round II 10,000 Main Contract PQ 2023
Jeddah Metro Company - Jeddah Metro: Orange &
8,000 Main Contract PQ 2023
Blue Lines
MMRTC - Mecca Metro: Lines B and C 8,000 Bid Evaluation 2024
SAR - Saudi Landbridge 7,000 Main Contract PQ 2023
Maaden - Third Phosphate Fertiliser Manufacturing
6,400 Study 2024
Facility
PIF - New Jeddah Downtown 5,000 Study 2029
Satorp - Mixed Feed Cracker & Derivatives
5,000 Study 2024
complex
SRO - Yanbu Jeddah Jizan and Taif Khamis
4,200 Study 2025
Mushayt Abha Rails
MMRTC - Mecca Metro: Line D 4,000 Study 2024
MMRTC - Mecca Metro: Line A 4,000 Study 2024
WEC - Jubail 3 IWPP 4,000 Main Contract PQ 2022
MMRTC - Mecca Metro: Phase 1 (Lines B, C): Part
3,547 Bid Evaluation 2024
1: Package 3 (SYS)
Jeddah Metro Company - Jeddah Metro: Red Line 3,500 Main Contract PQ 2023
SB Energy - Solar PV Project at Sudair 3,000 Bid Evaluation 2023
Ministry of Municipal and Rural Affairs - Riyadh
2,900 Design 2022
Storm Water Drainage Project
Shomoul Holding - The Avenues Riyadh: Mixed
2,700 Design 2021
Use Development
MMRTC - Mecca Metro: Phase 1 (Lines B, C): Part
2,653 Bid Evaluation 2024
1: Civil: Package 1
SCTA - Al Rayis Development 2,500 Design 2027
SEC - Shuqaiq Power Plant Expansion: Phase 1 2,500 Study 2022
SEC - Jeddah South Power Plant: Phase 2
2,500 Study 2023
Expansion
YALJ - Kaaki Development in Mecca 2,000 Design 2022
PQ: Pre-Qualification; Source: MEED Projects
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parent Hyundai Heavy Industries (HHI). This adds to Aramco’s existing 64.3 per cent stake
in S-Oil Corp, South Korea’s third-largest refiner.
Aramco is expected to continue shopping for refining assets going forward. The company’s
downstream capacity covers only a third of its production – a much lower ratio than the oil
majors Aramco wants to compete with. Greater downstream integration would also provide
a key hedge against low oil prices in the future.
Upstream oil
Hydrocarbons resources in Saudi Arabia are limited to a relatively small geographical
region and a number of large oil fields. Production primarily comes from 12 reservoirs in
the north-eastern corner of the kingdom, along with the Shaybah field in the south.
The kingdom has three of the world’s six giant fields in Khurais, Safaniya and Ghawar,
which each have the capacity to produce over 1 million b/d. Ghawar is the world’s largest
oil field, and is capable of producing about 5 million b/d. Safaniya and Khurais each
possess a production capacity of 1.2 million b/d.
Other large fields in the kingdom include Shaybah, Zuluf and Abu Safah, which produce
750,000-850,000 b/d. The Marjan and Qatif are also major fields, with production
capacities of 450,000-500,000 b/d each. Saudi Arabia’s allocation from the Divided Zone
is about 350,000 b/d. Other smaller fields include Haradh and Berri, each with capacities
of over 300,000 b/d.
Saudi oil and gas fields
Source: Arab Oil & Gas Directory
6.5.1 Revised Proven Reserves

In January 2019, Aramco revealed Saudi Arabia’s hydrocarbons reserves after a third-
party audit – a process carried out as part of its plans to prepare for a stock market listing.
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93
Maaden Phosphate Company
MPC’s main source of phosphate rock is the Al-Jalamid mine in the north, near the border
with Iraq. The site includes a beneficiation plant and supporting infrastructure. The mine
produces about 11.6 million tonnes a year (t/y) of ore, which is processed into about 5
million t/y of dry concentrate.
The phosphate concentrates at Al-Jalamid, which has a measured resource of 534 million
tonnes, is transported by rail to Ras Al-Khair on the Gulf coast for processing into fertiliser.
Ras Al-Khair, 90km north of Jubail, hosts MPC’s $5bn integrated chemicals and fertiliser
production plant, which manufactures saleable products from Al-Jalamid concentrate.
The fertiliser complex contains a phosphoric acid plant, sulphuric acid plant, ammonia
plant, di-ammonium phosphate (DAP) granulation plant, a co-generation, and
desalinisation plant and associated facilities.
Railways supporting Ras Al-Khair minerals city
Source: Maaden
The DAP granulation plant started production in February 2012 and has a capacity of 3
million t/y. The offtake from the plant is sold on the international market, with 400,000 t/y
of surplus ammonia being sold domestically or internationally.
The complex also has the capability to produce mono-ammonium phosphate (MAP) if
market requirements demand it. A new ammonia plant began production at Ras Al-Khair
in January 2017.
The process for establishing a third sulphuric acid plant (DAP3) at the site is underway. In
November 2018, Maaden signed the financing agreement of $266m with Industrial
Development fund for the development of the project. The main contract tender issue for
the project is expected in the third quarter of 2019.
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137
Package (82 per cent completed); and PP13 Combined Cycle Power Plant: Early &
General Civil Works Package (85 per cent completed).
The £925m SEC PP14 Combined Cycle Power Plant covers three projects: PP14
Combined Cycle Power Plant: Electro-mechanical Installation Package (95 per cent
completed); PP14 Combined Cycle Power Plant: Industrial Buildings Package (96 per cent
completed); and PP14 Combined Cycle Power Plant: Early & General Civil Works Package
(completed).
Major power plants under construction

Estimated
Scheduled
Project Owner Main Contractor contract
commissioning
value ($m)
Jizan Refinery IGCC Power Plant:
Saudi Aramco SEPCO 2,500 2020
Package 4: CCPP
SEPCO III Electric
Yanbu Power Plant: Phase 3 SWCC/Marafiq JV Power Construction 1,370 2020
Corp
Saudi Aramco Saipem 1,000 2019
Package 1: Gasification Unit
Saudi Aramco Saipem 1,000 2019
Package 2: Sulphur Recovery Unit
Waad Al Shamal Integrated Solar General
SEC 980 2019
Combined Cycle (ISCC) Power Plant Electric/Abener JV
Doosan Heavy
Saudi
Fadhili IPP Industries & 896 2019
Aramco/SEC
Construction Co.
PP13 Combined Cycle Power Plant:
SEC GAMA 320 2019
Electro-mechanical Installation Package
SEPCO III Electric
SEC Power Construction 293 2019
Electro-mechanical Installation Package
Corp
SEC Alkifah Contracting 160 2019
Industrial Buildings Package
Upgrade Sulfur Handling and Export M R Al Khathlan for
Saudi Aramco 130 2019
Facilities at Berri Gas Plant Contracting
PP14 Combined Cycle Power Plant: Early
SEC Archirodon 120 2019
& General Civil Works Package
PP13 Combined Cycle Power Plant: Early Assad Said
SEC 118 2019
& General Civil Works Package Contracting
PP13 Combined Cycle Power Plant: Alfanar Bena
SEC 61 2019
Industrial Buildings Package Contracting
10.3.3 Power Consumption

Power consumption in the kingdom has increased due to rising economic activity, as well
as buoyant residential consumption.
The residential sector was the largest consumer of electricity in the kingdom in 2017,
accounting for 48 per cent of total energy consumption that year. The industrial sector was
the second largest user, accounting for 18 per cent, followed by commercial users with 16
per cent and government with 13 per cent.
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Transmission & distribution
The kingdom has comfortably been the region’s largest spender on transmission and
distribution (T&D) infrastructure since 2008, with about $28.9bn-worth of contracts
awarded until the end of December 2018. The largest of these was a $550m contract
awarded in 2008 to Middle East Engineering & Development Company for the construction
of the Qassim-Medina Transmission Line project.
Transmission & Distribution contract awards, 2011−18 ($m)
7,000
5,980
6,000
5,000
4,000 3,740
3,324
3,114
3,000 2,765
1,855
2,000
910 997
1,000
0
2011 2012 2013 2014 2015 2016 2017 2018
Investment in the transmission sector increased from 2011 to 2014 when it peaked at a
total value of nearly $6bn. Investment in the transmission sector is divided between
investment in cables and overhead lines, as well as substations and control centres.
Investment in the latter accounted for an average of 66 per cent of total investment
between 2011 and 2014.
Post-2014, there was a declining trend in investment in the transmission sector. Between
2017 and 2018, there was a marginal increase in investment, particularly in cables and
overhead lines.
Selected T&D contract awards, 2018–2019*
Project name Contractor Value ($m)

230/115/69 kV Abqaiq Central Substation Al Babtain Contracting 80
380/132/13.8 kV Al-Remal Substation (9046) Al Babtain Contracting 64
380kV OHTL from Arar BSP and Waad
Shamaal BSP National Contracting Company 64
380KV OHTL Fadhili Gas Plant S/S to Wadi Al Arabia Electrical Transmission
Summan 380/115/33kv BSP Line Construction Company 62
Middle East Engineering &
380/230 kV Haradh & Hawaiyah OHTL Development Co 60
Construction of EIC S/S 1 & 2 and Transmission
Line Larsen & Toubro 60
380 kV UG for Al Rawabe(9047) BSP to Riyadh Saudi Services for Electro
Metro (9054) BSP & 9017 Mechanic Works 60
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189
Water supply by source (million cm/d), 2017
7 6.5
6
5
4 3.3
3
2
1 0.2
0
Desalination water Ground water Surface water
Sources: SWCC
Historically, the kingdom opted for desalination rather than alternatives such as large water
transfer projects or further over-exploitation of deep groundwater. However, much of the
existing desalination capacity was built before 1990 and needs to be replaced over the
coming decade.
Existing desalination plants
Source: SWCC
In 2000-08, very little new capacity was commissioned as a result of budgetary problems
for the government and SWCC; this was exacerbated by the fact that several contractors
faced serious payment issues for projects undertaken in the late 1990s.
However, rising oil prices and the launch of a utility privatisation programme resulted in an
increase in investment. In 2010, Saudi Arabia regained its position as the leading
desalination producer after two of the world’s largest plants – the Shuaibah IWPP on the
Red Sea and the Jubail IWPP on the Gulf coast – were commissioned. The plants boosted
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205
Demand for TSE in Riyadh, Jeddah, Medina, Mecca and Greater Dammam, 2012−30
(thousand cm/d)
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2012 2013 2014 2015 2016 2020 2024 2028 2030
Source: NWC
To address this area, NWC is planning to spend an average of $600m a year on TSE
projects until 2028, including $1.5bn on projects in three major cities over the next four
years. Among its plans, the company will invest $800m in Riyadh, $530m in Jeddah and
$160m in Mecca.
All NWC’s new treatment projects will employ tertiary technology as a minimum. This is a
prerequisite, given that NWC is aiming for a significant increase in TSE reuse.
NWC has signed more than 12 agreements and memorandums of understanding (MoUs)
with companies for bulk TSE supply. Under the 20–25-year contracts, the private sector is
responsible for distributing the TSE from the STPs.
Forecast of TSE usage in the kingdom’s six major cities, 2011−30 (cm/d)
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Riyadh Jeddah Makkah Madinah Dammam & khober.
Source: NWC
Saudi Arabia 2019

225
Saudi Arabia tourism contract awards, 2010−18
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Cultural Hospitality Leisure Retail
The biggest project currently on hold is the construction of four-star hotels in Group 4A of
Dar Al Hijrah’s Pilgrim City project. Dar Al Hijrah, a body owned by the Public Investment
Fund, is planning to develop an integrated mixed-use project called Pilgrim City comprising
100 buildings to accommodate over 120,000 pilgrims and 31,000 employees.
Major tourism projects on hold in Saudi Arabia

Value
Project Client
($m)
Pilgrim City: Four Star Hotels: Group 4 A 1,000 Dar Al Hijrah Company
Ishbiliyah City Centre 800 Majid Al Futtaim
Salboukh Mall in Riyadh 600 Arabian Centres
General Presidency for Grand Mosque and Prophet
Grand Mosque Expansion: Utilities Bldg 540
Mosque Affairs
Botanical Gardens In Riyadh: Phase 3 500 King Abdullah International Gardens
Riyadh Land: Kingdom Oasis: Four
500 Kingdom Holdings
Seasons
Mecca Museum 500 Saudi Commission for Tourism & National Heritage
Four Seasons Hotel in Jeddah 480 Midad Real Estate Investment & Development Co
Sharma Complex: Hotels & Accomodation 360 PIF
Riyadh Walk 320 Raj Real Estate
Jeddah Gate: Radisson Blu Hotel &
300 Al Tawfeeq for Development & Investment
Residence
Sofitel Luxury 5 Star Hotel In Riyadh 300 King Abdullah bin Abdulaziz Foundation for Housing Dev
Al Sharif Mansour Bin Saleh Abu Rayash Investment &
Millennium Jeddah (Corniche Jeddah) 250
Development Co
Saudi Arabia 2019

249
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16.4.3 Mecca Metro
Mecca has a light rail system in operation, but it is only used during peak pilgrimage times,
which is about seven days a year, to transport worshippers between various holy sites.
The pilgrim metro line, also known as the Al Mashaaer al Mugadassah Metro, links the
holy sites of Mecca, Mina, Arafat and Muzdalifah. It spans 18km, and has the capacity to
transport 72,000 passengers an hour.
The metro was built by Chinese contractors under a $1.77bn contract between the
Municipal & Rural Affairs Ministry and China Railway Construction Corporation (CRCC)
signed in February 2009. The contract covered the construction of the scheme and a three-
year O&M concession.
After a limited capacity test run during the 2010 Hajj, the metro was used at full capacity
from 2011 to 2013. CRCC operated the trains from 2011 to 2013, incurring net losses
estimated at $607m prior to transferring the project to the client. In May 2015, Malaysia’s
Prasarana Berhad won a SR807m three-year O&M contract for the service.
A further multi-phased light rail project has also been proposed for the city. The proposed
Mecca mass rail transit project (MMRT) will include the construction of four new metro
lines, A, B, C and D, complementing the Al Mashaaer Al Mugaddassah line. The new lines
will have a total length of 180km and will link about 88 stations.
The project aims to address the city’s traffic congestion issues, caused by a consistently
growing population and the rising number of pilgrims, whose number is expected to exceed
25 million by 2030.
Mecca Metro
Source: Development Commission of Mecca and Mashaer
Saudi Arabia 2019

275
Due to its location on the Red Sea coast and its relative proximity to the Suez Canal, KAP
is being touted as Saudi Arabia’s response to Jebel Ali port in Dubai, catering not only to
the domestic market but to transhipment cargo as well.
Saudi ports
Sources: Saudi Ports Authority; Ports Development Company; MEED
Annual cargo throughput at Saudi ports (million tonnes), 2013−17
300
250
200
150
100
50
0
2013 2014 2015 2016 2017
Import Export
Source: Saudi Ports Authority (SPA)
Saudi Arabia 2019

297
Petroleum products form a large majority of exports (78.5 per cent in 2018), followed by
petrochemicals products such as propylene and ethylene. Automobiles represent the
largest share of imports, followed by telecoms devices and medicine.
The kingdom exports mainly to the UAE, China, India, Singapore and Kuwait. It imports
mainly from China, the US, Germany, Japan, South Korea and the UAE.
Riyadh usually enjoys a trade surplus, although its scale varies with the fluctuations in
global oil prices. Exports grew rapidly in 2018, aided by rising oil prices, to reach SR1.1
trillion ($294bn). Its imports in 2018 were SR507bn, leaving a surplus of SR597bn, the
highest since 2015.
Saudi imports and exports (SRm)

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2013 2014 2015 2016 2017
Imports Exports
Source: GSAT
Those wishing to sell products and services to Saudi Arabia are not required to establish
a direct or permanent presence in the kingdom. Instead, they can trade on open account
and deal with Saudi customers by phone and email without even sending an employee
into the country; this is often adequate for small companies and those that do not attach
great significance to the local market. For others, however, the option of establishing a
direct or indirect presence has to be seriously considered to take advantage of the
opportunities the market offers, and to conform to local law.
The simplest way to establish a local presence is by appointing a Saudi company as a

local agent or representative. There is no standard approach to this, although there is a
set of commercial agency regulations that define the parameters of any arrangement.
The first condition is that the Saudi agent or representative is properly incorporated under
the kingdom’s regulations for companies. This entails a Saudi national or corporation
registering with the Commerce & Industry Ministry and other relevant bodies and stating
which activities it wishes to pursue. Foreign firms working with individuals or entities that
are not properly incorporated and registered will quickly discover that few advantages will
be secured by taking this route.
Foreign firms appointing a Saudi company as an agent or representative are free to define
the relationship by contract within the terms of the commercial agencies’ regulations. This
can be registered in a foreign jurisdiction, although it will make the enforcement of
Saudi Arabia 2019

307
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SAUDI ARABIA 2019

Trends, opportunities and challenges

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"The quality of information provided by MEED Insight enabled us to quickly focus on

Saudi Arabia 2019

Saudi Arabia 2019

Saudi Arabia 2019

Saudi Arabia 2019

Saudi Arabia 2019

Saudi Arabia 2019

Copyright 2019 MEED Media FZ LLC

Saudi Arabia 2019

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Saudi GDP by sector, 2017 (% of total)

Utilities, 1.6 Oil and gas, 28.2

Construction, 6.0 Govt services ,

Saudi Arabia 2019

Total value of contract awards, 2010−18 ($m)

Contract awards by sector, 2010−18 ($m)

Source: MEED Projects

Saudi Arabia 2019

Largest projects due for award in 2019

Saudi Arabia 2019

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Saudi oil and gas fields

Source: Arab Oil & Gas Directory

6.5.1 Revised Proven Reserves

Saudi Arabia 2019

Railways supporting Ras Al-Khair minerals city

Saudi Arabia 2019

Major power plants under construction

10.3.3 Power Consumption

Saudi Arabia 2019

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Transmission & Distribution contract awards, 2011−18 ($m)

Source: MEED Projects

Selected T&D contract awards, 2018–2019*

Project name Contractor Value ($m)

Saudi Arabia 2019

Existing desalination plants

Saudi Arabia 2019

Riyadh Jeddah Makkah Madinah Dammam & khober.

Saudi Arabia 2019

Cultural Hospitality Leisure Retail

Source: MEED Projects

Major tourism projects on hold in Saudi Arabia

Saudi Arabia 2019

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Source: Development Commission of Mecca and Mashaer

Saudi Arabia 2019

Sources: Saudi Ports Authority; Ports Development Company; MEED

Annual cargo throughput at Saudi ports (million tonnes), 2013−17

Source: Saudi Ports Authority (SPA)

Saudi Arabia 2019