Page 16 - MEOG Week 36

MEOG NEWS IN BRIEF MEOG

POLICY farm. Billions of dollars in investments in but it did rely heavily on Aramco—on its
gas and petrochemicals. These were all facets revenues and, of course, its public listing.
Saudi’s stance on Palestine of Saudi Arabia’s Vision 2030—perhaps the half the shares that were initially supposed
The company went public last year but with
most ambitious economic diversification in
‘remains unchanged’ the world. Now, that ambition is in tatters. to be listed. It did well in the beginning,
Can Saudi Arabia pick up the pieces and truly
becoming the world’s most valuable company.
Saudi Arabia’s position on the Palestinian diversify its economy away from oil, or are its The oil price crash, however, led to Aramco’s
cause will not change after the Kingdom plans dead in the water, leaving the Kingdom’s share price crash. Pretty much all oil stocks
gave permission for all flights between the survival forever tied to oil revenues? crashed this spring, so that was not unique to
UAE and other countries to travel through Earlier this week, Saudi Arabia’s Aramco Aramco. But what was special about it is that
Saudi airspace, the foreign minister said on said it would shelve an investment of several a whole economic diversification program
Wednesday. billion dollars in Sempra Energy’s Port Arthur hinges on it—utterly and completely. Aramco
The altered flight policy followed a request LNG terminal. It also said it would delay also has hefty dividends to pay, but cash is
from the UAE’s General Civil Aviation investments in a $20-billion refining and now tight.
Authority to the Saudi General Authority petrochemical project at home, at its Yanbu More projects are being delayed, too,
for Civil Aviation. “The Kingdom’s firm hub. The reason: cash conservation. projects that don’t have anything directly to do
position toward the Palestinian cause and the Earlier this year, Riyadh government with Saudi Arabia’s economic diversification.
Palestinian people will not change by allowing sources told the Wall Street Journal that Saudi These are projects that have to do with
flights to and from the UAE to pass through Arabia was not pursuing its $200-billion solar Aramco’s international expansion.
Saudi airspace,” Prince Faisal bin Farhan farm project it had conceived in partnership The company is reviewing a $6.6-billion
said. “The Kingdom appreciates all efforts to with Japan’s SoftBank. Nobody was working petrochemical production plan for its Motiva
achieve a just and lasting peace in accordance on the project, the sources said, and Riyadh refinery in the United States, the Wall Street
with the Arab Peace Initiative.” was discussing a replacement with several Journal reported this week, citing unnamed
Saudi political analyst Dr. Hamdan Al- smaller solar projects. sources familiar with the company’s situation.
Shehri told Arab News the Kingdom knew The $500-billion smart city project, Neom, The company is also freezing for a year its
how to separate the two issues. “Yes, we is still on the table, it appears. The Kingdom’s plans to boost oil production capacity to 13
allowed the flights, but that doesn’t mean we oil ministry recently said it would help fund million bpd. This decision, of course, is hardly
let go of our original causes,” he said. the project and make sure it was completed surprising given the state of global supply and
“The language of those with established on time. demand, and more importantly, the outlook
positions is flexibility, which does not mean Neom is the flagship project of Vision for the latter. It is, nevertheless, telling of
waiving rights or just and fair initiatives. Our 2030, Prince Mohammed’s brainchild aimed Aramco’s—and Riyadh’s—step back from
stance in these cases is crystal clear and will at reducing Saudi Arabia’s reliance on oil their diversification ambitions.
not change.” revenues. Ironically, this diversification It is an interesting development: a couple
The UAE and Israel normalized ties in an drive relied on precisely these oil revenues of years ago, there was concern among
agreement last month. to materialize. And now that these revenues some observers that higher oil prices would
A joint Israeli-US delegation travelled have been significantly reduced because of the discourage the Kingdom from pursuing
from Tel Aviv to Abu Dhabi last Monday and effects the coronavirus pandemic had on oil its Vision 2030 diversification due to
returned the following day. demand, Prince Mohammed’s vision is under complacency, as history has proven time and
ARAB NEWS threat. again.
There was always some doubt Saudi Arabia “When countries kick-start reform
Is Saudi’s ambitious Vision would be able to pull all of these projects programs when oil prices are low, sometimes
off. They were simply too expensive, even
the enthusiasm wanes when commodity
2030 plan dead? for its massive sovereign fund. Of course, it prices move higher. That is potentially a risk
here. It will take continued focus on discipline
was never assumed that the Kingdom would
A $500-billion smart city. A $200-billion solar finance all of these major initiatives by itself, to maintain many of those initiatives with

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