How Saudi Arabia Will Kick Its Oil Habit

Saudi Arabia, the Middle East’s biggest economy and the world’s largest oil producer, is running out of its black gold. Some estimate that the wells will run dry as early as 2030. That’s a huge deal. Oil revenue reached $312 billion this year and accounts for almost half the economy and 90 percent of export revenue. It also makes the kingdom the Persian Gulf’s economic powerhouse.

That’s why diversification is no longer a luxury. Opening its notoriously insulated stock exchange to foreign investors and investing in solar power, poultry, dairy, petrochemicals and innovative technology — these are the threads stitching together the kingdom’s safety net. Here are the companies leading the way forward:

SABIC

The Pitch: Global petrochemical leader

Size: $103.4 billion market value

CEO: Mohamed Al-Mady

Recent Moves: Recently crowned the Middle East’s big-biz king, SABIC is among the world’s largest petrochemical companies. Petrochemical usually means plastics and fertilizer, but SABIC is looking ahead with a host of new polycarbonate technologies, like solar panels, a film for touch screens and the first polycarbonate automobile wheel. Though it’s rolling back European operations, it’s venturing eagerly into the U.S., attracted by the shale oil boom. And with Saudi Arabia about to crack open its stock market to foreign investors, non-oil multinationals are poised for global prominence. Expect SABIC to receive the most lavish treatment from foreigners.

Glowork

The Pitch: Leading the kingdom’s startup revolution

Size: Acquired for $16 million by SAS Holdings

Founder: Khalid Alkhudair

Recent Moves: To kick their country’s oil addiction, Saudi leaders have launched hundred-million-dollar venture funds and incubators nationwide. The goal? A knowledge-based economy by 2025. The pre-eminent career portal for Saudi women is a poster child for the kingdom’s startup offensive, not to mention female workplace empowerment. Glowork’s market is potentially tremendous: A third of women are unemployed, and because most of them are college educated, they represent a real opportunity cost. And a government cost, too, because the jobless receive $800 a month from the government — a total of $1.6 billion down the drain, according to Alkhudair.

Saudi Aramco

The Pitch: Jolly green oil giant

Size: 9.5 million barrels of crude oil production daily; 54,000 employees

CEO: Khalid A. Al-Falih

Recent Moves: The Saudi government is planning an ambitious solar renaissance — the kingdom wants its energy mix to include 23 percent solar by 2030 and 39 percent by 2050. With lots of sunshine, low-cost funding and abundant space, Saudi Arabia has already developed one of the world’s cheapest solar models. Saudi Arabia might be the site of a perfect solar storm.

Saudi Aramco is poised to helm it. The state-owned behemoth and undisputed world petroleum champion was once valued at $7 trillion, almost half of the U.S. GDP ($16.8 trillion in 2013). The coming oil crunch has it staking a claim in solar and other alternative energies.

Although progress toward solar salvation has been slow, Aramco is still investing heavily in other potentially revolutionary alternative energy solutions. This month, it spearheaded a $30 million investment in San Francisco-based Siluria Technologies, which plans to produce low-cost gasoline from natural gas — for $1 per gallon.

Almarai

The Pitch: Moving Saudi Arabia from fuel to food

Size: $10.4 billion market cap; 16,000 employees

Founder: Prince Sultan bin Mohammed bin Saud Al Kabeer

Recent Moves: The region’s largest food company is in the right place at the right time. Saudi Arabia is the world’s largest importer of broiler meat, mostly chicken, to the tune of 875,000 metric tons in 2013. Domestic competitors like Almarai are ripe for growth. Already, poultry production is on the rise in the kingdom and is expected to swell 52 percent by 2018.

Almarai is showing other signs of international ambition. In partnership with PepsiCo, it launched a $345 million investment in Egypt this June, and its CEO has stated he plans to boost that figure to $560 million in five years. The funds will go toward a new juice factory, a 5,000-cow dairy farm and expanding existing facilities for Egyptian beverage firm Beyti. Drink and eat up!

16 Comments on "How Saudi Arabia Will Kick Its Oil Habit"

MSN fanboy on Tue, 9th Sep 2014 2:58 pm 



Err, without oil Saudi Arabia is a desolate desert.

Seriously, check google maps.

Stupid article, what are they going to export, SAND???

MSN fanboy on Tue, 9th Sep 2014 3:01 pm 



A knowledge based economy..

ROLF HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHH

These guys crack me up.

I remember Gordan Brown, a knowledge based economy ROLF

HAHAHAHA.

When the house of Saudi collapse the only thing exported will be Islamic terrorism, with American weapons… and SAND.

Northwest Resident on Tue, 9th Sep 2014 4:48 pm 



Saudi Arabia will kick its oil habit the same that America and the rest of the world will kick their oil habits. That is, they’ll run out of oil that they can afford to extract and be forced to go COLD TURKEY. We are talking serious withdrawal systems — puking, shivers, hallucination, suicidal thoughts and full-on unfiltered misery of epic proportions. Without some kind of divine or alien intervention, the oil addicts of the world are in for a world of hurt, and that includes us and Saudi Arabia and just about every other country.

Plantagenet on Tue, 9th Sep 2014 5:11 pm 



“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel”

—-Rashid bin Saeed Al Maktoum

KingM on Tue, 9th Sep 2014 5:33 pm 



It’s going to get ugly there. A whole lot of people who have been multiplying for generations and a ton of people whose most strenuous work is cashing an oil check. When the collapse comes the tribal and religious violence is going to make Afghanistan look like Switzerland.

Davy on Tue, 9th Sep 2014 7:13 pm 



KSA, will be in a sad state in a few years. All that energy will not make a difference with the loss of globalism and complexity. Food and water will be the issues and other general carrying capacity issues. KSA had 1.5MIL in 1900 and today it is close to 34.5MIL. In the initial descent KSA should do OK offering oil for food and other essentials but how much time will that buy them? Much will depend on the degree and duration of the BAU descent. It is very possible KSA will eventually be a doomed ship that will sink with a large loss of life. I cannot see anything good coming with such a large overshoot. You take the severe carrying capacity breach and add in a religious fanaticism undercurrent. I see serious social unrest that could result in the destruction of the vital oil production infrastructure. Being the custodian of a primary Islamic holy place they could be a target of other powers also

Check out these stats:
http://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_Saudi_Arabia
About 50% of drinking water comes from desalination, 40% from the mining of non-renewable groundwater and 10% from surface water, especially in the mountainous South-West of the country.

https://www.globalpolicy.org/security-council/dark-side-of-natural-resources/water-in-conflict/50795-water-oil-food–a-crisis-for-saudi-arabia-and-the-world.html
According to the article, the nation will be 100 percent dependent on wheat imports by 2016, if not sooner. In a report on the coming global food crisis, Earth Policy Institute’s Lester Brown reports that Saudi wheat production fell by two-thirds from 2007-2010.

When Bau fractures and economic activities plummets the ability of the world to distribute food will fall drastically. KSA will get food for oil I am sure but not nearly enough. How much oil are they going to be able to produce with the failure of complexity that will come with a fractured BAU? Oil production today is an immensely technical and complex endeavor. Water will not be desalinized to the extent it is today and the mining of ground water will become problematic with the end of BAU. They are already in a food insecurity situation. Water stress is near at hand and much more devastating.

steve on Tue, 9th Sep 2014 7:46 pm 



If this was so sad it would be funny but they and we are screwed…this is a sign that we are still just hoping no one looks any deeper…this article is lacking in a lot of info….where and what is going to replace the Saudi oil? I guess the object is to let us live happily until the end…

Makati1 on Tue, 9th Sep 2014 7:53 pm 



Plantagenet, it might be a good time to start a camel ranch there and build a big herd? ^_^

pat on Tue, 9th Sep 2014 11:56 pm 



The world bank of oil is running out dry fast and with it the normal functioning world as we know. The 2015 is only just the begin of the crisis….

Stercus Feri on Wed, 10th Sep 2014 4:53 am 



I suspect the king will die soon and his replacement will be dead soon after. The next 10 years may see the crown holder roll over 2 or 3 times. Once the infighting starts it will quickly fall apart. Balkanization.

KingM on Wed, 10th Sep 2014 6:22 am 



There are so many weapons and spare, useless young men lying around that I would imagine that a good chunk of the population will flood into other, more fertile regions that surround them. You might see a repeat of the initial pulse of Arab tribes in the time of Mohammed.

Davy on Wed, 10th Sep 2014 7:44 am 



King there is little fertility left after the locust of humans has stripped the land bare in the ME and surrounding areas. Then there is the coming climate disaster. The ME is a destroyed desert. How much worse can you get than that? They will be eating each other I suspect before all is said and done. I am sure some loon will issue a fatwa that it is ok to eat human flesh. That will help and buy them some time. They will start with infidels but then eventually start on the women until that runs out.

JuanP on Wed, 10th Sep 2014 8:36 am 



If I lived in KSA I would get out now. It is almost certain that at some point in the future KSA will experience a brutal population reduction.
As Davy pointed out above, the country is horribly overpopulated, and has wasted its soil and water growing wheat for years. I don’t think a million could live there after collapse, there aren’t enough resources. They will only make while they can import food.

Kenz300 on Wed, 10th Sep 2014 9:57 am 



EVERY oil company and oil producing nation will need to develop plans to DIVERSIFY their economies and business models.

It is time for OIL producers to become “ENERGY” producers and expand into alternative energy production. It is a matter of survival.

Wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste are the future.

Global Renewable Energy Status Uncovered

http://www.renewableenergyworld.com/rea/news/article/2014/08/global-renewable-energy-status-uncovered?page=all

Northwest Resident on Wed, 10th Sep 2014 3:57 pm 



Maybe ISIS will break Saudi Arabia’s oil habit for them:

Islamic State’s Ultimate Goal: Saudi Arabia’s Oil Wells

“IS knows that it will only feel secure once Saudi Arabia is part of the Caliphate, and its oil fields are under IS control — which is why the group has two logical next steps.

First, to capture and secure the most important country in the Muslim world: Saudi Arabia.

If the battle for Syria and Iraq attracted tens of hundreds, (some say tens of thousands) of young Muslims, the battle for control of Islam’s two holiest sites, Mecca and Medina, are very likely to attract many more fighters into the ranks of the Islamic State.

And second, to take on the United States — the one remaining superpower that could stop its march on the oilfields of Saudi Arabia, and ultimately the rest of the Gulf.”

ht tp://oilprice.com/Geopolitics/Middle-East/Islamic-States-Ultimate-Goal-Saudi-Arabias-Oil-Wells.html

Makati1 on Wed, 10th Sep 2014 8:34 pm 



But…but…isn’t ISIS a branch of the CIA? Aren’t we arming them in Syria? Or has the plot twisted even more? So many lies. So little truth…