Saudi Arabia Eyes $1 Trillion Investment in Non-Oil Sectors by 2030

New report by Goldman Sachs shows that Saudi Arabia, which is targeting to diversify its economy away from oil by 2030, plans to spend $1tn on non-oil sectors. It will be funded by what the report calls the “capex super-cycle,” in which 73 per cent of the spending will be dedicated to sectors other than oil.

Among the primary beneficiaries of this investment spree are clean energy, mining, and logistics since the Kingdom is keen on becoming a world hub in clean energy, advanced mining, and efficient logistics. The report reminds that to reach the goals of energy transition, announced by Riyadh, clean energy investment is expected to touch $235bn alone, against a previous expected $148bn.

Faisal Al Azmeh, the head of equity research for Central and Eastern Europe, the Middle East, and Africa at Goldman Sachs said that Kingdom’s energy ministry is leading the reduction in capital expenditure to the oil sector; it will be slashed by $40bn from 2024 to 2028. This is however small consolation for Saudi Arabia; natural gas is still indispensable for the country’s decarbonization and diversification process despite its diminishing role in the kingdom’s reserves.

Saudi Arabia is also stepping up its green plan, as noted by the Goldman Sachs; there is a pipeline renewable energy projects, some 11. 2GW of solar photovoltaic projects are already planned and another 16. 7GW of solar and wind projects planned. In accord with this thrust, the Kingdom has upped the solar energy goal in 2030 from 58. 7 GW to a range of 100-130 GW.

Another industry on the list is the mining industry; Saudi Arabia said it aims to grant more than 30 mining exploration licenses this year and launch a 182-mineral exploration incentive program to lure more investment.

The Kingdom’s budget deficit has been expected to rise to 4. 3% of GDP this year because of higher spending and falling oil prices, but Goldman Sachs identified that the capex super-cycle would continue to be an important theme for the country in the future. There may therefore be problems of funding, but the Kingdom is expected to look for other sources of funding to cater for its large scale investments.