Oil and Gas Sector
Arabia has 264.2 billion barrels of proven oil reserves (more than
one-fourth of the world total) and up to 1 trillion barrels of
ultimately recoverable oil.
Saudi Arabia is the
world's leading oil exporter and maintains production capacity of
around 10 – 10.5 million barrels per day. Saudi
Arabia maintains an excess production capacity of approximately two
million barrels per day, a vital contribution to oil market
stability in the event of unanticipated supply
disruptions. Record oil revenues in 2003 have helped the Saudi Government
close the year with a surplus of over $12 billion.
Throughout 2003, oil prices have remained high in the upper
end of the $22-28 OPEC band. Oil represents 90-95 percent
of total Saudi export earnings, 75 percent of state revenues, and
about 35-40 percent of GDP.
Saudi Arabian Gas sector has considerable untapped potential, with
proven natural gas reserves estimated at 224.7 trillion cubic
Saudi Arabia aims to triple natural gas output to 15 Bcf/d by
2009. Domestic demand is driving a $4.5 billion
expansion of Saudi Arabia's Master Gas System (MGS).
The MGS feeds gas to the industrial cities of Yanbu and
Saudi private sector is expected to continue its growth in
the years ahead. Since the
establishment of the Saudi Arabian General Investment Authority
(SAGIA) in April 2000, SAGIA has approved more than $15 billion in
foreign investment projects, including joint foreign-Saudi ventures,
although actual new investment has been significantly
less. Total banks lending to the manufacturing
sector increased by more than nine percent in 2003, from $6.49
billion in 2002 to $7.09 billion in 2004. Banking
sources expect a better performance in the few coming years with continued low
interest rates and low inflation to enhance consumer confidence and
Saudi Government is implementing various structural reforms to
attract more foreign direct investments. The
latest Government figures revealed that the number of operating
industrial plants reached 3,468, with capital investments of more
than $64.1 billion. The Saudi petrochemical
sector tops the list of new industrial investments especially in the
industrial cities of Jubail and Yanbu.
jump in crude oil prices in 2003 has sparked strong construction
activity, especially in the government sector.
Budgetary surplus has enabled the government to move ahead
with previously postponed projects. The Saudi
Government was expected to spend close to $4.8 billion on various
infrastructure and urban development projects in 2003.
By the same token, Saudi banks lending to the building and
construction sector rose by 4.8 percent in 2003, reaching its
highest level ever of $5.87 billion.
2004, the Saudi Government allocated $11.2 billion for various
projects in its 2004 budget, double the 2003 figure.
The budget outlays included projects in the healthcare
sector, water projects, and highways and roads.
Saudi banking system remains one of the strongest and most
profitable in the region. With high liquidity and
profits, the banking sector did as well as the rest of the Saudi
economy in the past few years. 11 majority
Saudi-owned banks and five GCC banks are licensed to operate in
Saudi Arabia, lately the
Saudi Arabian Monetary Agency (SAMA) granted four licenses to
The new Capital
Markets Law, promulgated in June 2003, calls for the transformation
of the informal interbank bourse into a privatized stock market with
an independent regulator and allows for non-bank financial
advisors. The law creates a market oversight
body, the Capital Market Authority, and an independent, publicly
held stock exchange. Foreigners, with the
exception of GCC citizens, may only invest in the stock market
through mutual funds.
in the Saudi economy, including the creation of partial savings
accounts in the country's two major pension systems, would greatly
boost stock exchange capitalization, and make it a more important
engine for economic growth.
telecommunications sector remains one of the most dynamic sectors in
Saudi Arabia. Since its privatization in 1998,
Saudi Telecommunications Company (STC) has carried out major
telecommunications projects kingdom-wide, gradually taking over this
role from the Ministry of Post, Telephone and Telegraph
(PTT). To echo the concurrent change, the PTT
Ministry was renamed the Ministry of Telecommunications and
Information Technology. Saudi Telecommunications
Company has ambitious plans to
expand and upgrade its telecommunication services based on the
latest broadband technologies. These services
include fast Internet services and digital subscriber lines
(DSL). Broadband technologies are characterized
by high speed and bandwidth high capacity.
It is anticipated
that revenues from Saudi Arabia's GSM market will soar to $7.9
billion by 2007.