Saudi Arabia is planning to invest $500bn in a futuristic city run entirely on alternative sources of energy, Crown Prince Mohammed bin Salman said this week and called for a return to the precepts of “moderate Islam” as the ultraconservative Kingdom looks to accommodate the aspirations of a young and increasingly well-educated workforce.
To be known as the Neom project and to be built on a 26,500 km² independent economic zone in the northwest of the country near its borders with Egypt and Jordan with access to the Red Sea and the Gulf of Aqaba, the new city is expected to become a hub for technological innovation funded by a combination of Saudi Arabia’s state-owned Public Investment Fund and a range of private and international investors.
Former Siemens and Alcoa CEO Klaus Kleinfeld has been taken on to run the project, whose first phase is scheduled for completion in 2025.
“This place is not for conventional people or conventional companies,” the prince told gathering of international investors in Riyadh. “This will be a place for the dreamers of the world,” he said, complete with drones, driverless cars and robotics.
The announcement is the latest manifestation of Saudi Arabia’s Vision 2030 drive to diversify its economy away from energy and to create some much-needed jobs in the private sector; most Saudis hold relatively low-paid posts within government, and with an estimated five million young Saudis due enter the workforce over the next decade, there is an urgent need for some rapid job creation.
Prince Mohammed chose to unveil the project at the Future Investment Initiative conference organized by the PIF which has been earmarked as the main financial vehicle behind Vision 2030 and which will also be the initial beneficiary of the sell-off of 5% of the state-owned oil giant Aramco. The IPO on the Riyadh stock exchange is scheduled for next year and is expected to raise some $100bn, with the authorities ultimately planning to funnel $2trn through the PIF.
From the desert to the Arctic Circle
Russia’s largest independent gas company Novatek, meanwhile, is in talks with potential unnamed Saudi partners for its planned Arctic LNG-2 project across the , its chief executive Leonid Mikhelson said last week.“There are discussions with Saudi companies. They haven’t signed, they are thinking about it,” he told reporters on the sidelines of a conference in Verona. Total and CNPC, who partnered with Novatek in the development of the original $27bn Yamal LNG 1 project also interested. “There will be partners, of course, and the current partners have also expressed their interest in taking part in the next one,” he said.
The announcement comes hot on the heels of King Salman’s visit to Moscow earlier this month – the first time a Saudi monarch has ever set foot on Russian soil – signifying a political and economic rapprochement between the two states.