Saudi Arabia is expected to put less money into the oil industry than initially predicted in its goal to invest $1 trillion in strategic sectors by the end of the decade.
According to Goldman Sachs Group Inc., the Gulf kingdom will likely direct the majority of its funds, around 73% of total investments, into non-oil sectors by 2030, leaving only a quarter of the remaining funds for oil sectors, as the kingdom focuses on industries that enable its diversification including metals and minerals, transport and logistics, and digitalization.
Under Crown Prince Mohammed bin Salman’s economic transformation plan Vision 2030, Saudi Arabia has opened up its economy to new avenues, investing in new sectors and re-branding the country’s image. A big goal in the vision is to reduce reliance on crude sales.
Head of CEEMEA equity research at Goldman, Faiz AlAzmeh, wrote in a report, that Although capex in the oil sector is likely to shrink by $40 billion between now and 2028, natural gas continues to be “a key contributor to the country’s decarbonization, economic development, and diversification plans.
With Brent crude prices currently hovering around $80 a barrel and with Saudi oil production down to around 9 million barrels a day, the kingdom faces the rising threat of a widening budget deficit.
The government’s oil earnings have dropped around one-third from 2022 levels, when oil prices averaged nearly $100 a barrel.
