Will the oil of Saudi Arabia really be quit?

Will the oil of Saudi Arabia be quit?

This article is about the oil of Saudi Arabia and its future. Stay with us to know more about the prospects of the oil of Saudi Arabia and other stuff.

The line project

This eco-city aims to be completely carbon-neutral. Internet-famous 'The Line' wants to house 9 million people in a 170-kilometer-long strip of skyscrapers towering 500 meters above sea level. And that's just one small part of a much bigger plan called NEOM. No roads, no cars, zero emissions, and running completely on renewable energy is the glitzy face of Saudi Arabia's Vision 2030 – an ambitious roadmap to move the world's largest oil power away from fossil fuels.

"The world needs NEOM because the world needs change." It all sounds great on paper, but there's skepticism about whether Saudi Arabia can pull it off. "You know, the Saudis have been making a lot of wildly over-ambitious goals."

The Kingdom of Saudi Arabia

The Kingdom is looking to massively expand its green energy production to help diversify its economy and reduce dependency on oil. It could be a huge step in the world's quest to halt climate change. But is Saudi Arabia quitting oil? The Kingdom of Saudi Arabia was only founded in 1932. As a young nation, its infrastructure was fairly basic and the new monarchy had to rely on outside help to tap into the oil of Saudi Arabia's reserves. This is why a US-owned company, later renamed Aramco, was the one that first struck the oil of Saudi Arabia and its lands in 1938. But it wasn't long before the Saudis wrested away control of the company.

Aramco

In 1950, Aramco was convinced to split profits down the middle rather than risk King Ibn Saud nationalizing the Kingdom's oil industry (the oil of Saudi Arabia's industry). A blossoming diplomatic relationship developed. The US offered Saudi Arabia crucial political and security support in return for fossil fuels. From there, Saudi Arabia succeeded where many other developing countries have failed – it capitalized on its natural resources. Aramco is now 98% Saudi-owned and valued at about $2 trillion.

It posted a record profit of $161 billion in 2022. And this war chest is now driving the Kingdom's Vision 2030. It's a plan that sounds as ambitious as it is paradoxical: a country built on oil... wants to move away from the oil of Saudi Arabia. But why? "Today I announce that the Kingdom of Saudi Arabia aims to reach net zero by 2060." De facto ruler Crown Prince Mohammed bin Salman is the face of Vision 2030.

Vision 2030

"It's an attempt to diversify the economy, reduce its dependence on the oil of Saudi Arabia, and turn it into a more vibrant society that also reaps the benefits." This is Karim Elgendy, a climate consultant based in London, who focuses on the Middle East. "As the world moves away, or signals that it wants to move away, from buying this oil and gas, there's limited time before that becomes a risk to the Saudi economy. So in a way, it's in a race against time." That requires a major overhaul.

this article is about the oil of Saudi Arabia and the policy of this country in this regard. Stay with us.

When Saudi Arabia announced Vision 2030, oil and gas accounted for 50% of Saudi's GDP, 70% of government revenue, and 90% of export earnings. The diversification plans include eye-catching 'giga projects' such as NEOM, entertainment, sports, and culture hub Qiddiya, which aims to host millions of visitors each year, and the Red Sea Project, a string of luxury eco-tourism destinations. NEOM alone is expected to cost more than $500 billion.

The green energy

As for green energy, the Saudis are also going big: they want to get 50% of their energy from renewable sources by 2030. Currently, they're powered by 99% fossil fuels. "As everybody knows, Saudi Arabia's economy has been kind of a one-trick pony for a long time." This is Jim Crane, who specializes in energy geopolitics. "International organizations, the IMF, the World Bank, etc., have been urging the Saudis to diversify their economy for a long time.

Finally, those warnings have been taking hold." The initial target? About 54 gigawatts of renewable energy capacity. Saudi recently said they're sitting at just 2.8 gigawatts, while there are about 21-24 gigawatts under development.

"I'm not a betting man, but if you had asked me whether a 50% target can be achieved... I would say that looks very difficult to quit the oil of Saudi arabia."

Yet according to Saudi media, Energy Minister Prince Abdulaziz bin Salman recently targeted 130 gigawatts of renewable energy – more than double the former target. Planet A's interview requests have fallen on deaf ears. But either someone's math doesn't add up, or there is indeed cause for such optimism.

Saudi Arabia has a hell of a lot going for it when it comes to clean energy.

While data analytics company Global Data ranks them just 45th in the world for solar-power capacity, the World Bank places them 7th in terms of potential.

Some Statistics about the oil of Saudi Arabia:

Arid and mountainous geography, as well as a long coastline, means large parts of the country are very windy – ideal conditions for power generation. They really couldn't be better placed to turn green. "Net zero in the Kingdom actually makes a lot of sense.

Geography

They've got great geography and great geology to reach net zero. They've got a lot of vacant land right outside their cities that gets a lot of sunshine. It's a country that has spare cash lying around, right? In the central bank and in investment funds. So they are able to build, especially solar-power-generation projects, at a really, really low cost." But building up large-scale infrastructure takes time and more cash than the Kingdom itself is willing to spend – which is why Saudi Arabia has been courting foreign investors.

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Foreign Investment

So far, however, they haven't exactly been banging on the gates of the Kingdom. Saudi Arabia had expected to boost annual Foreign Direct Investment to $19 billion by 2020. As of 2021, they'd only pulled in $5.5 billion. Investors were spooked after the murder of journalist Jamal Khashoggi in 2018 when Saudi Arabia's reputation took a nosedive. While there has also been concern that some of these ambitions are quite simply, a bit loopy. "There's some skepticism around some of these giga projects.

Whether they're financially viable or if there's going to be much of a return from them. But even speaking to some Saudis about some of the giga projects, there are doubts and skepticism." Another question mark is Saudi Arabia's many desalination plants. The population heavily depends on them for fresh drinking water. But removing brine from saltwater is extremely energy-intensive, and transforming these oil-run plants won't be an easy task. "That means that for every gigawatt that you transition from fossil-fuel electricity generation into renewable electricity generation, you have to find a solution for desalination." Mohammed bin Salman nevertheless appears to be giving it a very decent crack.

bin Salman

His success as a Saudi ruler could be judged on this green energy hill. And the Saudis are indeed talking a big game. "We need to attend to climate change, it's an admission from the Saudi Government that we are up to the challenge." "Climate change is real and if we want to leave the world in a better place than we found it, we have to do something about it. And we have to do it now."

But... here's the thing: irrespective of this green vision, Saudi Arabia isn't exactly plotting a course to quit fossil fuels and the oil of Saudi Arabia. It's quite the opposite.

It still plans to pump out as much oil as is humanly possible. So. the production of the oil of Saudi Arabia will be continued. And fill its coffers to the brim. Saudi Arabia also wants to increase natural gas production by 50%. And it's actively searching for new markets to export the oil of Saudi Arabia.

The situation of fuels in Saudi Arabia

"The Saudis have been not just diversifying, but they're also doubling down on oil as well. They've been buying a lot of refining capacity in developing countries. Their targets lie mainly in Asia... and Africa. An investigation involving Britain's Channel 4 recently found that the Saudis were aiming to "artificially raise" oil demand in developing African nations, through cheap cars, supersonic commercial aviation, and floating power plants.

And on the global stage, Saudi Arabia is doing its best to ensure it's in the driver's seat when it comes to climate change talks. "Rather than becoming an obstructionist and trying to slow down the process at every turn, it's decided in recent years that it's in its best interest to jump on the bandwagon, take part in the negotiations, become more active participants, but also try and steer the direction of this negotiation in a way that serves its own national interest."

That was highlighted most recently at the UN's COP28. While scientists screamed at the top of their lungs for an end to fossil fuel production, Politico uncovered that Saudi Arabia had claimed emissions from the manufacture and transport of wind turbines and solar panels were just as problematic. They're just a fraction, by the way. Instead, it wants to divert the world's attention towards a different solution. "It argues that the problem, the enemy is the emissions and not fossil fuels.

And if we manage the carbon in a way by recycling it, reusing and ultimately capturing and storing it, then there will be no problem with having some emissions." There's just one tiny problem: the tech to do that isn't anywhere near advanced enough. Skeptics say it's merely a distraction by fossil-fuel-producing nations and will funnel investment away from renewable energy. Karim Elgendy estimates that the tech – if it works at all – won't be available at scale until potentially 2040. "

But to depend on a technology that isn't available until 2040 at scale is a great risk." So while Saudi Arabia marches on into its brave new green energy world, they're still looking to convince developing countries to take their oil and persuade the world's leaders that managing carbon is the solution to the climate crisis. So far, the plan is on track.

Aramco predicts oil demand will actually increase to 105 million barrels per day in 2025. "You could argue that if the demand is there, that they're only satisfying demand. But that's a completely different conversation as to whose responsibility does emissions, whose shoulders does it lie upon, is it the producers or the consumers." Saudi's domestic green energy targets may be cause for lavish announcements such as these.

It could help develop new and more efficient technology. But don't be fooled, it doesn't look like there's a plan to help developing countries move in a similar direction. "The Saudis are going to be able to outcompete anybody on crude prices. That's their strategy, to be the last man standing."

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