Much has been written about Saudi Arabia’s suite of gigaprojects and the potential on offer for the project logistics community. However, there have been nagging doubts that the sheer scale of development, and the costs involved, could see the scope reined in somewhat.
There have already been a series of eye-catching moves and developments in support of Saudi Arabia’s Vision 2030 strategy to diversify its economy away from its oil and fossil fuels. However, a recent report from Bloomberg indicates that the country’s rulers could scale back the overall size Neom – a massive urban development in the desert.
The government originally intended for 1.5 million people to live at The Line, a futuristic eco-city, by 2030. Officials now expect roughly 300,000 residents in situ by that point. The USD1.5 trillion development, if realised in full, would span 170 km along the Saudi coastline. The source suggests that just 2.4 km would be built by the end of the decade and that medium-term ambitions had been “scaled back”.
In February 2024, freight forwarder DSV and Neom obtained the relevant regulatory approvals to form its USD10 billion exclusive joint venture to support the development of projects taking place as part of the Saudi Arabian giga-project. The partnership focuses on providing logistics services for Neom in the coming years. Under the agreement, the joint venture said it will provide end-to-end supply chain management, development and investments in transport and logistics assets and infrastructure as well as transport and delivery of goods and materials within NEOM.
Some rationalisation of project scopes and timelines in Saudi Arabia is to be expected, as is often the case with most long-term major capital expenditures. Nevertheless, the diverse nature of projects under development in Saudi Arabia and the wider GCC region should give the project logistics community comfort that there will be plenty of work to keep them occupied.
Speaking in HLPFI’s March/April 2024 Middle East report Steffen Behrens, president, Middle East at project forwarder deugro, said: “There are still the traditional oil and gas activities but also renewables are in the mix,” adding that there are new upcoming hydrogen that are in the planning phases all across the GCC. “At the same time we are already executing the largest hydrogen project in the world in Saudi Arabia.”
Ryan Foley, ceo of DHL Industrial Projects, also highlighted recent strong performance in Saudi Arabia. “We invested EUR30 million (USD33 million) over the last couple of years to establish three gateways in Riyadh, Dammam and Jeddah to be ready and set up for the projects and we formed a joint venture company with Saudi Aramco in order to support its business and where it is heading.”
He noted that it is not just one sector generating work. “Just look at some of the wind projects in Saudi Arabia… mining projects are also coming back. We built aluminium smelters there a few years ago and have been involved in mining there for a while. But there is also solar, semi-conductor activities, oil and gas. It is all happening, and across the region.”
