KSA Continues To Offer Opportunities For Businesses Navigating Their Way Through Post COVID landscape
Saudi Arabia’s fiscal balance challenges look set to receive some respite with the Energy Minister Abdulaziz Bin Salman predicting oil demand to return to 97% of pre-pandemic levels by Q4 2020. This is based on a consensus emerging from OPEC, the EIA and the IEA and it does look like the oil price may well see US$50 again by the end of Q3 unless COVID-19 spreads another blanket of lockdowns and quarantines.
In the short term, Aramco remains committed to US$20 billion plus of capex per annum which is aimed at both increasing production capacity but also preserving its much emphasized lowest carbon footprint by unit of production and lowest carbon intensity of any major global oil producer.
Oil demand hit 100 million barrels per day in 2018 and, despite the climate change pressures and energy transition strategies now being played out, peak oil demand may still be out to 2040 given its dominant role in the primary energy mix. Saudi’s hyper-low production costs means it will probably be the last man standing when the petroleum world fades out but in the interim it is committed to stay at the leading edge of technology which drives carbon and cost reduction at the same time as production and efficiency maximisation.
Against the backcloth, the Saudi population of 34 million is projected by the World Bank to reach just shy of 40 million by 2030 placing increased pressures on jobs creation and training. Therefore, the technology-based opportunities will need to be balanced out with the accompanying IKTVA and increased taxation challenges.