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1、EQUITYRESEARCH|September 24,2023|3:35PM GSTGoldman Sachs does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this re
2、port as only a single factor in making their investment decision.For Reg AC certification and other important disclosures,see the Disclosure Appendix,or go to employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.Faisal AlAzmeh,CFA+971 4 376-3476 Goldm
3、an Sachs InternationalDalal Darwich+971 4 376-3411 Goldman Sachs InternationalWaleed Jimma+971 4 376-3409 Goldman Sachs InternationalMichele Della Vigna,CFA+39 02 8022-2242 Goldman Sachs Bank Europe SE-Milan branchGCC Capex Wave SeriesSaudi Arabia Capex Super-Cycle:Diversifying,Decarbonizing,Digital
4、izingThe GCC countries have embarked on an economic diversification and growth journey underpinned by ambitious government targets across sectors.Our recent conversations with investors have centered around key themes including O&G production efforts,downstream expansion,renewable energy/clean hydro
5、gen,mining plans,digital transformation,and transportation&logistics.With this report,we introduce our GCC Capex Wave Series,where we intend to map out the regions investments across sectors.In this note,we focus on Saudi Arabia,the GCCs largest economy.Led by ambitious targets and extensive investm
6、ent plans,the country is undertaking economic diversification with a holistic transformation approach,underpinned by digital transformation,various development plans across sectors,exploration efforts,and decarbonization/net zero targets.In 2021,Saudi launched the National Investment Strategy(NIS),a
7、 US$3.3tn(SAR12.4tn)strategy and a key enabler of Vision 2030.The strategy aims to boost the size of investments,enhance innovation,raise the private sectors contribution to the economy,and support the development of strategic sectors.Within six strategic sectors,we see scope for nearly US$1 trillio
8、n in preliminary investments through the end of the decade across investment programs,with more projects likely to be announced in tandem with technological progress and as Saudi accelerates the execution of mega-projects and smart cities.The Goldman Sachs Group,Inc.For the full list of authors,see
9、inside.NoteNote:The following is a redacted version of the original report published September 24,2022 84 pgs.AUTHORSFaisal AlAzmeh,CFA+971 4 376-Goldman Sachs InternationalDalal Darwich+971 4 376-Goldman Sachs InternationalWaleed Jimma+971 4 376-Goldman Sachs InternationalAUTHOR LIST Michele Della
10、Vigna,CFA+39 02 8022-Goldman Sachs Bank Europe SE Milan branchNeil Mehta+1 212 357-Goldman Sachs&Co.LLCWaleed Mohsin+971 4 376-Goldman Sachs InternationalDaniela Costa+44 20 7774-Goldman Sachs InternationalHarsh Mehta+971 4 376-Goldman Sachs InternationalChristian Hinderaker,CFA+44 20 7774-Goldman S
11、achs InternationalMarcio Farid+55 11 3371-Goldman Sachs do Brasil CTVM S.A.Farouk Soussa+44(20)7051-Goldman Sachs InternationalAti Modak+1(212)902-Goldman Sachs&Co.LLCCapex super-cycle i n the maki ng,benefiti ng from a constructi ve macro backdrop 3 Upstream Energy:Embarki ng on a large O&G capex p
12、rogram i n Saudi 12 Downstream Energy:Looki ng at the next phase of capex growth 19 Clean Tech:Future-proofing through decarboni zati on 24 Metals&Mi ni ng:Seeki ng economi c di versi ficati on 39 Di gi tali zati on:At the core of Saudi s economi c transformati on 45 Transportati on&Logi sti cs:Ai m
13、i ng to become a leadi ng travel and logi sti cs hub 53 Di sclosure Appendi x 58 24 September 2023 2Goldman SachsGCC Capex Wave SeriesTable of Contents The following is a redacted version of Goldman Sachs Researchs report“GCC Capex Wave Series:Saudi Arabia Capex Super-Cycle:Diversifying,Decarbonizin
14、g,Digitalizing”originally published Sept.24 2023(84pgs).All company references in this note are for illustrative purposes only and should not be interpreted as investment recommendations.Capex super-cycle in the making,benefiting from a constructive macro backdrop Since the launch of Vision 2030 in
15、2016,Saudi Arabia has made meaningful strides in growing the non-oil economy through various developments and investments across strategic economic sectors.In 2021,the country launched the NIS,a massive US$3.3tn(SAR12.4tn)investment plan and a key enabler of Vision 2030.We see scope for c.US$1.0tn(S
16、AR3.8tn)in total investments through the end of the decade across six strategic sectors,namely upstream/downstream energy,clean technology(renewable energy/low-carbon hydrogen/EV),metals and mining,digitalization and transport&logistics,and note that the investment plans are likely to develop furthe
17、r in tandem with technological progress/availability over time and as sector strategies are finalized.US$1.0tn(SAR3.8tn)in investments likely across six strategic sectors In thi s report,we focus on mappi ng out announcements,i nvestment plans,and development projects across si x strategi c sectors
18、i n Saudi:upstream energy,downstream energy,clean technology,metals&mi ni ng,di gi tal transformati on and transportati on&logi sti cs.Overall,we esti mate that there i s scope for US$1.0tn(SAR3.8tn)i n i nvestments through the end of the decade(usi ng detai ls from announced projects and sector tar
19、gets),wi th four sectors accounti ng for the li ons share.Thi s goes beyond the announced mega-projects,whi ch account for a cumulati ve US$870bn i n i nvestments by 2030.Exhibit 1:We see scope for a total of c.US$1.0tn in investments across six strategic sectors by 2030 US$bn,unless otherwise state
20、d Exhibit 2:Upstream energy,ICT,metals and mining and transportation account for 70%of the estimated investments%of total investments 245 392 562 712 832 932 982 US$1.0tn245 147 170 150 120 100 50 36 Upstream Energy*ICT/digital transformation*Metals&MiningTransport&LogisticsRenewable Energy*Downstre
21、am Energy*EV ProductionClean Hydrogen*Total30%of US$3.3tnUpstream Energy*24%ICT/digital transformation*14%Metals&Mining17%Transport&Logistics15%Renewable Energy*12%Downstream Energy*10%EV Production5%Clean Hydrogen*3%*Mid-point of estimated investments shown above;targeted investments used for metal
22、s&mining and transport&logistics Source:Goldman Sachs Global Investment Research*Mid-point of estimated investments shown above;targeted investments used for metals&mining and transport&logistics Source:Goldman Sachs Global Investment Research24 September 2023 3Goldman SachsGCC Capex Wave SeriesExhi
23、bit 3:We see substantial investment opportunities across six strategic sectors that are likely to drive a capex upcycle in Saudi through the end of the decade US$1.0TN INVESTMENTS LIKELY ACROSS SIX STRATEGIC SECTORSUpstream Energy:Embarking on sizable O&G production plans Aramco plans to increase ma
24、ximum sustainable capacity(MSC)from 12 to 13 mboe/d by 2027;Abundant and cheap natural gas has become a crucial contributor for long-term energy securityand economic security in Saudi;Aramco started the development of the Jafurah unconventional gas field,estimated to hold around200tn cubic feet of g
25、as;Total investment estimate:US$245bnDownstream Energy:Next leg of downstream capex underway Significant exploration efforts and expansionary projects in the upstream space potentially unlockingincremental feedstock allocations;Growing demand for petchem products,outpacing demand for oil derivatives
26、(gasoline/diesel);Crude oil to chemicals technology(COTC)a promising area within the space,driving furtherinvestments;Total investment estimate:US$100bnClean Tech:Ambitious renewable energy and clean hydrogen targets Saudi plans to add 58.7GW in renewable energy capacity and 2-3GW in nuclear capacit
27、y by 2030;On the clean hydrogen side,Saudi targets production of 2.9mtpa by 2030,of which we estimatec.1.9mtpa to come in blue hydrogen;NEOM Green Hydrogen to be the worlds largest green hydrogenproduction site;Increasing focus on EV production could drive c.US$50bn in investments by 2030(source:Min
28、istry ofInvestment)Total investment estimate:US$206bnMetals&Mining:Leveraging US$1.3tn worth of vastly under explored metals and minerals Introduction of a new mining investment law in 2021 to facilitate the issuance of exploration licenses;Leveraging an estimated US$1.3tn worth of vastly under expl
29、ored metals and minerals,deadlines forbidding rounds for 5 new exploration licenses announced;Transforming the sector into the third pillar of Saudis national industry and further diversifying theeconomy away from oil;Total investment identified:US$170bnDigital Transformation:At the core of Saudis e
30、conomic transformation plans Digital transformation is a key pillar and enabler of Vision 2030,supporting industries and the private/public sector entities;Telecoms capex focused on network capacity,5G and FTTH expansions;IT sector focused on smart solutions,system integration,managed and digital se
31、rvices;massiveinvestments expected within the cloud/data/AI space;Total investment estimate:US$147bnTransport&Logistics:Becoming a leading travel and logistics hub Saudi launched an updated National Transport and Logistics Strategy(NTLS)and a Saudi AviationStrategy(AVS);The country recently launched
32、 a new PIF-owned national airline,Riyadh Air;PIF announced the masterplan for the King Salman International Airport,expected to accommodateup to 185mn passengers and process 3.5mn tons of cargo by 2050;Total investment identified:US$150bnWhere we estimate total investments,we use a combination of pr
33、oject announcements and our estimates based on country targets for sectors.Mid-point of estimated investments shown above;targeted investments used for metals&mining and transport&logistics Source:Goldman Sachs Global Investment Research,National Transport and Logistics Strategy,Invest Saudi,State N
34、ews Agency,Ministry of Industry and Mineral Resources,Ministry of Energy,Ministry of Investment24 September 2023 4Goldman SachsGCC Capex Wave SeriesSpending on mega-projects is set to rise The NIS ai ms to faci li tate the governments i nvestment across sectors,attract hi gher Forei gn Di rect Inves
35、tments(FDI)and grow the pri vate sectors contri buti on to the economy through the Shareek Program,whi ch i s expected to account for 40%of total i nvestments,followed by the PIFs program at 24%.As hi ghli ghted i n Exhi bi t 4,FDI as a%of GDP i s expected to grow to 3.4%by 2025 and 5.7%by 2030,vs.2
36、6.4%/30%for GFCF(gross fixed capi tal formati on,i.e.i nvestments),wi th total i nvestments recordi ng a 13%CAGR i n 2021-30E.We hi ghli ght that whi le the NIS covers the countrys overall i nvestment plans by 2030,Saudi has i ntroduced di fferent strategi es across sectors,faci li tati ng the path
37、to achi eve Vi si on 2030 goals.These i nclude Nati onal Transformati on Program,ICT Sector Strategy,Nati onal Renewable Energy Program(NREP),Saudi Avi ati on Strategy and Nati onal Transport&Logi sti cs Strategy among others,alongsi de a li st of ambi ti ous targets to be achi eved over the comi ng
38、 years.We also expect more strategi es and announcements as i ni ti al targets are met,supported by further technologi cal breakthrough across sectors.Exhibit 4:Expected evolution of targets over the decade leading to 2030.640 575 614 686 766 855 955 1,066 1,190 1,328 1,482 1,654 09140176
39、220022e2023e2024e2025e2026e2027e2028e2029e2030eShare of domestic investmentShare of FDI in GFCF*GFCF as%of GDPFDI as%of GDP22.1%22.8%23.5%24.3%25.0%25.7%26.4%27.1%27.8%28.6%30.0%29.3%0.6%1.0%1.5%2.0%2.4%2.9%3.4%3.8%4.3%4.8%5.7%5.2%3.1x*GFCF=Gross fixed capital formation(investm
40、ents)Source:National Investment Strategy(NIS)24 September 2023 5Goldman SachsGCC Capex Wave SeriesExhibit 5:with c.40%/24%driven by the Shareek program and PIF.Contribution by investment program(%)Exhibit 6:.in Saudis massive US$3.3tn(SAR12.4tn)investment plan under its Vision 2030 across different
41、investment vehicles Saudi Arabias investment plan under Vision 2030 Shareek Program40%PIF24%Other local21%FDI15%SAR5.0tnSAR3.0tnSAR2.6tnSAR1.8tnShareek ProgramPIFOther localFDICumulative SAR12.4tn(US$3.3tn)investments targeted between 2021-2030US$1.3tnUS$0.8tnUS$0.7tnUS$0.5tnSource:Saudi Arabia Visi
42、on 2030,National Investment Strategy(NIS)Source:Saudi Arabia Vision 2030,National Investment Strategy(NIS)Exhibit 7:Across these investment programs,we estimate c.US$1tn in investments in six strategic sectors and note that there are targets for mega projects within other sectors too(including real
43、estate,healthcare and others)Total investments(US$mn)1,018 US$3.3tn in investments targeted under the NIS879 Investments estimated across sixstrategic sectors(GSe)Mega projectsOther investments and key sectorsTotalUpstream/downstream energy,clean tech,metals&mining,digitalization,transportation&logi
44、sticsNEOM,Al Ula,Red Sea Project,Qiddiya and othersImplied scope for investments in other sectors including real estate,infrastructure,healthcare and othersSource:Goldman Sachs Global Investment Research,National Investment Strategy,Middle East Economic Digest(MEED)24 September 2023 6Goldman SachsGC
45、C Capex Wave SeriesAs hi ghli ghted by GS MENA economi st Farouk Soussa,there are tangi ble i nvestments afoot that,whi le falli ng short of the grand targets stated under Vi si on 2030 and related strategi es,would nonetheless be transformati onal i n thei r magni tude.Exhi bi t 8 outli nes the mai
46、 n mega-projects currently underway i n Saudi,amounti ng to a total expected i nvestment of US$870bn by the end of the decade.Whi le executi on on the projects has been relati vely slow(c.6%of total as of June 2023),we note that some of them such as the Red Sea Project,Amaala,Qi ddi ya and Di ryah G
47、ate are among those that are at a more developed stage(15%completi on rate).The largest and most well-known project i s the US$500bn NEOM project,a futuri sti c ci ty on the Saudi si de of the Gulf of Aqaba.Whi le the constructi on of the mega-ci ty i s sti ll i n i ts early stages,the project has s
48、een the hi ghest level of i nvestments i n the past couple of years,at over US$18.2bn(c.4%of total cost).Exhibit 8:Saudi Arabia has over US$870bn in mega-projects set for completion by 2030 As of June 2023 SectorProjectAmount(US$bn)Amount Executed(US$bn)Execution RateNEOM50018.24%New Murabba10000%Je
49、ddah Cultural Urban Revival200.32%Red Sea Project167.245%Al Ula151.711%Rua Al Madina101.414%Amaala5.12.447%Asir Project30.310%Boutique Group Hotels1.500%Entertainment Ventures50.24%King Salman International Park2300%Qiddiya8.82.326%Real EstateDiryah Gate202.915%HousingRoshn902.83%InfrastructureKing
50、Salman International Airport30-5000%Total as per MEED879506%MixedTourismEntertainmentSource:Middle East Economic Digest(MEED),compiled by Goldman Sachs Global Investment Research24 September 2023 7Goldman SachsGCC Capex Wave SeriesSaudi Arabias capital Riyadh to see an uptick in investments As part
51、of the US$3.3tn i nvestment plan targeted by the end of the decade,at least 30%i s set to be allocated to the capi tal ci ty Ri yadh,as per the Mi ni stry of Investment.Saudi ai ms to grow Ri yadh i nto one of the worlds top 10 ci ti es(vs.currently among the top 40 largest ci ty economi es globally
52、),and targets to i ncrease i ts populati on from 7.5mn to c.15-20mn i n 2030.Addi ti onally,Ri yadhs development i s a strategi c move for Saudi s economi c di versi ficati on plan,as the ci ty represents c.50%of the nati onal non-oi l economy.Indeed,the ci ty i s already experi enci ng an upti ck i
53、 n constructi on acti vi ty,wi th US$12.2bn i n contracts awarded i n 2022,the hi ghest level si nce 2013.The latter stood at US$32bn,of whi ch US$23bn was related to the development of Ri yadh metro.As per MEED,more awards are expected,and there are c.US$9bn worth of contracts currently i n bi ddi
54、ng evaluati on stage,whi ch,i f awarded thi s year,could bri ng the total contracts to US$20bn.In total,MEED i denti fied US$110bn and US$60bn i n desi gn and under-studyawards,respecti vely.The future pi peli ne of projects i ncludes(1)New Murabba Development Company,whi ch was launched i n Februar
55、y 2023 to develop the worlds largest modern downtown,and(2)Ki ng Salman Internati onal Ai rport launched i n November 2022,whi ch,i f completedon ti me i n 2030,wi ll become the worlds largest ai rport i n terms of passenger capaci ty.Exhibit 9:US$120bn in contracts have been awarded for the develop
56、ment of Riyadh between 2010-22 Contract awards(US$mn)-5,000 10,000 15,000 20,000 25,000 30,000 35,00020000022As of July2023Excluding Riyadh Metro contract award of Planned awards for 2023 could exceed US$20bn,highest level witnessed over the past decade(ex
57、cl.US$23bn Riyadh metro project in 2013)Source:Middle East Economic Digest(MEED)24 September 2023 8Goldman SachsGCC Capex Wave SeriesSaudi introduced supportive programs to enable investments under the NIS Shareek program:Incentivizing domestic investments of the private sector Shareek,announced i n
58、 2021 and led by the Counci l of Economi c and Development Affai rs(CEDA),i s a dynami c program that ai ms to i ncrease domesti c i nvestments of li sted and non-li sted pri vate sector compani es to SAR5tn(US$1.3tn)by 2030.The program i s underpi nned by several projects offered by the government
59、to i ncenti vi ze i nvestments by the pri vate sector.The program currently i ncludes 28 pri vate firms,and targets an i ncrease i n pri vate sector GDP contri buti on to 65%and non-oi l exports to 50%(from 16%i ni ti ally).On March 1,2023,the government announced the first wave of supported project
60、s for large compani es joi ni ng Shareek(Pri vate Sector Partnershi p Rei nforcement Center).Frameworks were si gned for a total of 12 projects across ei ght compani es i n a number of strategi c sectors,wi th a total value of c.SAR192bn(US$51.2bn),of whi ch the share of large compani es i s c.SAR12
61、0bn(US$32bn).These projects are expected to contri bute up to SAR466bn(US$124.3bn)to GDP over the next two decades wi th an economi c multi pli er of 2.43,and are i ntended to result i n the creati on of more than 64k jobs.Exhibit 10:Key objectives under the Shareek program Unlock SAR5tnin domestic
62、private sector investments by 2030Help the private sector contribute 65%to GDP by 2030Secure up to SAR2tnin GDP by 2025Create hundreds of thousandsof job opportunities by 2025Contribute to increasing Saudis GDP ranking to 15thworldwideSource:Shareek24 September 2023 9Goldman SachsGCC Capex Wave Seri
63、esNational Development Fund broadens the scope of investments;PIF,the sovereign wealth fund,and the Saudi banks to play a pivotal role in the economic transformation story Between 1Q21-1Q23,Saudi Arabi a generated si gni ficant oi l gai ns,and,duri ng thi s peri od,the i nternati onal i nvestment po
64、si ti on of the country i mproved by US$150bn,as per Saudi Central Bank monthly data.Goi ng forward,our MENA Fi nanci als teams vi ew i s that the SWFs are li kely to play a pi votal role i n regi onal economi c di versi ficati on through both local project spend and i nternati onal i nvestments.The
65、 Publi c Investment Fund(PIF),whi ch i s among the largest SWFs globally wi th c.US$700bn i n AUM(up from c.US$250bn i n 2018),i s expected to play a key role i n terms of local i nvestment and development(c.SAR3tn i n i nvestments targeted under the NIS by 2030).Saudi has also launched several i ns
66、ti tuti onal i ni ti ati ves,namely the Nati onal Development Fund(NDF),to broaden the scope of development and encourage i nvestments across the vari ous economi c sectors targeted under Vi si on 2030.Through i ts vari ous funds and development banks,the NDF ai ms to faci li tate i nvestments by th
67、e pri vate sector.Some key funds i nclude the Saudi Industri al Development Fund(SIDF)and the Nati onal Infrastructure Fund(NIF).Furthermore,Saudi banks are also li kely to be key faci li tators of thi s capex wave.Indeed,our MENA Fi nanci als team expects Saudi Vi si on 2030 projects to be the core
68、 engi ne for credi t growth.Exhibit 12:Saudi has launched several institutional initiatives to broaden the scope of development and encourage investments from the private sector National Development Fund(NDF)to facilitate investments by the private sectorLaunched in 2017,the PIF Program plans to sup
69、port the private sector and launch promising industries,committing to invest no less thanUS$40bn(SAR150bn)p.a.into the local economy through 2021-25.It also aims to raise the share of local content in PIF and its affiliates to 60%,and to contribute US$320bn(SAR1.2tn)to non-oil GDP,cumulatively,by 20
70、25.Established initially in 1974,SIDF was one of the primary financial enablers ofSaudis industrial transformation.The fund aligned its objectives with those of Vision 2030,and continues to play a vital role in promoting industrial investment opportunities,expanding its support to cover a number of
71、promising sectors in industrials,energy,mining and logistics.Launched in 2021,the NIF plans to support up to US$53bn(SAR200bn)in projects related to the water,transportation,energy,digital infrastructure,education and health sectors through 2030.Public Investment Fund ProgramSaudi Industrial Dev.Fun
72、dNational Infrastructure FundSource:PIF,Saudi Industrial Development Fund,Vision 203024 September 2023 10Goldman SachsGCC Capex Wave SeriesEconomic outlook looks favorable;solid progress on market reforms supports Saudis equity capital market transformation The GS commodi ti es team remai ns bulli s
73、h on the oi l pri ce outlook and forecasts an average 2023 Brent Crude Oi l pri ce of US$82/bbl(and US$91/bbl i n 2024).Thi s i s largely i n li ne wi th the IMFs forecast budget break-even oi l pri ce of c.US$81/bbl for Saudi Arabi a(as of May 2023).Our CEEMEA economi st Farouk Soussa hi ghli ghts
74、that Saudi Arabi as oi l poli cy i s supporti ve of i ts fiscal outlook.He expects the i mpact of hi gher oi l pri ces to outwei gh the drag to revenue from lower producti on post the recent cuts.Farouk esti mates that the budget defici t would wi den to 2.4%of GDP i f oi l pri ces were to remai n a
75、t around$75/bbl for the remai nder of the year.As i t i s,wi th hi s assumpti on of oi l pri ces i n the mi d-$80s range for the remai nder of the year(based on forward pri ci ng),he i s forecasti ng a budget defici t of 1.4%of GDP.Our Fi nanci als team beli eves the Vi si on 2030 projects are li ke
76、ly to be funded through a combi nati on of both local and forei gn fundi ng i n the form of equi ty and debt.The cumulati on of oi l gai ns together wi th plans to leverage di versi fied fundi ng sources(local/forei gn as well as debt/equi ty)should li mi t project outlay ri sk related to oi l pri c
77、e volati li ty.Furthermore,GS economi sts esti mate that external assets could reach$5.5trn by end-2026,an i ncrease of$1.3trn over the next four years.In an upsi de scenari o,where Brent oi l pri ces ri se steadi ly to US$120/bbl over that peri od,they esti mate that GCC external assets could reach
78、 US$6 tri lli on.Conversely,i n a downsi de scenari o,where oi l pri ces decli ne to US$40/bbl,they beli eve GCC external assets could plateau at just under US$5 tri lli on.Addi ti onally,as hi ghli ghted by our MENA Fi nanci als team,Saudi Arabi a,the largest market i n MENA and one of the largest
79、i n EM,i s at the forefront of the equi ty capi tal market transformati on bei ng seen i n the regi on.Ini ti ati ves i nclude si gni ficant market reforms,such as new li sti ngs,relaxati on of forei gn ownershi p li mi ts(attracti ng forei gn capi tal),and broadeni ng of the product sui te.24 Septe
80、mber 2023 11Goldman SachsGCC Capex Wave SeriesUpstream Energy:Embarking on a large O&G capex program in Saudi While Saudi continues to undertake significant clean energy investments on its path to net zero,the country has made several announcements over the past 24 months related to the expansion of
81、 oil and natural gas capacities to cater to growing demand both domestically and internationally.Upstream expansi on i s mai nly focused on(1)catering to structurally tight supply post a multi-year peri od of under-i nvestment globally;(2)utilizing hydrocarbon resources in more value-add products su
82、ch as petrochemi cals;(3)lowering carbon emitted from power generation by swi tchi ng to gas;and(4)providing the base for the bui ld-up of blue hydrogen exports.Overall,we see multi ple factors dri vi ng upstream growth over the medi um to long term,i ncludi ng the countrys focus on i ncreasi ng gas
83、 producti on(from both conventi onal and unconventi onal sources),expandi ng i ts exi sti ng oi l maxi mum sustai nable capaci ty(MSC)and enhanci ng explorati on efforts wi th meani ngful potenti al volumes across natural gas li qui ds(NGLs)and condensates.Exhibit 13:We see a capex upcycle driven by
84、 O&G exploration and development projects Upstream EnergyDownstream EnergyClean TechMetals&MiningDigital TransformationTransport&Logisticsc.US$1.0TN IN INVESTMENTS LIKELY ACROSS SIX STRATEGIC SECTORSUS$245bn of estimated investmentsAramco to grow oil MSC by c.1mbpd by 2027,expanding Safaniyahs offsh
85、ore field,Marjan and Berri,Zuluf,Abu Safah,Dammam Dev.Project,and JafurahMid-point of estimated investments shown above Source:Goldman Sachs Global Investment Research24 September 2023 12Goldman SachsGCC Capex Wave SeriesCrude oil expansion:Another multi-year period of growth investments on the hori
86、zon In li ne wi th the rest of the i ndustry,OPEC has made mi ni mal commi tments to i ncremental capaci ty growth over the past seven years,as evi dent i n the li mi ted pi peli ne of growth developments.Thi s i s whi le non-OPEC capaci ty growth was dampened owi ng to the i ncrease i n decli ne ra
87、tes,dri ven by agi ng assets and a lack of brownfield acti vi ty duri ng the COVID(2020-21)peri od.We beli eve these factors have shaped a ti ght oi l(and broader energy)market,also reflected i n Aramcos plans to scale oi l producti on over the next few years.Wi th regard to announced expansi onary
88、projects,Saudi ai ms to grow i ts oi l MSC by c.1mbpd to 13mbpd by 2027,largely through field expansi on projects hi ghli ghted i nExhi bi t 15 i ncludi ng Marjan and Berri,Zuluf,Abu Safah,and the Dammam DevelopmentProject.Beyond 2027,Aramco plans to expand Safani yas offshore field by 700kbpd,rai s
89、i ng Saudi s oi l producti on capaci ty to 13.7mbpd.Usi ng avai lable data on i nvestmentExhibit 14:Overview of key upstream growth projects in Saudi Arabia Marjan Field developmentOne of the oldest and biggest offshore oil and gas fields in the Arabian Gulf.Through this project,Aramco aims to add 3
90、00kbpd of oil,2.5 bscfd of gas,and 350kpd of ethane and Berri Field developmentIn order to sustain crude production capacity at 12mbpd in the short term,Aramco aims to double the fields capacity to 500kbpd mainly through enhanced oil recoveryZuluf Field developmentThe initiative involves building a
91、new onshore central processing facility that is expected to process an incremental 600kpd and includes associated pipelines and other infrastructureDammam Field development Construction activities are underway and the project is expected to add 25kbpd and 50kpd of crude oil by 2024 and 2027,respecti
92、velySafaniya Field developmentOne of the worlds largest conventional offshore oil fields by reserves and production capacity.Post the expansionary initiatives,production is set to increase by around 350kbpd in 2027,and another 350kbpd post 2027Jafurah Field developmentCenter to Saudis energy transit
93、ion strategy,Jafurah is a sizable unconventional gas field estimated to hold 200trn cubic feet of rich raw gas.Production is expected to ramp up from 200mscfd in 2025 to a sustainable 2bscfd of gas by DecriptionLocationCompletionArabian Gulf,Saudi Arabia2025Arabian Gulf,Saudi Arabia2025Arabian Gulf,
94、Saudi Arabia2026Arabian Gulf,Saudi ArabiaPhase 1:2024Phase 2:2027Arabian Gulf,Saudi ArabiaPost 2027Arabian Gulf,Saudi ArabiaPhase 1:2025Phase 2:2030Abu Safah Field developmentManaged by Aramco,the offshore oil field is a joint reservoir between Saudi/Bahrain.The fields capacity is expected to grow b
95、y 100kboepd by 2027.Arabian Gulf,Saudi Arabia2027Source:Compiled by Goldman Sachs Global Investment Research,Company data,Regional news outlets24 September 2023 13Goldman SachsGCC Capex Wave Seriescosts and project targets,we esti mate these oi l-related expansi on projects requi ri ng c.US$73-82bn(
96、c.SAR274-308bn)i n capex spendi ng through 2030.Exhibit 15:Saudi aims to increase oil MSC from 12mbpd to c.13mbpd by 2027 Key announced expansionary oil projects 1,325 kbpd2,025 kbpd550 600 10025 50 700 Marjan and BerriZulufAbu SafahDammamdevelopmentproject ph.1Dammamdevelopmentproject ph.2Total inc
97、rementalcapacity*by 2027SafaniyaTotal incrementalcapacity*2025e2026eAfter 2027e2027e2024eExpected completion year2027e*Excluding decline rate effects Source:Company data,data compiled by Goldman Sachs Global Investment ResearchExhibit 16:The lion share of Saudis MSC of 12mbpd comes from Ghawar,Khura
98、is,and Safaniyah oil fields(combined capacity of 6.6mmbpd)Saudis oil field contribution to total maximum sustainable capacity,%Exhibit 17:Saudi aims to increase its crude oil MSC to c.13mmbpd by 2027 with further upside coming from Safaniyahs expansion thereafter Saudis maximum sustainable capacity,
99、mmbpd GhawarKhuraisSafaniyahShaybahZulufOther12.013.011.011.512.012.513.013.514.02024E2025E2027EBeyond 2027E*Oil expansion projects include:1.Dammam development projects(25&50 kbpd)2.Marjan and Berri(550 kbpd)3.Abu Safah(100 kbpd)4.Zuluf(600 kbpd)Source:Company data,data compiled by Goldman Sachs Gl
100、obal Investment Research*Includes 700kpbd upside to the MSC target from the Safaniya expansion project,excluding decline rate effects Source:Company data,data compiled by Goldman Sachs Global Investment Research24 September 2023 14Goldman SachsGCC Capex Wave SeriesAs hi ghli ghted i n the Top Projec
101、ts report,the energy i ndustry has been under-i nvesti ng si nce the peak of 2014,wi th i nvestments i n tradi ti onal energy(oi l,gas upstream)falli ng 50%i n 2020 from the peak and dri vi ng an 18%reducti on i n global pri mary energy i nvestments,from$1.3trn i n 2014 to$1trn i n 2020.A number of
102、oi l and gas project i nvestment deci si ons have been delayed si nce 2014,translati ng i nto 10 mn bl/d of lost oi l producti on by 2024-25 equi valent to Saudi Arabi as annual producti on and 3 mn boe/d of lost LNG producti on more than that of Qatar,as per our energy teams esti mates.The focus ha
103、s shi fted i n recent years to energy sustai nabi li ty,but the overall growth of the i nvestments i n renewables has not been suffici ent to compensate for the abrupt drop i n i nvestments i n the tradi ti onal energy space,gi ven the smaller scale and hi gher capi tal i ntensi ty per uni t of ener
104、gy output.The average capex i ntensi ty of low carbon energy developments i s c.2x that of hydrocarbons,further enhanci ng the need for energy capex;our energy colleagues esti mate the need for an i ncremental$1.5trn pa capex by 2032.They expect the annual pace of i nvestment deci si ons i n long-cy
105、cle oi l&gas mega-projects to exceed$150 bn pa by 2024,almost 3.0 x the level of the trough i n 2020,dri ven by a strong recovery i n LNG and deepwater,dri vi ng a return of double-di gi t oi l&gas capex growth for the first ti me i n a decade.Exhibit 18:Primary energy capex fell over the past decad
106、e,but our energy team expects it to grow 48%by 2027.Primary energy supply capex split by source(US$bn)and renewables share as a%of total(%)Exhibit 19:.with the renewed focus on energy security re-igniting oil&gas commitments Top Projects capex sanctioned by year,split by winzone(excl.Russia)0%10%20%
107、30%40%05001,0001,5002,0002,5003,0003,500200000222023E2024E2025E2026E2027EClean energy as a%of total Energy investments(US$bn)Oil&gas-upstreamOil&gas-downstreamCoal-mining&infraBiofuelsCoal&gas-powerNuclearRenewablesNetworks%share of renewablesFuel supplyPo
108、wer supply050030020002000420052006200720082009200000222023E2024E2025ETotal capex(US$bn)Traditional(incl.exploitation)Heavy OilGasDeepwaterLNGSource:IEA WEI(historicals),Goldman Sachs Global Investment ResearchSource:Goldman Sachs Glob
109、al Investment ResearchExhibit 20:Saudi Arabia is expected to lead in terms of both onshore and offshore hydrocarbon production in MENA Hydrocarbon production volumes from 2021 to 2030 by MENA country(mnboe/d)Exhibit 21:Hydrocarbon production in Saudi Arabia is set to grow at a 3%CAGR through 2025 Pr
110、oduction by hydrocarbon type in Saudi(mnboe/d)02468023020230202302023020230KSAIranIraqUAEQatarKuwaitAlgeriaOmanBahrainRest ofMENAOnshoreOffshore10.09.39.19.91.21.31.31.71.41.31.41.40.30.20.20.312.912.112.013.30.02.04.06.08.010.012.014
111、.020025ECrude oilGasNGLConsensate/Source:Rystad market reportSource:Rystad market report24 September 2023 15Goldman SachsGCC Capex Wave SeriesNatural Gas expansion:A key area of focus within the upstream space Abundant and cheap natural gas has become a cruci al contri butor for long-term
112、 energy securi ty as well as economi c development and di versi ficati on of the GCC economi es.In Saudi,the government has placed gas at the center of i ts energy transi ti on strategy as i t ai ms to reduce i ts carbon footpri nt meani ngfully by 2030 and reach net zero by 2060.Demand for natural
113、gas i n the country i s expected to grow at a 5%CAGR through 2030(source:Rystad),meani ngfully outpaci ng the global average of 1.5%over the same peri od.Addi ti onally,Saudi ai ms to i ncrease i ts gas producti on by more than 50%to c.15bsfd by 2030,wi th i ncremental volumes expected from natural
114、gas and ethane.Wi th regard to expansi onary projects,Jafurahs unconventi onal field development stands out as one of the largest i n terms of i ncremental capaci ty addi ti on and i nvestment si ze(expected to requi re over US$68bn i n capex over the first 10 years of development,as per Aramco).Jaf
115、urah i s forecast to add 200msfd by 2025,scali ng up to a sustai nable 2.0bsfd by 2030,and 2.2bsfd by 2036,i n addi ti on to 420msfd of ethane and 630kbpd of NGLs and condensate.Besi des Jafurah,Aramco expects to add 2.5bsfd of i ncremental gas producti on capaci ty by 2025 from the Marjan field.Tow
116、ards the end of the decade,we see scope for Saudi to become a net exporter of natural gas mai nly vi a blue hydrogen and blue ammoni a(wi th natural gas a key i nput for both products).Overall,we currently esti mate c.US$83-91bn(c.SAR311-341bn)i n gas-related i nvestments through 2030,based on avai
117、lable data on i nvestment costs and project targets.We hi ghli ght that a si zable part of the i ncremental gas from the aforementi oned growth projects i s li kely to be allocated to power generati on as well as refini ng and i ndustri al sectors.Saudi s Mi ni stry of Energy(MoE)has plans to steer
118、away from generati ng electri ci ty usi ng oi l li qui ds(i ncludi ng fuel oi l);as such,i t ai ms to pri mari ly use natural gas,whi ch has relati vely lower carbon emi ssi ons vs oi l li qui ds,as well as renewables,to achi eve a cleaner power generati on mi x by the end of the decade.In addi ti o
119、n,the gas and gas li qui ds produced are li kely to be di rected towards bui ldi ng Saudi s capabi li ti es i n the clean hydrogen/ammoni a space and expandi ng downstream petrochemi cals producti on.Exhibit 22:Rystad sees growing demand globally for hydrocarbons through 2030,in particular gas Globa
120、l natural gas demand by continent,in bcm per year Exhibit 23:Saudi Aramco aims to grow its gas production by 50%by 2030 Saudi Aramcos gas production(both natural gas and ethane),bscfd 05001,0001,5002,0002,5003,0003,5004,0004,5005,00020000022E2023E2024E2025
121、E2026E2027E2028E2029E2030ERussiaEuropeNorth AmericaSouth AmericaAfricaKSAMiddle East ex KSAAsiaCAGR21-25+3.3%+7.7%+2.0%9.2 bscfd13.7 bscfd0.9 bscfd1.4 bscfd0.02.04.06.08.010.012.014.016.018.02021 productionNatural gasEthane2030Gas expansion projects include:1.Marjan and Berri(2.5 bscfd of natural ga
122、s)2.Jafurah(2 bscfd of natural gas)3.Jafurah(0.42 bscfd of ethane)50%growth in total gas production*Source:Rystad market report*Includes both natural gas and ethane production Source:Regional news outlets,Company data,compiled by Goldman Sachs Global Investment Research24 September 2023 16Goldman Sa
123、chsGCC Capex Wave SeriesOn the i nfrastructure si de,Aramco si gni ficantly expanded i ts natural gas processi ng capaci ty for both conventi onal and unconventi onal raw gas over the last few years to 18.3bscfpd(as of FY2021).The company recently announced that both Hawi yah and Haradh compressi on
124、 projects became commerci ally operati onal towards the end of 2022,wi th full capaci ty ramp-up expected i n 2023;Aramco expects these to add 1.3bscfd of raw gas processi ng capaci ty once fully operati onal.Looki ng ahead,Aramco ai ms to pursue vari ous i nfrastructure expansi on projects,i ncludi
125、 ng(1)the first development phase for the Jafurah gas plant(expected raw gas processi ng capaci ty of 3.1bscfd),whi ch i s li kely to come onli ne by 2025;and(2)the Tanaji b gas plant,whi ch i s expected to add an i ncremental 2.5bscfd of addi ti onal processi ng capaci ty and come on stream by 2025
126、.We expect another US$74-88bn(SAR278-330bn)of capex to be spent on sustenance and other i nfrastructure-related spend.We forecast thi s porti on of capex to grow annually between US$200-400mn as Saudi embarks on i ts upstream capaci ty growth plans.Exhibit 24:We see Saudis shift towards clean energy
127、 by 2030 driving meaningful demand for gas in power generation Saudi gas demand by end use,bscfd Exhibit 25:Saudi aims to increase the contribution from gas in the energy mix towards 2030 given its lower carbon emissions relative to other hydrocarbon liquids Saudis energy mix,in TWh 0.01.02.03.04.05
128、.06.07.0 PowerGeneration Industrial Feedstock Refining Other own use2030E20040050060020002005200252030Solar PVOnshore windLiquidsGasTodaySource:Company data,Goldman Sachs Global Investment ResearchSource:Arabian Drilling,Rystad,Reuters,Saudi Aramco24 September 2023 17Goldman Sa
129、chsGCC Capex Wave SeriesExhibit 26:Aramcos gas infrastructure has been growing significantly over the last decade given the growth in supply/associated and non-associated gas production Saudi gas processing capacity since 1980,bscfd Exhibit 27:We see gas processing capacity and related infrastructur
130、e ramping up meaningfully over the medium term to cater to the gas production growth targets Saudis gas processing capacity,bscfd 02468040622004200620082001620182020Saudi gas processing capacity,bscfd18.3 bscfd1.33.12.50510152025Curre
131、nt capacity(FY21)Hawiyah andHaradhJafurahTanajibMedium termcapacity=+c.38%Source:Company data Haradh and Hawiyah fields already commenced commissioning activities and full capacity is expected to be reached in 2023 Source:Company data,data compiled by Goldman Sachs Global Investment Research24 Septe
132、mber 2023 18Goldman SachsGCC Capex Wave SeriesDownstream Energy:Looking at the next phase of capex growth Saudi has ambitious plans to grow its downstream hydrocarbon production.Indeed,Aramco aims to place one million barrels of oil in petrochemical production and increase natural gas liquids alloca
133、tion to the petrochemicals space.Saudi today is one of the worlds largest petrochemicals hubs and its sizable upstream energy expansionary proj ects should pave the way for the sector to meaningfully grow its production over the next decade.We expect the next leg of growth i n the downstream space,m
134、ai nly dri ven by(1)si gni ficant upstream explorati on efforts and expansi onary projects underway,whi ch could potenti ally unlock i ncremental feedstock allocati ons,and(2)growi ng demand for petrochemi cal products both locally and i nternati onally,wi th demand outpaci ng that for oi l deri vat
135、i ves such as gasoli ne and di esel.We esti mate that c.US$93-107bn(c.SAR349-401bn)of total capex could be spent by the sector through 2030,on the back of recent announcements and project plans from multi ple i ndustry players,as well as potenti al unlocki ng of addi ti onal feedstock allocati ons f
136、ollowi ng si gni ficant upstream gas expansi on efforts(namely from Jafurah).For i nstance,Aramco recently expressed i ts i ntenti on to grow i ts oi l to li qui ds chemi cals capaci ty to 4mbpd wi th one mi lli on barrels to be allocated i n Saudi vi a the thermal oi l to chemi cals route.Overall,w
137、e see scope for(1)c.US$32bn(c.SAR122bn)of capex from i ntegrated refini ng/chemi cal plant expansi on projects,(2)c.US$57-71bn(SAR214-266bn)from potenti al crackers that could be added i n the market,and(3)c.US$4bn(c.SAR15bn)from newly announced PDH plants.Exhibit 28:We see a capex upcycle driven pa
138、rtially by the need for higher capacity to cater to growing local and international demand Upstream EnergyDownstream EnergyClean TechMetals&MiningDigital TransformationTransport&Logisticsc.US$1.0TN IN INVESTMENTS LIKELY ACROSS SIX STRATEGIC SECTORSUS$100bn of estimated investmentsBeneficiary from si
139、gnificant expansionary projects in the upstream space,and growing local and international demand for petrochemical products Mid-point of estimated investments shown above Source:Goldman Sachs Global Investment Research24 September 2023 19Goldman SachsGCC Capex Wave SeriesTo esti mate the requi red c
140、apex for i ntegrated refini ng/chemi cal plants,we use the average total i nvestment cost/i ncremental chemi cal producti on for global COTC projects whi ch we then multi ply by the esti mated producti on capaci ty of announced projects(computed assumi ng a 43%crude oi l to chemi cals conversi on ra
141、ti o,i n li ne wi th i ndustry players levels).Whi le we do not factor i n Aramcos expectati ons for future conversi on rates as the base case i n our analysi s,we note that i t sees conversi on rates as li kely to reach above 70%underpi nned by i ts key focus on i nnovati on coupled wi th potenti a
142、l technologi cal breakthroughs i n catalyst and separati on devi ces.Key announced growth projects wi thi n the Saudi i ntegrated refini ng/chemi cals space i nclude SABICs COTC partnershi p wi th Aramco/Si nopec and SABICs li qui d to chemi cals plant project announced i n November 2022.To esti mat
143、e the requi red capex for potenti al crackers,we take i nto account plans that have already been di scussed by key i ndustry players.These i nclude APPCs new mi xed feed cracker whi ch i s expected to come onli ne by 4Q25,as well as Si pchems potenti al cracker addi ti on whi ch management has hi gh
144、li ghted on previ ous earni ngs calls.Beyond these,we assume a potenti al addi ti on of 6-8 other crackers i n Saudi i n li ne wi th the countrys ai m to di versi fy i ts economy partly vi a uti li zi ng more hydrocarbon volumes to produce more value-add downstream products.We apply the average cape
145、x per ton for si mi lar growth projects to the expected i ncremental capaci ty from the aforementi oned growth projects and arri ve at c.US$57-71bn(SAR214-266bn)of requi red i nvestments for other potenti al crackers.In terms of planned PDH expansi on projects,we note that both APPC and Alujai n hav
146、e two si zable projects underway whi ch are expected to requi re combi ned i nvestment costs of around c.US$4bn,as per respecti ve company announcements.We note that out of the c.US$93-107bn total capex we esti mate by 2030,US$15bn(c.SAR56bn)worth of proj ects have already been announced at specifie
147、d budgets.Thi s expansi on could result i n Saudi s chemi cal capaci ty growi ng meani ngfully by 2030.Exhibit 29:Average estimated investment potential in the downstream energy space Propane dehydrogenation(PDH)Integrated refining/chemicals plantsOther potential crackers currently being plannedAnno
148、unced capex(US$bn)Potential capex(US$bn)US$4bnUS$11bnUS$0.0bnUS$4bnUS$32bnUS$64bnDownstream players like Sipchem and APPC(amongst others)announced plans around the potential development of new crackers.We believe more projects would be announced over time,especially in light of the expected growth i
149、n upstream supply.c.US$15bn announcedc.US$100bn GSe by 2030Source:Goldman Sachs Global Investment Research,Regional news outlets,Company data24 September 2023 20Goldman SachsGCC Capex Wave SeriesIntegrating refining with chemicals,a growing focus for Saudi Saudi Aramco sees crude oi l to chemi cals
150、technology(COTC)as among the most promi si ng areas wi thi n the downstream space gi ven i ts abi li ty to reali ze hi gher output yi elds vs tradi ti onal steam cracki ng.The company hi ghli ghted i ts recent achi evement i n i ncreasi ng the yi elds vi a the thermal oi l-to-chemi cals route from a
151、 hi stori cal range of 8%-12%to around 50%;longer term,the company expects i t to reach 70%-80%as the technology i mproves further.Integrati ng the downstream busi ness wi th upstream/refini ng producti on phases i s one key area that could result i n reali zi ng i ncrementally hi gher margi ns alon
152、g the hydrocarbon value chai n.We see thi s as a key theme i n Saudi s next phase of chemi cals expansi on wi th potenti al room for i mproved cost effici enci es and value creati on opportuni ti es across the i ndustry.By 2030,Saudi ai ms to allocate 4mbpd of crude oi l for chemi cals producti on,w
153、i th 1 mi lli on placed locally.Thi s i s i n li ne wi th the countrys vi si on to support the creati on of a world-leadi ng downstream sector as i t seeks to maxi mi ze value from Saudi s crude oi l producti on by i ntegrati ng across the hydrocarbon chai ns and support conversi on i ndustri es to
154、produce semi-fini shed/fini shed products to di versi fy the economy.The Mi ddle East currently has only c.16%of i ts ethylene/propylene capaci ty i ntegrated(wi th refineri es),meani ngfully below the 60%average across other regi ons globally,as per GPCA;we see thi s share growi ng over ti me as mo
155、re i ntegrated producti on faci li ti es,i ncludi ng crude oi l/li qui ds to chemi cal uni ts,begi n to come on stream(largely from Saudi)over the medi um term.Another key dri ver for i ntegrated refinery/chemi cal plants i s hi gher olefins and aromati cs demand growth vs key oi l deri vati ve prod
156、ucts such as di esel and gasoli ne.We see global demand for the latter growi ng at less than 1%CAGR through 2030(from 2021)parti ally due to a combi nati on of(1)growi ng i nterest i n cleaner burni ng fuels such as natural gas,hydrogen,and renewables and(2)hi gher penetrati on of electri c vehi cle
157、s wi thi n the transportati on space.These growth projecti ons are dwarfed by those for ethylene/propylene whi ch are expected to grow at CAGRs of c.3.7%/4.0%over the same peri od(per Argus).Saudi Aramco and SABIC have recently announced multi ple i ni ti ati ves wi thi n the space,i ncludi ng i ts
158、plan to convert 400kbpd of crude oi l to chemi cals i n Ras Al-Khai r,as well as another si mi lar project i n partnershi p wi th Si nopec.Gi ven SABICs i ndustri al scale and si ze,as well as i ts strategi c relati onshi p wi th Aramco(parent),the company i s able to leverage advanced technologi ca
159、l capabi li ti es i n both upstream/downstream.24 September 2023 21Goldman SachsGCC Capex Wave SeriesRoom for more mixed crackers To enable hi gher returns for COTC projects,Saudi Aramco i s li kely to uti li ze the growi ng producti on of natural gas li qui ds,whi ch,i f combi ned wi th heavi er fe
160、ed,could dri ve returns hi gher for mi xed crackers.Several li sted compani es have expressed i nterest i n bui ldi ng mi xed crackers(e.g,Si pchem and APPC)and we see potenti al for around c.US$57-71bn(SAR214-266bn)i n addi ti onal capex by 2030.Whi le li mi ted i nformati onhas been shared around
161、most projects,we beli eve the market i s li kely to see ani ncrease i n the number of crackers,parti cularly i n li ght of si zable gas field expansi onprojects such as Jafurah.Exhibit 30:The Middle East holds one of the lowest shares of integrated refineries globally,but this is likely to grow over
162、 time as more COTC projects potentially come on stream over the medium term Share of ethylene/refinery integrated capacities by region 85%79%66%64%57%51%49%47%44%16%0%10%20%30%40%50%60%70%80%90%100%South AsiaCentralEuropeAfricaEast AsiaWesternEuropeNorthAmericaSouthAmericaSouth EastAsiaEasternEurope
163、Middle EastEthylene/refinery integrationNon-integratedSource:GPCA24 September 2023 22Goldman SachsGCC Capex Wave SeriesExhibit 31:Total capacity for key petrochemical products have potential for meaningful expansion ahead Key petrochemical products by capacity in Saudi,ktpa(for illustrative purposes
164、)020,00040,00060,00080,000100,000120,000140,00020000030Key petrochemical product capacities from listed companies in Saudi Source:Company data,Goldman Sachs Global Investment ResearchExhibit 32:We see c.US$15bn in announced downstream capex plans so far.To
165、tal capex(US$bn)Exhibit 33:.and estimate average additional potential spending of US$85bn by 2030,bringing the average total investment to US$100bn(on GSe)US$15bn113.9Integrated refining.chemicals plantsPDH plantsTotalSATORP(US$11bn,2027)APPC new PDH plant(US$1.9bn,4Q24)Alujain project(US$2.0bn,1H26
166、)c.US$100bn64324CrackersIntegratedrefining.chemicalsplantsPDH plantsTotalPotential crackers currently being plannedIncludes SATORP(US$11bn)&other COTC(US$21bn)Source:Compiled by Goldman Sachs Global Investment ResearchSource:Goldman Sachs Global Investment Research24 September 2023 23Goldman SachsGC
167、C Capex Wave SeriesClean Tech:Future-proofing through decarbonization Despite expected spending in the upstream energy space,Saudi remains committed to achieving its net zero target by 2060 by accelerating investments in clean energy technologies.Under Vision 2030,Saudi aims to(1)generate 50%of its
168、electricity requirements through renewable energy sources(RES)by 2030 through the installation of 58.7GW of solar and wind capacities;and(2)produce 11mtpa of clean ammonia and 2.9mtpa of clean hydrogen by 2030(and 4mtpa by 2035).We estimate a total of c.US$193-218bn(SAR724-818bn)in investments would
169、 be required to achieve the targets set for renewable energy,clean hydrogen and EVs by 2030.Additionally,Saudi aims to have 30%of cars in its capital city Riyadh as EVs by 2030.Renewable Energy:ambitious targets;tenders have been accelerated Over the past few years,Saudi Arabi a launched several gre
170、en i ni ti ati ves as part of i ts Vi si on 2030,most notably the Nati onal Renewable Energy Program(NREP)and Renewable Energy Ini ti ati ve i n 2017.Wi thi n four years of launchi ng these programs,Saudi i naugurated the Sakaka solar PV plant(300MW)and Dumat Al Jandal onshore wi nd farm(400MW)i n 2
171、021,bri ngi ng the total operati onal capaci ty to 700MW connected to the gri d by year-end.Exhibit 34:Despite expansionary projects in the upstream energy space,Saudi remains committed to achieving diversification and decarbonization targets Upstream EnergyDownstream EnergyClean TechMetals&MiningDi
172、gital TransformationTransport&Logisticsc.US$1.0TN IN INVESTMENTS LIKELY ACROSS SIX STRATEGIC SECTORSUS$206bn of estimated investmentsTarget 58.7GW in RE by 2030,70%of which to be developed by PIF/ACWA Power;2.9mtpa of clean hydrogen target by 2030;EV production plansMid-point of estimated investment
173、s shown above Source:Goldman Sachs Global Investment Research24 September 2023 24Goldman SachsGCC Capex Wave SeriesOver the past 12-24 months,the country has engaged i n accelerated tenderi ng processes to achi eve i ts renewable energy targets of 27.3GW i n i nstalled capaci ty by 2024,and 58.7GW b
174、y 2030,wi th the latter broken down i nto:(1)c.40GW i n solar PV(photovoltai c,68%),(2)c.16GW i n wi nd(27%)and(3)c.2.7GW i n solar CSP(concentrated solar power,5%).Addi ti onally,Saudi plans to ramp up i ts nuclear generati on capabi li ti es wi th an ai m to reach 2-3GW of i nstalled capaci ty by
175、2030.REPDO(Saudi s Renewable Energy Project Development Office)was tasked by the Saudi government to procure 30%of the 58.7GW renewable power target through publi c tenders,whi le the remai ni ng 70%wi ll be developed by the PIF vi a a Strategi c Framework Agreement(SFA)si gned wi th ACWA Power.The
176、company and the PIF have already i denti fied 11.5GW to be developed by 2025.Sudai r solar PV(1.5GW)i s the first project to be developed under the SFA pi peli ne;i t achi eved financi al close i n mi d-2021 and moved to the constructi on phase,wi th an expected commerci al operati onal date i n 4Q2
177、024.The renewable energy IPP market i s i ncreasi ngly attracti ng the i nterest of i nternati onal i nvestors and developers/EPC contractors alongsi de establi shed and new local stakeholders.In tandem wi th the pri vati zati on program undertaken by the country,we Exhibit 35:Saudi Arabia has made
178、meaningful progress on renewable energy strategies,policies and targets over the past few years 2001820202021Launch of Vision 2030,with the environment,a renewable energy mix,and sustainability at the heart of developmentRoyal order to form the Council of Royal ReservesLaunch of The Natio
179、nal Environment CCE endorsement and commitment to Global Coral Reef Conservation and Land Preservation during Saudi G20 PresidencyCreation of the Special Forces for Environmental SecurityLaunch of The Environmental FundAnnouncement of the National Renewable Energy ProgramLaunch of King Salman Renewa
180、ble Energy InitiativeFounding of Saudi Investment Recycling CompanyJoining of International Solar Alliance Establishment of National Environmental Centers Launch of Green Riyadh ProjectLaunch of Integrated Waste Management and Recycling Activities in RiyadhLaunch of The Saudi Green Initiative and Th
181、e Middle East Green Initiative Launch of Sakaka Solar Power Plant Launch of Dumat Al Jandal Wind Farm Announced goal to reach Net Zero by 2060Joined the Global Methane PledgeSource:Saudi Arabia Vision 203024 September 2023 25Goldman SachsGCC Capex Wave Seriesbeli eve that the proporti on of pri vate
182、 schemes i s li kely to i ncrease as the government encourages the parti ci pati on of the pri vate sector i n vari ous economi c sectors i ncludi ng the development of RE.We note that to date there are 19.85GW i n RE projects i n Saudi,spli t between completed(c.7%),i n executi on phase(c.16%)and a
183、nnounced(c.78%or 15.5GW,of whi ch most projects have been tendered so far-see Exhi bi t 40 below for detai ls).In terms of technology spli t,we see 85%of the c.19.9GW i n solar PV form vs.15%i n onshore wi nd,wi th Saudi planni ng to launch tenders for several wi nd farms i ncludi ng Yanbu(700MW),Al
184、-Ghat(600MW)and Waad Al Shamal(500MW).Wi th the pi peli ne of announced projects i n mi nd,we beli eve that an accelerati on i n i mplementati on i s requi red for the country to achi eve both i ts shorter and longer-term targets(i n li ne wi th hi stori cal and currently announced project ti meli n
185、es,we hi ghli ght that an esti mated 2-3 years i s needed on average for a project to reach the commerci al operati onal stage).We note that Saudi announced i n December 2022 the approval on the executi on of 10 RE projects wi th a total capaci ty of 7GW,showcasi ng the countrys commi tment to accel
186、erati ng deployment.Furthermore,we note that NEOM i tself could requi re i ni ti ally up to 20GW i n solar energy capaci ty,wi th room for more capaci ty requi rements as the mega-project progresses.In fact,NEOMs uti li ty subsi di ary Enowa appoi nted a France-based company(Assystem)to conduct pre-
187、development and preli mi nary desi gn and planni ng studi es for seven planned solar PV projects i n the Tabuk and Duba regi ons i n Saudi.Thi s i s i n li ne wi th NEOMs strategy to be 100%powered by RE by 2030;i t i s also expected to contri bute to Saudi s target to reduce i ts emi ssi ons by 278
188、mt of carbon di oxi de equi valent annually from 2020 to 2030.Exhibit 36:Saudis 2024 renewables targets were revised upward in 2020 from the initial targets set in 2016 Renewable energy targets(GW)Exhibit 37:Saudi Arabias 2030 RE target by source 5.920.040.02.47.016.01.20.32.72024E2024E Revised2030E
189、Solar CSPWindSolar PV9.5GW27.3GW58.7GWTargets revised upwards in 2020 from initial target in 2016In 2019,KSA announced a 2030 target of 58.7GW of renewablesGovernmenttarget:58.7GW27%,16GW68%,40GW5%,2.7GWWindSolar PVSolar CSPSource:ACWA PowerSource:Vision 2030,National Renewable Energy Program(NREP)2
190、4 September 2023 26Goldman SachsGCC Capex Wave SeriesExhibit 38:Key national targets as specified under the Saudi Vision 2030/NREP Exhibit 39:We note that 19.9GW in RE capacity is so far either operational,under construction or announced(tendered or pre-tender)Capacity(GW),to date Key National Targe
191、ts58.7 GWInstalled 2030 Renewables Capacity9.3mm m3/dayInstalled 2025 DesalinationCapacity2-3 GWInstalled 2030 Nuclear Capacity90%Desalination%share of urban water production mix by 20301.3 3.1 15.5 27.3 58.7 CompleteIn executionAnnounced/planned2024 Target2030 Target19.9GW identified so far7%16%78%
192、CompleteIn executionAnnounced/plannedSource:Vision 2030,National Renewable Energy Program(NREP),ACWA PowerSource:ACWA Power,Masdar,PIF,Ministry of Energy,EDF Renewables,REDPO,compiled by Goldman Sachs Global Investment ResearchExhibit 40:List of projects As of July 2023 Sakaka Solar PV300Complete202
193、0ACWA Power&OthersDumat Al JandalWind400Complete2021Masdar&EDF RenewablesJeddahSolar PV300Complete2022Masdar&EDF Renewables,NESA HoldingRabighSolar PV300Complete2023China Energy Engineering Group(CEEG)Complete1,300QurayyatSolar PV200Execution2024ACWA Power,Al Babtain,Gulf Investment Corp.Al Faisaliy
194、ah(Shuaibah)Solar PV600Execution2023ACWA Power,Al Babtain,Gulf Investment Corp.RafhaSolar PV20Execution2024Tamasuk Holding Company,Alfanar Group,Desert TechnologiesMadinahSolar PV50Execution2024Al-Balagha,Alfanar Group,Desert TechnologiesAr-RassSolar PV700Execution2024ACWA Power&othersYanbu 4 iwpSol
195、ar PV20Execution2023Engie SA,Nesma,MowahSudairSolar PV1,500Execution2024ACWA Power,PIFIn execution3,090SaadSolar PV300Announced2023Jinko Power Technology CoShuaibah 2Solar PV2,060Announced2025ACWA Power,The Water and Electricity Holding Company(Badeel)Rabigh 2 Solar PV300AnnouncedTBDACWA PowerLaylaS
196、olar PV80Announced2024ACWA Power,Ministry of EnergyWadi Al DawaserSolar PV120AnnouncedTBDREPDOAr Rass 2Solar PV2,000AnnouncedTBDACWA Power,Badeel(PIF owned)Saad 2Solar PV1,125AnnouncedTBDACWA Power,Badeel(PIF owned)Al KahfahSolar PV1,425AnnouncedTBDACWA Power,Badeel(PIF owned)NEOMSolar PV3,900Announ
197、ced2026ACWA Power,NEOM,Air ProductsYanbuWind700Announced2026Saudi Power ProcurementAl-GhatWind600Announced2026Saudi Power ProcurementWaad Al ShamalWind500Announced2026Saudi Power ProcurementYanbu Wind Power PlantWind850AnnouncedTBDREDPOAl HanakaSolar PV1,100AnnouncedTBDTBDTabarjalSolar PV400Announce
198、dTBDTBDAnnounced/planned15,460of which tendered%90%Total capacity identified(MW)19,850%of totalGWSolar PV(MW)85%16.8Wind(MW)15%3.12024 target(GW)2030 target(GW)2024 target-%identified so far2030 target-%identified so far73%34%Government Targets27.358.7ProjectTypeSize StatusComPartnersSource:ACWA Pow
199、er,Masdar,EDF Renewables,PIF,Ministry of Energy,REPDO,Middle East Economic Digest(MEED),compiled by Goldman Sachs Global Investment Research24 September 2023 27Goldman SachsGCC Capex Wave SeriesIn terms of economi cs,we beli eve the country screens attracti vely wi thi n both the MENA and global con
200、text.Based on our benchmarki ng analysi s on an LCOE(leveli zed cost of energy)basi s,Saudi offers some of the lowest bi ds seen wi thi n the RE space;for i nstance,the average LCOE of PV projects i n Saudi stands at a 60%di scount to the global wei ghted LCOE(as of 2021).Excludi ng transmi ssi on a
201、nd di stri buti on costs,we esti mate that the i nstallati on of the remai ni ng porti on of 38.9GW i n RE would requi re c.US$38-57bn(SAR143-214bn)i n i nvestments by 2030,and US$54-73bn(SAR203-274bn)i ncludi ng the nuclear energy target,based on current i nvestment costs of exi sti ng projects i n
202、 Saudi and the UAE.Beyond addi ng GWs,i nvestments would also be requi red for transmi ssi on and di stri buti on,as well as moderni zi ng the gri d to allow for the export of energy,whi ch could entai l c.US$38bn(SAR143bn)i n i nvestments,as per the MoE,bri ngi ng the total average i nvestment to U
203、S$120bn(SAR450bn),including US$17.4bn of announced investments.We flag that these calculati ons are based on projects that have achi eved financi al close and announced GWs and therefore could be subject to change as more projects are announced.Exhibit 41:Solar and onshore wind projects in Saudi Ara
204、bia rank competitively on cost vs.other projects in the region,and when compared to the global weighted average LCOEs Capacity(MW,RHS),levelized cost of energy(LCOE in USDc/kWh,LHS),and global average weighted LCOE for PV and onshore wind(USDc/kWh,as of 2021)Exhibit 42:The projects announced so far
205、account for 34%of Saudis 2030 RE target;we expect the remaining capacity to come mainly in solar PV Identified capacity additions vs those remaining to reach Saudis 2030 RE target(GWs)-200 400 600 800 1,000 1,200 1,400 1,60000.010.020.030.040.050.060.070.08ShuaibahSudairJeddahDEWA V RabighQurayyatDA
206、JSakakaKom OmboShuaa 2Shuaa 1Noor 1*LCOE(USDc/kWh)Avg-PVAvg-WF(Onshore)Capacity(MW)*Noor 1 capacity includes 700MW in CSP,and 250MW in Solar PV Source:IRENA,ACWA Power,DEWA,Masdar,data compiled by Goldman Sachs Global Investment ResearchSource:Vision 2030,Goldman Sachs Global Investment Research24 S
207、eptember 2023 28Goldman SachsGCC Capex Wave SeriesExhibit 43:We estimate a potential total investment of c.US$110-130bn as likely in renewable and nuclear energy by 2030 Total investments(US$mn);scenarios based on different capex levels for solar PV,wind,and CSP 109,778 114,020 118,734 123,448 128,6
208、33 -20,000 40,000 60,000 80,000 100,000 120,000 140,000-20,000 40,000 60,000 80,000 100,000 120,000 140,000-20%-10%Base case*+10%+20%Solar PVWindCSPExisting/announced projectsNuclear(3GW)Transmission and distributionAverage total investment cost at US$120bn*Base case based on the capex/GW of existin
209、g projects that have achieved financial close Source:Goldman Sachs Global Investment Research24 September 2023 29Goldman SachsGCC Capex Wave SeriesClean Hydrogen:Strategically positioned to capture growing hydrogen demand We believe Saudi is strategically positioned to capitalize on a growing clean
210、hydrogen economy given its attractive cost positioning in both renewable energy and natural gas,as well as infrastructure readiness benefiting from leading CCUS capabilities(via Aramco).We see several themes shaping the industry by 2030,establishing Saudi as a maj or hub for clean hydrogen and ammon
211、ia exports.We estimate that a total of c.US$33bn-c.US$39bn in investments would be required to achieve the target of 2.9mtpa of clean hydrogen by 2030.As hi ghli ghted i n The Ri se of Clean Hydrogen,hydrogen has the potenti al to decarboni ze the most challengi ng parts of the Carbonomi cs cost cur
212、ve,i ncludi ng long-haul transport,steel,chemi cals,heati ng and long-term power storage.Furthermore,hydrogen also screens attracti vely as a fuel when compared to other conventi onally used fuels owi ng to i ts low wei ght(li ghtest element)and hi gh energy content per uni t mass(2.5x the energy co
213、ntent per uni t mass of both natural gas and gasoli ne).Over the past few years,the i ntensi fied focus on decarboni zati on and cli mate change soluti ons has begun to translate i nto renewed poli cy acti on ai med at the wi der adopti on of clean hydrogen.Our global energy team expects green hydro
214、gen to become the ulti mate decarboni zati on tool wi th si gni ficant longer-term potenti al.Whi le blue and green hydrogen are the lowest carbon i ntensi ty hydrogen producti on pathways,both technologi es are more costly when compared to tradi ti onal hydrocarbon-based grey hydrogen producti on,b
215、ased on our energy colleagues hydrogen cost of producti on analysi s.Our global team esti mates the cost of producti on of green hydrogen can be 1.3-5.5x that of blue hydrogen dependi ng on the pri ce of natural gas and LCOE.Opex i mprovements dri ven by i mproved uti li zati on levels from i ntegra
216、ted desi gn opti mi zati on,centrali zati on of producti on,and economi es of scale wi ll be key for hi gher adopti on i n the future.Thi s leads us to conclude that both blue and green hydrogen wi ll form key pi llars of the low carbon transi ti on,but wi th blue faci li tati ng the near-and medi u
217、m-term transi ti on unti l green reaches cost pari ty longer term.Exhibit 44:Hydrogen end uses and ongoing related projects ChemicalsSteelmakingShippingTransportationHeatingHydrogen is key to the production of ammonia and methanolThis industry is responsible for producing betwen 7-10%of global CO2 e
218、missions.Hydrogen has the potential to decarbonize the industry by enabling the production of green steelHydrogen is likely to have an important role in shipping via conversion to ammonia or in the form of fuel cell electric vehicles(FCEV)trucksRoad Transport:Fuel cell electric vehicles(FCEVs)enjoy
219、short refueling time and lower weight making them particularly useful in long-haul and heavy transportationHydrogen can be blended with the current pipeline infrastructure and could effectively be a lower-cost alternativeSource:Compiled by Goldman Sachs Global Investment Research,MHI Group24 Septemb
220、er 2023 30Goldman SachsGCC Capex Wave SeriesUnderstanding green,blue and grey hydrogen Hydrogen fuel contai ns the hi ghest energy content per uni t mass vs other fuel types(2.5x more than conventi onal fossi l fuels).In addi ti on,i t has short refueli ng ti me,low wei ght,and zero di rect emi ssi
221、ons when sourced from renewable energy sources.The energy source that i s used i n the producti on process determi nes the color of hydrogen.The major ones are as follows:Grey hydrogen i s the carbon-emi tti ng hydrogen whi ch has been produced for numerous decades.It i nvolves spli tti ng natural g
222、as usi ng fossi l fuel energy.Green hydrogen i s produced vi a water electrolysi s,an electrochemi cal process i n whi ch water i s spli t i nto hydrogen and oxygen usi ng only renewable energy sources throughout the producti on process.As hi ghli ghted by our uti li ti es team i n Green Hydrogen:Th
223、e next transformati onal dri ver of the Uti li ti es i ndustry,c.65%of the total cost related to green hydrogen producti on i s electri ci ty i nput cost.Thi s creates an opportuni ty for the future as economi es of scale further reduce the cost of electrolysi s(as already seen i n the past ten year
224、s when costs have fallen by c.60%).Blue hydrogen i s produced when natural gas i s spli t through steam methane reformi ng(SMR)or auto thermal reformi ng(ATR)wi th the resulti ng CO2 getti ng captured and stored through a process called Carbon Capture Usage and Storage(CCUS).Exhibit 45:Comparison be
225、tween the production of green vs.blue hydrogen Electrolyser-based greenCCUS-based blueHigh capexLow-to-moderate cash costsLow/no variable costHigh price riskLow cost riskDeflationary cost outlookLow-to-moderate capexModerate-to-high cash costsHigh variable costLow price riskModerate-to-high cost ris
226、kInflationary cost outlookSource:ArgusHydrogen:potential to transform the carbon abatement cost curve Based on current technologi es to reduce GHG emi ssi ons,our energy team esti mates that c.25%of current global anthropogeni c GHG emi ssi ons are not abatable under current,commerci ally avai lable
227、,large-scale technologi es at pri ces US$1,000/tnCO2eq,calli ng for more technologi cal i nnovati on and breakthroughs to unlock the net zero carbon potenti al.Exami ni ng the emergi ng technologi es,i t appears that hydrogen i s currently at the forefront of thi s technologi cal challenge:based on
228、our energy teams analysi s,i t has the potenti al to transform 45%of the cost curve(i ncludi ng non-abatable emi ssi ons 80%to come in capacity additions%of target capacity Exhibit 53:We estimate US$8.0-9.4bn in potential investments needed to achieve the countrys blue hydrogen target Total investme
229、nts(US$mn),scenarios based on different natural gas prices(US$/mmbtu),all else equal 82%18%New capacity needed(mtpa)Capacity to be converted(mtpa)4,7595,2145,6696,1233,2323,2323,2323,2327,9928,4468,9019,35602,0004,0006,0008,00010,00012,000US$5/mmbtuUS$10/mmbtuUS$15/mmbtuUS$20/mmbtuPlant investment e
230、x-CCUS(US$mn)Additional CCUS investment(US$mn)Average total investment cost at US$8.7bnSource:Ministry of Energy(MoE),Goldman Sachs Global Investment ResearchSource:Goldman Sachs Global Investment Research24 September 2023 36Goldman SachsGCC Capex Wave SeriesElectrification:Growing focus on EV rollo
231、ut in Saudi Whi le EV adopti on i n the Mi ddle East i s sti ll nascent,i ts growi ng penetrati on globally,coupled wi th government-led energy transi ti on i ni ti ati ves,has been accelerati ng i ts adopti on regi onally.In COP27 last year,several countri es pledged to transi ti on to EVs by 2040
232、as a way to accelerate thei r decarboni zati on plans.Saudi has si mi larly announced multi ple i ni ti ati ves around the future of cars i n the regi on gi ven the meani ngful contri buti on of cars to the countrys total energy consumpti on(21%,per Saudi Energy Effici ency Center).In terms of expec
233、ted capex,Saudi could see around US$50bn(SAR188bn)bei ng spent on EV producti on over the next decade(Mi ni stry of Investment).Thi s i s whi le total i nstalled capaci ty i n the country i s expected to reach over 300k vehi cles per year over the same peri od(source:SIDF(Saudi Industri al Developme
234、nt Fund).By 2030,Saudi ai ms to have 30%of cars i n Ri yadh(and c.10%of cars i n Saudi)powered by electri ci ty.In May 2022,Saudi announced plans to i nvest around c.US$2bn(or c.SAR.8bn)i n an EV battery plant,i n li ne wi th the countrys broader plans to di versi fy i ts economy away from hydrocarb
235、ons and develop the i ndustri al sector as part of the Saudi Vi si on 2030 and Nati onal Industri al Development and Logi sti cs Program(NIDLP);the project i s currently underway.Saudi also recently launched Ceer,the countrys first EV maker;accordi ng to the Saudi government,the company i s expected
236、 to produce around 150k cars per annum and contri bute around US$8bn to the countrys GDP by 2034.In addi ti on,vehi cles produced by Ceer are expected to be avai lable by 2025.The company i s expected to desi gn,manufacture,and sell vehi cles i n Saudi as well as the broader MENA regi on.Luci d also
237、 si gned an agreement wi th the Saudi government to bui ld i ts first overseas producti on factory i n Saudi where i t could potenti ally manufacture up to 150k vehi cles per year.Furthermore,Saudi Arabi a agreed to purchase between 50-100k EVs over a ten-year peri od;deli very of the vehi cles i s
238、expected to start thi s year wi th an i ni ti al order rangi ng between 1-2k vehi cles annually,scali ng to 4-7k begi nni ng i n 2025.We beli eve Saudi could potenti ally be a key player wi thi n the EV space partly dri ven by i ts di versi ficati on efforts,economi c resources,and proxi mi ty to i
239、nput-exporti ng countri es(Saudi s posi ti on at the i ntersecti on of Afri ca,Asi a,and Europe posi ti ons i t competi ti vely to i mport mi nerals from mi nes i n Afri ca,produce vehi cles domesti cally,and finally export to i nternati onal markets).24 September 2023 37Goldman SachsGCC Capex Wave
240、SeriesExhibit 54:The supply of battery EVs locally built in Saudi is expected to grow.Number of vehicles(thousands)Exhibit 55:.with EV penetration expected to reach around c.10%by 2030 Car sales(excluding EV)and EVs in Saudi 00.20.40.60.811.205003003502023E2024E2025E2026E2027E2028E2029E20
241、30ELucid-ProductionCER-ProductionFuture Project-Production0.3%0.5%0.9%1.5%3.2%5.0%6.3%8.0%9.8%0.0%2.0%4.0%6.0%8.0%10.0%12.0%010,00020,00030,00040,00050,00060,00070,00080,000202220232024202520262027202820292030Total sales except EVTotal EV sales%of EVSource:SIDFSource:SIDF24 September 2023 38Goldman
242、SachsGCC Capex Wave SeriesMetals&Mining:Seeking economic diversification Saudi Arabias mineral resources are estimated to be worth SAR5tn(US$1.3tn),including over 15 commercially viable minerals(out of the 48 identified in total)and 20mn ounces of unexplored gold reserves,as per Invest Saudi.The exp
243、ansion of the mining sector is an important part of Vision 2030,as the country aims to increase its contribution to GDP to US$64bn by 2030(vs.US$17bn in 2021)and reduce the reliance on imports by US$7.5bn by 2035.Overall,Saudi is targeting cumulative investments of US$170bn(SAR638bn)by 2030,of which
244、 nine proj ects worth US$32bn(SAR120bn)have been already announced.Saudi i s the worlds 13th largest country by land mass(2.1mn km2),of whi ch c.30%i s a major source of base and preci ous metals(source:Invest Saudi),i n what i s known as the Arabi an Shi eld regi on.The countrys largest mi neral an
245、d metal resources i nclude phosphate,gold and copper,followed by zi nc,i ron ore,urani um,ni obi um,si lver and others;Saudi i s targeti ng 50%completi on of the geologi cal survey program for the Arabi an Shi eld(600k km2)by 2025.The expansi on of the metals&mi ni ng sector i s an i mportant part o
246、f Vi si on 2030 as the country seeks economi c di versi ficati on and ai ms to grow the non-oi l economy.Exhibit 56:Saudi aims to invest US$170bn in the metals&mining sector by 2030 Upstream EnergyDownstream EnergyClean TechMetals&MiningDigital TransformationTransport&Logisticsc.US$1.0TN IN INVESTME
247、NTS LIKELY ACROSS SIX STRATEGIC SECTORSUS$170bn of investments targetedFocus on economic diversification,largely untapped mineral reserves estimate at US$1.3tn,introduction of new Mining Investment LawSource:Goldman Sachs Global Investment Research24 September 2023 39Goldman SachsGCC Capex Wave Seri
248、esWi th the mi ni ng sector bei ng the thi rd pi llar of Saudi s economi c di versi ficati on agenda,i ts development i s a mai n area of focus over the comi ng few years.The government has undertaken several steps to support growth of the metals and mi ni ng i ndustry,i ncludi ng the i ntroducti on
249、 of a new Mi ni ng Investment Law,and the constructi on of rai lways to faci li tate logi sti cs.As of 2021,Saudi has i nvested US$40bn i n fully i ntegrated mi ni ng value chai ns,i n partnershi p wi th the pri vate sector(as per the Nati onal Industri al Development and Logi sti cs Program(NILDP).
250、Addi ti onally,the country has attracted US$8bn i n FDI to the sector,and i ssued 145 li censes i n 2021.Saudi i s currently targeti ng new i nvestments worth US$30bn i n mi ni ng and metals producti on across di fferent projects,and cumulati ve i nvestments of US$170bn by 2030.Exhibit 57:Saudi Arab
251、ias metals and mining industry snapshot(as of 2022)70,000kmMining area used#8Largest cement producer globally365Mining complexes4Mn ozof gold sold since 19881,967Active Licenses for reconnaissance,exploration and exploitation6Mtyearly production of Phosphate9MtDomestic steel production420MtTons of m
252、inerals exploited1,800KtSmelter Grade Alumina Production*US$7bnMineral value chains delivered in gross exportsUS$1.3tnMineral resources potential value48Minerals identified in the Kingdom*as of 2019Source:Ministry of Industry and Mineral Resources,Invest Saudi24 September 2023 40Goldman SachsGCC Cap
253、ex Wave SeriesA new Mining Investment Law to facilitate investments in the sector To attract both local and forei gn i nvestments and faci li tate li censi ng,Saudi passed a new Mi ni ng Investment Law whi ch came i nto effect on January 1,2021.It ai ms to enhance governance i n the sector,i mprove
254、transparency and li ft i nvestor confidence,as stated by the Mi ni stry of Industry and Mi neral Resources(MIMR).The law(1)clari fies the roles and responsi bi li ti es of new i nvestors i n Saudi mi ni ng projects,(2)di gi tali zes the process for i ssui ng new mi ni ng li censes,hence enhanci ng t
255、he ease of doi ng busi ness,(3)streamli nes li cense approvals and(4)requi res transparent publi cati on of records related to mi ni ng li censi ng acti vi ti es.As per the MIMR,a new mi ni ng explorati on li cense can now be i ssued i n 90-180 days under the new i nvestment law vs.a number of years
256、 globally.We hi ghli ght that on taxati on,post Apri l 2021,Saudi Arabi a i ntroduced a royalty/severance fee of 4%on phosphate extracti on and 1.5%on gold,accounted for as part of COGS.In addi ti on,a 20%i ncome tax i s appli ed to the hypotheti cal i ncome on the first sellable product,whi ch fall
257、s below the EBITDA i ncome li ne.Exhibit 58:Saudi Arabia accounts for 40%of the MENA regions mining reserves,with untapped mineral reserves valued at US$1.3tn Saudi Arabia mining sector reserves as a%of MENA region Exhibit 59:Saudi aims to increase the mining sectors contribution to annual GDP to US
258、$64bn by 2030E Mining sector size(US$bn)and%contribution to GDP 40%60%Saudi ArabiaOther MENAUS$1.3tnofuntapped mineral reserves2%6%0%1%2%3%4%5%6%007020212030Size(US$bn)%of GDPSource:Saudi Arabia Vision 2030Source:Saudi Arabia Vision 2030,IMF,compiled by Goldman Sachs Global Investment Res
259、earch24 September 2023 41Goldman SachsGCC Capex Wave SeriesIn terms of financi ng,the SIDF plays a leadi ng role i n i mplementi ng development poli ci es and programs,and promoti ng i ndustri al i nvestment opportuni ti es.In 2017,the Counci l of Mi ni sters approved the amendment of SIDFs Basi c L
260、aw,broadeni ng i ts reach to support a number of new sectors under Vi si on 2030 focus,i.e.mi ni ng,i ndustry,energy and logi sti cs.Through the Nati onal Industri al Development and Logi sti cs Program(NILDP),SIDF i ntroduced new packages of financi al products and servi ces.For the mi ni ng sector
261、,SIDF ai ms to rai se the latters contri buti on to GDP,as well as i ncrease job opportuni ti es and the flow of domesti c/forei gn i nvestments i nto Saudi;to achi eve thi s,SIDF offers financi ng for(1)mi ni ng projects for all mi nerals up to 75%of the cost of eli gi ble projects,and(2)the final
262、stage of the explorati on process,i ncludi ng dri lli ng and mi ne preparati ons,among other servi ces.On recent developments i n the space,Saudi awarded the mi ni ng li cense of the Khnai ghui yah area(26mt i n zi nc and copper,both cri ti cal mi nerals contri buti ng to the global energy transi ti
263、 on)recently to a consorti um compri si ng Moxi co Resources Plc and Ajlan&Bros.Addi ti onally,Maaden i s rapi dly expandi ng new mi nes li ke Mansourah Massarah(250k ounces of gold),whi ch i s currently i n executi on phase,whi le a consorti um of Maaden and Barri ck Gold T7 Ltd won the Umm Al-Dama
264、r explorati on li cense(40 km2;i ncludes copper,zi nc,gold and lead)and Al Masane Al Kobra Mi ni ng(AMAK)was awarded four explorati on li censes(expi ri ng i n July 2027)for copper and gold i n Al-Dawadmi (396km2)near Ri yadh.Saudi also announced that new gold and copper ore deposi ts exi st wi thi
265、n the Madi nah regi on that could be explored.Overall,the total of number of acti ve li censes for reconnai ssance,explorati on,and exploi tati on stood at 1,967(as of 2022),wi th 48 mi nerals i denti fied i n the Ki ngdom.Looki ng i nto 2023,the country has announced bi ddi ng ti meli nes for five
266、new mi ni ng li censes across(1)Ar Ri dani yah si te(zi nc deposi ts),(2)Umm Hadi d si te(si lver,lead,zi nc and copper deposi ts),(3)Bi r Umq i n Madi nah(copper and zi nc deposi ts),(4)Jabal Sahabi yah(zi nc,lead and copper deposi ts)and(5)Muhadad(copper,zi nc,lead and gold deposi ts).As per the M
267、i ni stry,pre-quali fied bi dders and bi d wi nners for the projects are Exhibit 60:Saudi Arabia ranks favorably vs.other countries in the region in terms of the cost of doing business FactorElectricity tariffs for industrial players$48/MWhProductivity adjusted wages$3.3/hrLogistics Performance Inde
268、x(1-5)3.2Construction Costs(Indexed to US,%0 is cheapest)74Ease of getting credit(0-100)50Bottom 25%Top 75%Top 50%Top 25%Ranking amongst regional peersSource:Invest Saudi24 September 2023 42Goldman SachsGCC Capex Wave Seriesexpected to be announced over the comi ng few months,wi th explorati on li c
269、enses to be i ssued wi thi n three months of the end of the rounds.Furthermore,we hi ghli ght that progress on new plants and ventures has also been movi ng i n the ri ght di recti on;Baoshan Iron and Steel Co.,one of Chi nas largest li sted steelmakers(and a subsi di ary of Chi na Baowu Steel Group
270、,the worlds largest steelmaker),announced i n May that i t has si gned agreements wi th Aramco and the PIF to bui ld a steel plate manufacturi ng JV(wi th Baosteel owni ng 50%and Aramco/PIF each owni ng a 25%stake).The JV wi ll be desi gned wi th an annual capaci ty of 2.5mn tons of di rect reduced
271、i ron and 1.5mn tons of steel plate,and i s expected by Baosteel to come onli ne by the end of 2025.The project wi ll also be equi pped wi th a di rect reduced i ron furnace and an electri c arc furnace fueled by natural gas,whi ch i s also forecast to reduce carbon di oxi de emi ssi ons by 60%vs.th
272、e tradi ti onal blast-furnace based steelmaki ng process(as per Baoshan).Exhibit 61:c.49%of the investment opportunities in Saudi are related to steel manufacturing plants Contribution to total investment(%)Exhibit 62:Maadens near-term projects:(1)commercial production at Mansourah-Massarah and(2)ex
273、ploration efforts in Mahd Ad Dahab and Ar-Rujum gold mines Maadens near-term growth projects in metals and mining,as of 2Q23 49%4%4%4%3%30%SteelNickelCopperAluminumBatteries/Evs relatedGoldOtherUS$30bn worth ofprojectsMansourah-Massarah250k ounces gold p.a.Mahd Ad Dhahab Expansion200k ounces gold p.
274、a.Ar-Rujum200k ounces goldp.a.2023Commercial production expected in 2H2023Commissioning activities startedMaadens largest gold project to date20252026Phosphate 3Phase 1-2025Phase 2-2027EPCM awarded for Phase 12027AluminiumLine 1&2 expansion90kmt p.a.Source:Saudi Vision 2030Green=in execution,Blue=un
275、der study Source:Maaden24 September 2023 43Goldman SachsGCC Capex Wave SeriesExhibit 63:Saudi announced several projects within the metals&mining space that are available for investments Investment required,US$mn 15,3179,2896,4001,8231,4001,3451,328800SteelOther metalsPhosphate(Maaden project)Batter
276、ies/Evs relatedNickelCopperAluminumGoldSource:Invest SaudiExhibit 64:A sample of projects identified by Saudi Arabia available for investments(US$mn)As of August 2023 Sizable US$110mn projectsUnitSizeLowHighSmaller 14%of revenues,showcasi ng the growi ng need for i nvestment i n both telecom and di
277、gi tal i nfrastructure.As such,we see potenti al for all three telecom operators i n Saudi to spend a cumulati ve c.US$30-37bn(c.SAR111-140bn)i n capex over 2023-2030E,focused on network enhancements and capaci ty growth,5G,FTTH rollout,and other non-tradi ti onal i nvestments i ncludi ng enterpri s
278、e soluti ons,data centers/cloud,wholesale/submari ne cables,cybersecuri ty and emergi ng tech(AI)(see Exhi bi t 67).Exhibit 66:Key market trends across the ICT sector Saudi Arabias ICT sector:key market trends summarizedThe Saudi government has emphasized the importance of technology investments in
279、its strategic plans,with IT strategies aligned with the National Transformation ProgramEntities in Saudi have been increasing their focus on outsourcingvs.relying on internal service management,namely when it comes to digital transformation related servicesGrowing demand forcloud services as a cost-
280、effective alternative for data storage has been stimulating the transformation from traditional to advanced IT solutionsInvestmentsin IT infrastructure(cloud,e-government,cybersecurity,data centres,etc.)have become a priority for corporates and government entities to accelerate digitalization Smart
281、city projects are expected to gain momentum across Saudi over the coming few years,requiring an accelerationin the development and adoption of tech/digital servicesIncreasing the contribution of SMEs to the economy and nurturing an entrepreneurialspirit is helping the Kingdom spearhead its digital t
282、ransformation journeyDigital transformation stands at the heart of Saudi Arabias Vision 2030,with plans and targets to make the country one of the most digitally advanced globallySource:MIS,stc Solutions,Goldman Sachs Global Investment Research24 September 2023 47Goldman SachsGCC Capex Wave SeriesBe
283、yond telecoms,total spendi ng by the publi c and pri vate sector on IT,professi onal servi ces and di gi tal soluti ons i n Saudi i s expected to grow by a 12.7%CAGR through 2027(based on IDC forecasts),contri buti ng 2.0%to GDP,on our esti mates(vs.0.9%as of 2022).Taki ng the IT spendi ng growth ra
284、te i nto account,we expect the gap i n spendi ng between Saudi and more di gi tally mature markets as a%of GDP to narrow through the end of the decade.We note that stc Soluti ons,Elm,MIS and other local and i nternati onal IT/di gi tal servi ces provi ders have key exposure to growi ng demand from p
285、ubli c and pri vate sectors.Addi ti onally,we see more demand upsi de dri ven by the ongoi ng executi on of smart mega-projects and ci ti es,resulti ng i n a hi gher number of project awards.In terms of i nvestments,the Saudi government announced a couple of strategi es totali ng US$38bn(SAR142.5bn)
286、,focused on(1)data&AI as part of i ts National Data&AI Strategy(US$20bn,SAR75bn),and(2)i ts data center strategy(US$18bn,SAR68bn)whi ch was launched i n early 2022 wi th an ai m to bui ld a network of large-scale data centers across the country,wi th a capaci ty exceedi ng 1.3GW by 2030.On thi s,the
287、 Saudi MCIT hi ghli ghted that i t i s worki ng closely wi th the pri vate sector,i ncludi ng local and i nternati onal i nvestors,to achi eve thi s goal;i ndeed,Mi crosoft,SAP,Oracle and other i nternati onal players have si gned agreements to i nvest and establi sh publi c cloud regi ons i n the c
288、ountry.We hi ghli ght that AI has gai ned addi ti onal focus i n the past few years,wi th the country establi shi ng the Saudi Data&AI Authori ty(SDAIA)to dri ve the nati onal agenda for Data&AI,wi th the key focus unti l 2030 set on addressi ng the countrys needs to enable AI development,as well as
289、 bui ld the foundati ons needed to gai n competi ti ve advantages i n key ni che domai ns.Under the Nati onal Data&AI Strategy launched by SDAIA,Saudi ai ms to rank among the top 15 countri es i n AI technologi es and among top 20 countri es i n sci enti fic contri buti on,empower 20k+data and AI ex
290、perts,and sti mulate the ecosystem by enabli ng the creati on of 300+startups i n the field.Exhibit 67:We expect total capex spending by telecom operators to remain relatively elevated through 2030.Total capex over 2023-2030E(US$mn)based on scenarios from 2028-30E reflecting different capex/sales as
291、sumptions that are broadly in line with historical levels Exhibit 68:.contributing 19%of total average spending expected within the ICT/tech space by 2030%of total average investments 29,710 32,279 34,849 37,418 -5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000-5,000 10,000 15,000 20,000 25,00
292、0 30,000 35,000 40,00010.0%12.5%15.0%17.5%2028-2030 Capex/sales%stcMobilyZain KSAGaming,27%Avg telecom capex,19%Gov.support,22%Data&AI,14%Data Centers,13%Entrepreneurship,5%Source:Company data,Goldman Sachs Global Investment ResearchTelecom spending-GSe;other investments are targets Source:Goldman S
293、achs Global Investment Research,Invest Saudi,State News Agency 24 September 2023 48Goldman SachsGCC Capex Wave SeriesExhibit 69:We expect spending on IT services in Saudi to grow to US$26bn p.a.by 2030.Spending on IT services in Saudi(US$bn)Exhibit 70:.contributing 2.6%to GDP,on our estimates,vs.0.9
294、%in 2022 IT spending in Saudi as a%of GDP 13.4 15.0 16.7 18.6 20.6 22.6 24.6 26.6 2023e2024e2025e2026e2027e2028e2029e2030e0.9%2.2%2.6%20222027e2030e+11.7%avg.GSe+9.0%avg.GSeSource:stc Solutions,IMF,Goldman Sachs Global Investment ResearchSource:stc Solutions,Goldman Sachs Global Investment Research2
295、4 September 2023 49Goldman SachsGCC Capex Wave SeriesAddi ti onally,the government has announced US$2.5bn(SAR9.4bn)i n support to bui ld the di gi tal i nfrastructure i n Saudi,wi th further support from the SIDF whi ch dedi cated a US$28bn(SAR105bn)fund and deli vers programs such as Tanafusi ya-th
296、e latter provi des consulti ng and financi ng servi ces to compani es to pave the way for di gi tal transformati on.Under Industry 4.0 developments,Saudi also ai ms to(1)i ncrease the readi ness of techni cal i nfrastructure i n i ndustri al ci ti es from 50%to 100%by 2025,(2)rai se the number of fa
297、ci li ti es benefiti ng from the fourth i ndustri al revoluti on to 43 by Exhibit 71:An overview of Saudi Arabias ICT ecosystem TelecommunicationoperatorsSystem/network integratorsIT/digital/business services providersHardware/equipment re-sellers/partnersRegulatorsInformation&Communication Technolo
298、gy(ICT)in Saudi ArabiaEcosystem&competitive landscapeWe note that the list of companies we present in this exhibit is not exhaustive Source:stc Solutions,Elm Co.,MIS,compiled by Goldman Sachs Global Investment Research24 September 2023 50Goldman SachsGCC Capex Wave Series2025(vs.10 i n 2021),(3)set
299、up five centers to develop i ndustry 4.0 use cases and appli cati ons,and(4)develop a financi ng program of US$800mn to di gi tally transform 100 factori es.Electroni c entertai nment/gami ng also remai ns a key focus area wi thi n the di gi tal transformati on journey of Saudi;Savvy Games Group(SGG
300、),a company wholly owned by the PIF,ai ms to i nvest US$38bn(SAR143bn)i n the gami ng i ndustry by 2030,of whi ch US$19bn wi ll be dedi cated to the acqui si ti on of mi nori ty stakes i n relevant compani es,US$13.3bn wi ll be used to acqui re a leadi ng game publi sher,US$5.3bn wi ll be targeted t
301、owards i nvestments i n mature i ndustry partners,and lastly US$0.5bn wi ll be used to enable growth for early-stage games and e-sports ventures.Lastly,Saudi announced US$6.4bn(SAR24bn)i n future technologi es and entrepreneurshi p i nvestments as i t ai ms to secure i ts posi ti on as the regi ons
302、largest di gi tal market.Investments i nclude(1)the launch of Aramco Ventures Prosperi ty7s US$1bn fund,and(2)NEOM Tech&Di gi tal Companys US$1bn fund.Exhibit 72:The government has established c.US$30.5bn in funds to enable digital transformation across sectors in a push towards the adaptation of In
303、dustry 4.0 US$bn,%of total Exhibit 73:Within the gaming sector,Savvy Games Group plans to invest US$38bn by 2030%of total Tanafusiya(SIDF),92%Other digital transformation,8%Acquisition of minority stakes in companies,49%Acquisition of a leading game publisher,35%Investment in mature industry partner
304、s,14%Growth of early-stage games and e-sports co.,1%Source:Invest SaudiSource:State News Agency(SPA)24 September 2023 51Goldman SachsGCC Capex Wave SeriesIn terms of key parti ci pants,local ICT/telecom players are i n a posi ti on to accelerate the countrys di gi tal transformati on through both i
305、n-house i ni ti ati ves and partnershi ps wi th global compani es such as Wi pro,IBM,Tata,Oracle,Mi crosoft,Accenture,and Ci sco.We beli eve telecom players play a key role i n moderni zi ng the i nfrastructure and i mplementi ng the latest network technologi es(e.g.5G),ai di ng the role of IT solut
306、i ons(i ncludi ng cloud,IoT,cybsersecuri ty etc.)provi ders i n di gi tali zi ng the publi c and pri vate sectors.We see players li ke stc Soluti ons well-posi ti oned gi ven i ts relati onshi p wi th the government,pavi ng the way for further partnershi ps wi th global hyperscalers.Below,we li st p
307、ubli cly li sted Saudi and global ICT players that have a noti ceable presence i n the country,albei t we note that thi s i s not an exhausti ve li st.Exhibit 74:In total,we see potential for US$143-150bn in investment within the ICT space by 2030 US$mn Entrepreneurship,5%38 US$143-150bn30-3731 2018
308、 6 GamingAvg telecom capexGov.supportData&AIData CentersEntrepreneurshipCumulativeSavvy investmentsstc,MobilyZain KSASIDF&othersNational Data&AI StrategyData Center StrategyEntrepreneurshipfundSource:Invest Saudi,State News Agency,Goldman Sachs Global Investment Research24 September 2023 52Goldman S
309、achsGCC Capex Wave SeriesTransportation&Logistics:Aiming to become a leading travel and logistics hub Beyond digital connectivity,Saudi also aims to become a leading logistics hub and an international travel destination.The country launched an updated transport and logistics strategy in 2021,with ta
310、rgets around expanding airports capacities,boosting the sectors contribution to GDP to 10%,launching a new national air carrier and improving the capabilities of the air cargo sector,among others.In terms of investments,Saudi targets US$150bn(SAR563bn)through the end of the decade,of which US$100bn(
311、SAR375bn)is focused on the aviation sector.The National Transport Strategy(NTS)In 2017,Saudi launched the Nati onal Transport Strategy(NTS)2030 under whi ch the Mi ni stry of Transport and i ts affili ates(i ncludi ng the Department of Roads,the General Authori ty of Ci vi l Avi ati on or GACA and t
312、he Publi c Transport Authori ty,among other government enti ti es)ai med to(1)enhance the transport sectors performance and ensure i ts posi ti on as a key enabler of Vi si on 2030,(2)i ncrease i ntegrati on across di fferent modes of transportati on,(3)i mplement new logi sti cs hubs,and(4)enhance
313、fiscal sustai nabi li ty and li vabi li ty across the country.The strategy i ni ti ally suggested an i nvestment of c.US$31bn(c.SAR115bn)by 2030,i n addi ti on to US$12bn(SAR44.5bn)allocated by GACA for the expansi on of Jeddah,Ri yadh,Abha and Ji zan ai rports.The National Transport and Logistics S
314、trategy(NTLS)In June 2021,the country revi sed the i ni ti al strategy and announced the Nati onal Transport and Logi sti cs Strategy(NTLS),a comprehensi ve program that ai ms to posi ti on Saudi as a global logi sti cal hub and i mprove all transport servi ces i n support of Vi si on 2030.Some key
315、targets covered by the strategy i nclude(1)i ncreasi ng the number of i nternati onal desti nati ons served to more than 250,(2)launchi ng a new nati onal ai r carri er,(3)transformi ng the country i nto a logi sti cs hub,rai si ng i ts global ranki ng i n the Logi sti cs Performance Index from 49 t
316、o 10,(4)boosti ng the sectors GDP contri buti on to 10%,(5)i mprovi ng the capabi li ti es of the ai r cargo sector by doubli ng i ts capaci ty to Exhibit 75:Saudi is targeting US$150bn in investments in the transportation&logistics sector Upstream EnergyDownstream EnergyClean TechMetals&MiningDigit
317、al TransformationTransport&Logisticsc.US$1.0TN IN INVESTMENTS LIKELY ACROSS SIX STRATEGIC SECTORSUS$150bn of investments targetedNational Transport and Logistics Strategy,National Aviation Strategy,construction of new economic zone,expansion of logisticsSource:Goldman Sachs Global Investment Researc
318、h24 September 2023 53Goldman SachsGCC Capex Wave Series4.5mn tons,(6)boosti ng rai lway capaci ty to 25mn passengers and 36mn tonnes offrei ght by 2025 and(7)i ncreasi ng capaci ty to accommodate 30mn Umrah vi si tors peryear(vs.c.7mn i n 2022,accordi ng to the Mi ni stry of Hajj and Umrah).In total
319、,the NTLStargets US$150bn i n i nvestments by 2030.The Saudi Aviation Strategy 2030(AVS)As part of the NTLS,the Saudi Avi ati on Strategy 2030 was launched i n 2022,backed by US$100bn i n i nvestments from both the government and pri vate sectors,wi th an ai m to tri ple the avi ati on sectors contr
320、i buti on to the economy to US$74.6bn by 2030.Key targets i nclude(1)extendi ng connecti vi ty to 250+desti nati ons across 29 ai rports;(2)tri pli ng annual passenger traffic to 330mn(vs.c.100mn carri ed i n 2019 pre-COVID pandemi c);(3)i ncreasi ng ai r cargo volume to 4.5mn tons(from 0.8mn tons c
321、urrently,where Saudi captures 33%and 7%of the Mi ddle Easts total demand for ai r cargo goods and ai r cargo transi t markets,respecti vely);and(4)addi ng two global long haul connecti ng hubs.The strategy also ai ms to develop the countrys ai rfrei ght system,i mprovi ng flexi bi li ty i n the logi
322、 sti cs sector to allow for i ncreased capaci ty,targeti ng a 17%CAGR i n ai r frei ght handli ng by 2030.Addi ti onally,the strategy redefined GACAs role as a pure regulator,transferri ng 25 of the countrys ai rports to GACA-owned Matarat Holdi ng Company,a pri vate operator.Through GACAs regulator
323、y measures,Saudi ai ms to enhance avi ati on competi ti veness and the operati ng envi ronment,as well as transformi ng ai rli nes and thei r support servi ces by reduci ng thei r cost base through a pri ci ng reform program.The new operati ng envi ronment i s expected to attract more FDI i nto the
324、sector,eventually boosti ng the countrys ai r transport effici ency ranki ng to among the top 5 globally by 2030,accordi ng to the strategy.Exhibit 76:Main targets as stated under the Saudi Aviation Strategy Extend Saudis connectivity to 250+destinations across29 airportsIncrease air cargo volume to
325、4.5mn tonsTriple annual passenger traffic to330 millionInclude two global long-haulconnecting hubsSource:Saudi Aviation Strategy24 September 2023 54Goldman SachsGCC Capex Wave SeriesRiyadh Air:Saudi Arabias new national airline Saudi announced on March 12,2023 the creati on of Ri yadh Ai r,a PIF-own
326、ed new nati onal ai rli ne,as the country moves to compete wi th regi onal transport and travel hubs.The ai rli ne i s expected to serve more than 100 desti nati ons globally by 2030,add US$20bn to the countrys non-oi l GDP and create 200k jobs both di rectly and i ndi rectly.Addi ti onally,Saudi i
327、s set to spend c.US$35bn on a fleet of 72 Boei ng jets as i t prepares to commerci ally launch Ri yadh Ai r(source:PIF).King Salman International Airport(KSIA)In addi ti on to the nati onal avi ati on strategy,the PIF announced i n November 2022 the master plan for Ki ng Salman Internati onal Ai rpo
328、rt,whi ch i s expected to posi ti on Ri yadh as a global logi sti cs hub and sti mulate transport,trade and touri sm.The ai rport project i s i n li ne wi th the countrys vi si on to transform Ri yadh to be among the top ten ci ty economi es i n the world and support the ci tys populati on growth to
329、 15-20mn people by 2030.Addi ti onally,the ai rport i s forecast to accommodate up to 185mn passengers,and process 3.5mn tons of cargo by 2050,coveri ng an area of c.57km2 allowi ng for 6 parallel runways,and 12km2 of ai rport support faci li ti es,resi denti al areas,retai l outlets and other logi
330、sti cs real estate.KSIA i s expected to contri bute SAR27bn p.a.to non-oi l GDP,and create 103k di rect and i ndi rect jobs,ali gni ng wi th Vi si on 2030,although no detai ls around i nvestment cost/fundi ng have been announced yet(source:PIF).Exhibit 77:Summary of Saudis new national airline and K
331、SIA targets Serve 100 destinations globally by 2030+US$20bn to non-oilGDPCreate 200k direct and indirectjobsSaudi to spend US$35bn on afleet of Boeing jetsTo accomodate up to 185mnpassengersby 2050+3.5mn tons of cargoprocessing capacity by 2050+SAR27bn p.a.to non-oil GDPCreate 103kdirect andindirect
332、 jobsRiyadh Air:Saudis new nationalairlineKing Salman International Airport(KSIA)Source:PIF,compiled by Goldman Sachs Global Investment Research24 September 2023 55Goldman SachsGCC Capex Wave SeriesLogistics In 4Q2022,the Saudi government announced movi ng ahead wi th the constructi on of 19 logi st
333、i cs servi ces zones across Ri yadh,Jeddah,KAEC(Ki ng Abdullah Economi c Ci ty)and other areas out of the 59 targeted as per the Mi ni stry of Transport and Logi sti cs Servi ces.The total i nvestment value of the 19 zones i s esti mated at US$7.7bn(c.SAR30bn),as per Saudis Transport and Logistics Services,to be undertaken i n partnershi p wi th the pri vate sector.Addi ti onally,the government la