Saudi Arabia till now had its economy lasting longly on Crude Oil export.
The time has come for this oil-rich kingdom to look beyond oil. The crash in crude oil prices that began in 2014 has left the country with a gaping budget deficit. And while oil prices have recovered, climate activists have tried to bring the end of the hydrocarbon age closer and many analysts have predicted the approach of “peak demand” that would mark the end of a long climb in global oil consumption.
The 31-year-old deputy crown prince, Mohammed bin Salman, son of the king, has set out to reinvent the Saudi economy by the year 2030. His plan, called Vision 2030, would foster new private businesses, improve education and trim the budget deficit by cutting subsidies and introducing a 5 percent value-added tax.
China is the kingdom’s top trade partner. It was noted that even if oil demand drops, production costs are so low in Saudi Arabia that investors could still make money.
That modifies the risk of the price of oil, which has lurched over the past nine years from a high of $147 a barrel in 2008 to a low of less than $27 a barrel in 2016.
“We can’t sell gasoline at prices less than water prices,” said Qasabi, the Saudi commerce minister. “I think the time has come to correct this.”
Aramco is set to benefit from up to $120 billion in debt Saudi Arabia is aiming to issue by 2020 as the country looks to increase its investments into renewables like solar. That debt alongside the IPO is likely to happen sometime late next year or early 2019 and will provide a dramatic infusion to state coffers to finance reform projects aimed at reducing Saudi Arabia’s oil dependency.
The energy ministry said Abu Dhabi’s Masdar and Electricite de France SA bid to supply power from a 300-megawatt photovoltaic plant for as little as 6.69736 halalas a kilowatt hour, or 1.79 cents, according to a webcast of the bid-opening ceremony on Tuesday in Riyadh. If awarded, that would beat the previous record for a solar project in Abu Dhabi for 2.42 cents a kilowatt-hour.
By signing a deal of producing the world's cheapest electricity, Saudi Arabia is one step forward towards its Vision 2030, but is promoting renewable energy at the same time. This raises a number of questions on where will Saudi Arabia stand if the world shifts on renewables, since the prices of renewables are decreasing drastically.
