Saudi Arabia puts money on tech as it prepares for life after oil
DUBAI: The world’s biggest crude exporter is future-proofing itself against oil’s decline by investing in futuristic technologies.
Saudi Arabia has accumulated a stake in electric car maker Tesla Inc for about $2 billion through its Public Investment Fund and aims to be part of any investor pool that emerges to take the company private.
That’s on top of a $3.5 billion investment in ride-sharing company Uber Technologies Inc, a $45 billion commitment to SoftBank Group Corp’s $100 billion technology fund and a planned investment of about $1 billion in Virgin Group’s space companies.
Neom, a planned $500 billion futuristic city that it’s hoped will host more robots than people on a desolate peninsula in the kingdom’s northwest is also part of the plan.
“The metropolis will have a link with artificial intelligence, with the internet of things — everything,” Crown Prince Mohammed bin Salman said in October, when Neom was announced.
The project includes a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa.
While the International Energy Agency sees oil demand rising more than 10% to 103.5 million barrels a day by 2040, advances in vehicle efficiency, the rise of electric cars, tighter emissions standards and shifts to other fuel sources would result in crude demand much lower than the industry is banking on.
About 60% of oil is used in transportation, which is also where the biggest technological changes are emerging.
Diversifying the biggest Arab economy away from oil is central to the government’s Vision 2030 programme and investments by its sovereign-wealth fund are a key component.
The government has called for shares to be sold in state oil company Saudi Aramco and for the PIF to become the world’s biggest sovereign-wealth fund, ultimately controlling more than $2 trillion.
“As part of its Virgin Group deal, the PIF will invest in Virgin Galactic LLC, The Spaceship Co and Virgin Orbit LLC and have the option to invest an additional $480 million in the group’s space services,’’ it said in October.
Saudi Arabia plans to support the ventures’ plans for human spaceflight and launching satellites into orbit and may cooperate with Virgin to create what the kingdom called a “space-centric entertainment industry” in the country.
“The investment reflects the strides Saudi Arabia is making toward a diversified, knowledge-based economy by investing in “those sectors and technologies that are driving progress on a global scale,” the crown prince said.