KSA USA ECONOMIC RELATIONS

introduction

The year 1931 witnessed the consolidation of the economic relations between Saudi Arabia and the US, with the finding of oil, and with the awarding of oil exploration rights by King Abdulaziz to the US Standard Oil Company. The year 1932, on the other hand, is considered an important year in the relations between the two countries, as it witnessed two important events, the unification of the Kingdom, and the setting up of temporary diplomatic and commercial relations between the two countries. The oil exploration agreement referred to above have led to an increase in the number of American companies operating in the Kingdom, including the Standard Oil Company, which joined Mobil, Exxon and Texaco to form the Oil Company known today, as Saudi Aramco. Presently, the United States and Saudi Arabia enjoy a strong bilateral economic relation. The Kingdom is one of the United States’ largest trading partners in the Middle East, a partnership that is heavily supported by common interests. In fact, the US is one of the top partners of the Kingdom, ever since bilateral relations between the two friendly countries were established, over eight generations ago. The American private sector has a long and productive history of operating in Saudi Arabia, contributing to its social and economic development. They represent a broad range of sectors, from energy and defense, to healthcare, information technology, consulting, as well as other business lines. It is worth noting that the American private sector is encouraged by the economic reforms proposed in the Saudi 2030 Vision and looks forward to taking advantage of the various commercial and investment opportunities it offers, while partnering with the Kingdom to fulfill its goals. This is the reason why new Saudi American business initiatives are highly recommended. American multinationals involvement in the development of Saudi Aramco has been there since the company’s inception. In May 2017, Saudi Aramco signed agreements with eleven major U.S. oil and gas companies, paving the way for enhancing its business synergy with the US, grow strategically and diversify as well as attract investments from its U.S. counterparts, to strengthen and achieve its standing as the world’s leading energy company. Saudi American relations have reached a level of maturity where the two countries are keen to maintain these strong ties, and continuously develop them, whatever may be the circumstances. Both countries have a longstanding relationship that has deepened with common desire for greater cooperation. Over the years, the leaders of Saudi Arabia and the US, have supported the bilateral economic relationship, and are committed to ensuring that the relationship continues to flourish, and broadened to reflect new priorities. The shared history and mutual interests have brought the two nations into a partnership. Both nations have a deep respect for values. Both seek stability in the Middle East, and the Arabian Gulf in particular, without which, no progress can be made in the region, either at the political and/or the economic level. In conclusion, the Kingdom is forging ahead to meet the challenges in building its future. As such, it is the collaborative bilateral efforts between Saudi Arabia and the United States that will support overcoming challenges.

BUSINESS COOPERATION

Saudi Aramco signs 12 agreements with American companies.

Saudi Aramco, in May 2017, signed agreements with major U.S. companies which will pave way for the company to enhance its business synergy with the U.S. as well as attracting investments from its U.S. counterparts to the Kingdom.
The agreement which are estimated to be around $50 billion highlights the magnitude of strategic growth and diversification underway at Saudi Aramco, including strengthening the company’s standing as the world’s leading energy and chemicals company and focus on local capacity building of its technical expertise and workforce.

Saudi Aramco signs agreements with American companies

Among the agreements signed were.

JV with Jacobs Engineering – New joint ventures to provide program and construction management services; to elevate project execution and job creation throughout Saudi Arabia and across the region.
JV with National Oil Well Varco (NOV) – NOV and Saudi Aramco Announce Joint Venture to Provide High-Specification Drilling Rigs and Advanced Drilling Equipment Broader Oil & Gas Investment Feasibility Study MOU with GE – Value adding to existing portfolio with a long-time partner MOU with GE – To undertake a digital transformation of Saudi Aramco’s operations MOU (updated) with Rowan – for the creation of offshore drilling company in-Kingdom .
MOU (updated) with Nabors – to explore land drilling improvisation and optimization.
MOU with McDermott – to expand and develop the company’s physical and human capital within the Kingdom.
MOU with Honeywell – Advancing Digitization of the oil and gas industry.
MOU with Honeywell – New Partnership Agreement In Support Of Saudi Arabia’s IKTVA Program.
MOU with Schlumberger to deliver a series of projects related to localizing oil field goods and services. The MOU will create 2,600 jobs, as well as support suppliers with significant funding.
MOU with Halliburton to deliver a series of projects related to localizing oil field goods and services. The MOU will create over 750 jobs, as well as support services with significant worth.
MOU with Weatherford to deliver a series of projects related to localizing oil field goods and services. The MOU will create over 900 jobs, as well as support suppliers with significant funding.
MOU with Emerson Collaboration for digital transformation within Saudi Aramco’s operations which covers Plant web Digital Ecosystem Solutions (IIoT); competency development programs (training of Saudi Aramco employees), digital oil field initiatives; and research and development in advanced applications for process automation.

KSA BUSINESSES OPPORTUNITIES

power
water
renewable energy
oil, gas and petrochemicals
communications
transport
mining
construction
social infrastructure (mainly healthcare and education)
environmental
railways

PERCEPTIONS SURVEY OF US COMPANIES

A 2017 survey of perceptions of US companies doing business in Saudi Arabia was administered by the Washington DC based US Chamber of Commerce. Some important findings are listed below:

On Importance of the Saudi Market:

Saudi Arabia continues to play a significant role for many U.S. companies in their international growth strategy. The major reason respondents cited for their increased trade and investment with Saudi Arabia was the expectation for new “growth opportunities.”

On Expansion in Saudi Arabia:

U.S. companies are eager to take advantage of the business opportunities available in Saudi Arabia.

On Perceptions of Saudi Arabia:

The overall perception of U.S. companies operating in Saudi Arabia is a positive one. Most notably, 81% of respondents said U.S. companies are viewed more favorably than non-Western companies. Additionally, based on their experiences, 64% believe they are viewed favorably compared to local companies and 68% indicated they are viewed favorably in comparison to other Western companies in the Kingdom.

On Financing:

Financing constraints are not a “significant” issue for nearly three out of four (74%) U.S. companies in Saudi Arabia polled by this survey. The 26% who report facing some constraints gave reasons such as difficulty accessing long-term financing, difficulty for SMEs to get financing, and low oil prices affecting the financial environment. The reforms of Vision 2030 may resolve some of these issues in the coming years.

On Government-to-Business Consultation:

One area the survey identified for potential room for improvement that would be mutually beneficial is consultation between the Government of Saudi Arabia and the private sector. U.S. companies are eager to establish a consistent dialogue and engage key stakeholders in the Saudi Government to ensure that their input is considered in the process of crafting laws and regulations that will impact their businesses. Improvement in this area will help create a better business climate and will be advantageous to attracting more foreign investment.

On Economic Potential:

U.S. companies are and will remain committed to working in Saudi Arabia. 20% of respondents explicitly believe the brightest part of Saudi Arabia’s future can be achieved by realizing the ambitious long-term goals of Vision 2030, which will draw upon and develop other strengths and capabilities of the country. Many other respondents named individual elements of the plan, such as growth of the private sector and diversifying the economy, as bright spots for the future, signaling their alignment with the principles of Vision 2030. When asked which sectors of the economy have the greatest growth potential in the Kingdom, the answers were equally distributed between a number of sectors such as finance, construction, information and communication technology, retail, tourism, health, and others. Interestingly, more than half of the respondents (58%) believe that healthcare was the most appealing sector for potential growth. Oil/gas (36%) and manufacturing (34%) were also sectors where companies saw strong growth opportunities. The responses indicate that there.