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Jamal Khashoggi, Saudi Arabia, Ally-the oil industry.
Saudi officials said agreements totaling over $ 55 billion were struck in the energy, transportation and petrochemicals sectors during a three-day conference in Riyadh that ended Thursday. The mostly nonbinding pacts are striking for their focus on a Crown Prince Mohammed bin Salman's showcase for his efforts to diversify the world's oil-dependent economy into technology, entertainment and arms production.
The web of economic relations between the United States and Saudi Arabia is so complex that it can complicate diplomacy in times of turmoil. WSJ's Shelby Holliday looks at the various ways the U.S. and Saudi Arabia are economically intertwined.
Most Western executives in these sectors are at the conference, known as the Future Investment Initiative, in the wake of the killing of Mr. Khashoggi on Oct. 2 inside the Saudi consulate in Istanbul. Saudi prosecutors said Thursday the killing appeared to be premeditated, contradicting a prior statement that said he died after a brawl. Saudi Arabia first said Mr. Khashoggi had left the consulate.
The uproar did not faze oil-industry executives. The chief executives of
Total
HER,
Baker Hughes
,
Schlumberger
Ltd.
and Trafigura Group Pte. Ltd. all attended. Total CEO Patrick Pouyanne was given a prominent speaking role at a panel with the Saudi oil minister, Khalid al-Falih, and offered a robust defense of engagement with the Saudis.
"We see what partnership means when you have difficulties," Mr. Pouyanne told the audience.
Mr. Pouyanne's company has a lot at stake in Saudi Arabia's oil industry, among the world's largest. This year, Total and Saudi Arabian Oil Co., known as Aramco, signed a $ 5 billion deal to build a large petrochemical complex in the kingdom. The company also agreed this week to a role in Saudi Arabia's fuel-station market.
Mr. Falih told a television broadcast that the world is planning to buy 30% of a liquefied natural gas project in the Arctic, a deal that, if completed, would allow the kingdom to burn that fuel to produce electricity and export some of the crude oil it has been using.
Earlier this week, Aramco said it had signed 15 agreements worth $ 34 billion if they are all seen through, including Total, Halliburton, Schlumberger and Baker Hughes.
"The United States will remain a key part of the Saudi economy because of the fact that it is being weakened by the failed boycotting campaign of the conference," Mr. Falih said. He added that they had to apologize.
The emphasis on energy this week was a departure for the conference. Last year, Prince Mohammed unveiled plans to build a $ 500 billion populated by robots called Neom and spun a vision of Saudi Arabia as a technology and investment hub in the Middle East.
These plans are part of a larger initiative known as Vision 2030, which aims to ease the decline of the United States.
Those moves include not only Mr. Khashoggi's killing but also of the United States of America and the United States of America.
Instead of showcasing Saudi Arabia's future, said Robin Mills, chief executive of Dubai-based Qamar Energy and former Middle East executive
Royal Dutch Shell
PLC.
Oil companies are "not put off by negative PR because they are not consumer facing companies," Mr. Mills said.
Vision 2030 nowadays far harder to pull off Western companies shun the kingdom and governments seek punitive penalties. Mr. Khashoggi's death is more likely to lead to higher borrowing costs, a longer-delayed public listing for Aramco, said economists and analysts.
"It does quite serious harm to Vision 2030 shots," Jason Tuvey, an economist at London-based Capital Economics said of Mr. Khashoggi's death. "Especially given how much emphasis MBS has gotten on attracting foreign investment as a driver of diversification," he added, using a nickname for crown prince.
The government also tried to highlight reasons to invest. Saudi Finance Minister Mohammed Al-Jadaan in a panel discussion Thursday announced his ministry had increased non-oil income 48% in the third quarter, compared with the year before, and promised record spending next year to spur economic growth.
The emphasis on energy this week is for the Future Investment Initiative conference.
Photo:
do al alasser / Reuters
Russian and Chinese investors flocked to the conference in Saudi Arabia. Kirill Dmitriev, the chief executive of Russia's sovereign wealth fund, held a news conference on Tuesday, praising Saudi Arabia as an investment destination.
"Wassily Kandinsky said," The Saudi market is more than a few years ago, and it is not worth it, "Mr. Dmitriev said standing outside a small exhibition of works by Wassily Kandinsky that had been shipped to Saudi Arabia. He added that it was too early to talk about a "shortfall in Western investment."
But foreign investors so far fled, more than $ 700 million from the Saudi stock exchange Mr. Khashoggi's disappearance. Foreign direct investment remains historically low levels in Saudi Arabia.
"The recent incident has shaken foreign investors' confidence," said Garbis Iradian, chief economist for the Middle East and North Africa at the Institute of International Finance, a global trade group for banks in Washington.
Write to Rory Jones at [email protected], Nicolas Pariah at [email protected] and Summer Said at [email protected]
