A recent report by information management consultants, Contax, entitled ‘The Saudi Arabian paradox: Opportunities and challenges’ revealed that the Kingdom of Saudi Arabia (KSA) is gradually transforming itself from a tier 1 exploration and production centre to a fully integrated energy hub.
The KSA is regarded as having one of the most intriguing energy infrastructure markets in the world. In an analysis of the project pipeline, Contax uncovered that KSA is set to invest US $119 billion in its energy infrastructure projects over the 2007-2009 period, putting the Kingdom high on many investment agendas.
Investments in the refining sector are projected to increase by 2189% during 2007-2009, compared to figures between 2004 and 2006.
However, since the Saudisation drive was introduced in 2005, acquiring, retaining and training staff remains the key challenge that KSA (and the GCC as a whole) faces, effecting successful project execution as a consequence.
The Saudisation law seeks to reduce the country’s reliance on some six million expatriate workers, and states that “the number of Saudi workers hired by the employer must be no less than 75 % of the total workforce,” and requires companies to “employ Saudis and ensure they remain in their jobs … by training and grooming them to perform the tasks assigned to them”.
Whilst domestic companies see Saudisation favorably, foreign contractors see the initiative as a challenge, presenting a paradox for the business community. In order to overcome this setback the Contax report states that, “organisations that build a physical local presence are better equipped to develop key relationships, gain trust, and demonstrate long-term commitment” to the energy capital.
“KSA is a balance in terms of opportunities – you accept the risk that comes with it,” said the manager of Global Investment Bank.
