Saudi Arabia will maintain its oil production capacity and increase its refining capacity, under its National Transformation Programme 2020 (NTP 2020) that aims to reduce the country's dependence on oil revenues and diversify its economy.
Gas production capacity will be boosted by nearly 50pc, and the country will for the first time look at the possibility of importing gas.
The NTP outlines strategies and goals for 24 government ministries and agencies as part of the Vision 2030 road map announced in April, and aims to establish the infrastructure required for its implementation.
The NTP calls for boosting the government's non-oil revenues from SR163.5bn ($43.6bn) to SR530bn ($141.2bn), for the creation of over 450,000 jobs in non-government sectors and for boosting non-oil related exports from 16pc of the total to 50pc, all by 2020.
Oil production capacity will be maintained at 12.5mn b/d, with domestic refining capacity increased to 3.3mn b/d from 2.9mn b/d by 2020.
Gas production capacity will be increased from 12bn ft³/d (123.6bn m³/yr) to 17.8bn ft³/d (183.3bn m³/yr). "Gas currently contributes around 50pc of the kingdom's energy mix, and we aspire to increase that to 70pc in the future from all sources, whether local or whether we are able to find sources for importation at competitive costs that provide secure supplies," said energy minister Khalid al-Falih.
That would be a major departure, as Saudi Arabia has previously asserted it can meet its gas needs without imports. Al-Falih said last week that Aramco is considering upstream investments abroad — another first for Saudi Arabia — particularly in gas.
The NTP makes no mention of an initial public offering (IPO) of up to 5pc of state-owned Saudi Aramco. Deputy crown prince Mohammad bin Salman, who is in charge of the Saudi economy, said in April that a separate plan for Aramco would be released. Likewise, the NTP makes no mention of plans to transform the Public Investment Fund (PIF) into the world's largest sovereign wealth fund. Proceeds from the Aramco IPO will be deposited in the PIF, and the possibility of placing the entire company into the PIF is under study. Proceeds from the sale of other government assets will also be placed in the PIF, which will invest domestically and internationally to maximise government revenues.
The NTP includes 543 projects that various government ministries and agencies will start implementing this year at an estimated combined cost over the next five years of SR270bn. The government said funds will be mostly covered by savings in public spending, and that the private sector will contribute a further SR300bn.
The NTP calls for reducing water and electricity subsidies by SR200bn/yr by 2020. Riyadh-based Jadwa investment bank estimates energy subsidies cost Saudi Arabia $61bn last year. Fuel prices were increased by up to 60pc at the start of this year, but Saudi Arabia's generous subsidy scheme means Saudis still pay far less for energy and water than citizens in other parts of the world, and prices are below those paid in neighbouring countries.
The NTP also aims to reduce the public wage bill from SR480bn to SR456bn, and to increase the percentage of government debt to gross domestic product (GDP) to 30pc from its current 7.7pc.
In addition, the NTP states an objective of fully privatising the power generation sector, and boosting the sector's efficiency from 33pc to 40pc. The NTP gives the King Abdullah City for Atomic and Renewable Energy (Kacare) the goal of installing 3.5gW of renewable energy, equivalent to around 4pc of overall generating capacity, by 2020. The NTP tasks Kacare with "enabling atomic energy to contribute to the national energy mix in accordance with domestic and international commitments", but gives no date for when atomic energy might be introduced, and makes no mention of what percentage of the energy mix it would contribute.
The Vision 2030 road map envisages the private sector will generate new revenue and increase employment. Government revenue will also be boosted by the introduction of value-added tax and income tax for non-Saudi residents.
