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Saudi Arabia Puts More Emphasis on Boosting Tourism

Historical sites are attractive to tourists and a focal point for investment (AFP)
Historical sites are attractive to tourists and a focal point for investment (AFP)
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Saudi Arabia Puts More Emphasis on Boosting Tourism

Historical sites are attractive to tourists and a focal point for investment (AFP)
Historical sites are attractive to tourists and a focal point for investment (AFP)

Saudi Arabia’s tourism industry has been making strides over the past few years, as billion-dollar projects and initiatives were launched and major decisions, such as the Saudi Season initiative and the decisions to make tourist visas available. These strides have highlighted the country's major touristic potential, shedding light on the attractive destinations of its diverse regions.

The Kingdom aims for tourism to contribute from about 3% of GDP to 10% of GDP by 2030. The most recent initiative taken to this end was the establishment of the Tourism Development Fund, to which 15 billion Riyals (4 billion dollars) have been allocated to develop the private sector and encourage investment.

Earlier this week, the Crown Prince, Deputy Prime Minister, Chairman of the Council of Economic and Development Affairs, and Chairman of the Public Investment Fund Mohammad bin Salman Al-Saud agreed to the formation of the Tourism Development Fund’s board of directors. The board that is headed by Mr. Amed Al-Khateeb, Saudi Arabia’s Minister of Tourism, includes Princess Haifa bint Mohammed Al-Saud, Muhammad Al-Omran, and Muhammad Al-Hawqal. The Council of Ministers approved the structure of the Tourism Development Fund during its most recent meeting this Tuesday.

Speaking to Asharq Al-Awsat, the experts emphasized the importance of this fund and said they were confident that it will strengthen Saudi Arabia’s tourism sector.

Nabeel Koshak, the CEO of Saudi Venture Capital Company, said that the fund is one of the many bodies that support the tourism industry system and its development by providing investment opportunities, stressing that it will incentivize local or international investment in this sector and small and medium enterprises, which he says are of significant importance because of the large number of people they employ.

Abdulaziz Al-Omran, an economic analyst, said tourist initiatives in Saudi Arabia, like those of Diriyah and Al-Ula, have been gaining increasing prominence, noting that they showcase the beauty of Saudi Arabia’s diverse cities, each of which has its unique characteristics.

These projects, in addition to the "hospitable" nature of Saudi society, make the kingdom a popular destination. He adds that the fund will stimulate investment in the tourism sector, which will create many jobs in the future, and its development is vital for continued job creation.

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What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
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What Happens When Russian Gas to Europe Via Ukraine Stops?

A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo
A view shows a board with the logo of Russian gas producer Gazprom at the St. Petersburg International Economic Forum (SPIEF) in Saint Petersburg, Russia June 5, 2024. REUTERS/Anton Vaganov/File Photo

Austria's energy company OMV was informed by Gazprom that the Russian gas producer would halt deliveries of natural gas via Ukraine to OMV from 0500 GMT on Nov. 16 following OMV winning an arbitration case. Supplies of Russian gas to Europe via Ukraine may completely stop from Jan. 1 2025 after the current five-year deal expires as Kyiv has refused to negotiate the new terms of the transit with Moscow during the war.
Here is what happens if Russian gas transit via Ukraine is completely turned off and who will be affected most, according to Reuters.
HOW BIG ARE THE VOLUMES?
Russian gas supplies to Europe via Ukraine are relatively small. Russia shipped about 15 billion cubic meters (bcm) of gas via Ukraine in 2023 - only 8% of peak Russian gas flows to Europe via various routes in 2018-2019.
Russia spent half a century building its European gas market share, which at its peak stood at 35%.
Moscow lost its share to rivals such as Norway, the United States and Qatar since the invasion of Ukraine in 2022, prompting the EU to cut its dependence on Russian gas.
EU gas prices rallied in 2022 to record highs after the loss of Russian supplies. The rally won't be repeated given modest volumes and a small number of customers for the remaining volumes, according to EU officials and traders.
UKRAINIAN ROUTE
The Soviet-era Urengoy-Pomary-Uzhgorod pipeline brings gas from Siberia via the town of Sudzha - now under control of Ukrainian military forces - in Russia's Kursk region. It then flows through Ukraine to Slovakia.
In Slovakia, the gas pipeline splits into branches going to the Czech Republic and Austria.
Austria still receives most of its gas via Ukraine, while Russia accounts for around two-thirds of Hungary's gas imports.
Slovakia takes around 3 bcm from energy giant Gazprom per year, also about two-thirds of its needs.
Czech Republic almost completely cut gas imports from the east last year, but has started taking gas from Russia in 2024.
Most other Russian gas routes to Europe are shut including Yamal-Europe via Belarus and Nord Stream under the Baltic.
The only other operational Russian gas pipeline route to Europe is the Blue Stream and TurkStream to Türkiye under the Black Sea. Türkiye sends some Russian gas volumes onward to Europe including to Hungary.
WHY DOES THE UKRAINIAN ROUTE STILL WORK?
While remaining Russian gas transit volumes are small, the issue remains a dilemma for the EU. Many EU members such as France and Germany have said they would not buy Russian gas anymore but the stance of Slovakia, Hungary and Austria, which have closer ties to Moscow, challenges the EU common approach.
The countries, who still receive Russian gas, argue it is the most economic fuel and also blame neighboring EU countries for imposing high transit fees for alternative supplies.
Ukraine still earns $0.8-$1 billion in transit fees from Russian gas transit. Russia earns over $3 billion on sales via Ukraine based on an average gas price of $200 per 1,000 cubic meters, according to Reuters calculations.
Russia's gas pipeline export monopoly Gazprom plunged to a net loss of $7 billion in 2023, its first annual loss since 1999, because of the loss EU's gas markets.
Russia has said it would be ready to extend the transit deal but Kyiv has repeatedly said it won't do it.
Another option is for Gazprom to supply some of the gas via another route, for example via TurkStream, Bulgaria, Serbia or Hungary. However, capacity via these routes is limited.
The EU and Ukraine have also asked Azerbaijan to facilitate discussions with Russia regarding the gas transit deal, an Azeri presidential advisor told Reuters, who declined to give further details.