The Saudi Vision 2030 strategy to restructure the kingdom's oil-dependent economy involves diversification and the privatization of massive state assets, including the energy giant Aramco. Nevertheless, the kingdom is the world's largest exporter of petroleum — as well as the main supplier to Japan — with nearly a quarter of the planet's proven petroleum reserves. And the oil and gas sector generates almost half of gross domestic product and more than 90 percent of export earnings.

While the government is committed to reducing its dependency and diversifying its economy into manufacturing and service sectors, the vast oil industry will always be a prominent part of the national landscape and a strong magnet for investment. Countless companies of all sizes have played a role in the upstream and downstream oil sector over the past eight decades, with many Japanese enterprises, technologies and workers involved in the extraction, refining and transport of the precious material.

As Saudi-Japan Vision 2030 notes: "Saudi Arabia plays an outstanding global role in the energy sector, leveraging its rich resources and well-proven knowledge and expertize. Saudi Arabia and Japan will continue to gain mutual benefits. Strengthened partnership between both countries, through continuous exchange of expertise and technical cooperation, could be leveraged to maximize the benefits of enhancing energy security. This will build on the memorandum of cooperation for the energy sector between Japan's Ministry of Economy, Trade and Industry and Saudi Arabia's Ministry of Energy, Industry and Mineral Resources (MEIM) concluded in September 2016. In its quest to further develop its oil and gas sector and to diversify its energy sources, including renewables and alternative energies, Saudi Arabia can venture into win-win collaborations with Japan."

Potential energy sector opportunities between the pair include the enlargement of crude oil storage capacity at Okinawa, promotion of energy efficiency and conservation, and infrastructure development for petroleum and natural gas. Officials behind Saudi-Japan Vision 2030 describe these initiatives as "front-runner projects," with oil goliath Saudi Aramco, the Japanese government and private companies agreeing to extend cooperation by 36 months and boost storage capacity at Okinawa by 2 million barrels.

Minister at MEIM Khalid A. Al-Falih, comments, "As we seek to realize Saudi Vision 2030 and to forge an even more prosperous tomorrow for our citizens, the spirit of partnership and the shared values between our nations and our peoples will further flourish in the years to come, while offering tremendous new opportunities to foreign companies and investors."

This view is echoed by Saudi Aramco President and CEO, Amin H. Nasser, who has signed a number of memorandums of understanding with local Japanese institutions, ranging from crude oil storage agreements to commitments to jointly explore opportunities in chemicals, technology, manufacturing, finance and investment, and solar energy.



The advanced technology specialist
Providing clients and customers with the basic needs for survival — water, food and fuel — for more than half a century, Alkhorayef Group is a specialist in the advanced technology involved in many major infrastructure projects in the Middle East and on other continents. With more than 5,000 employees, the diversified group offers complete and innovative solutions for projects ranging from farming to irrigation, sewage treatment plants to power generation and extracting oil to lubricants, in addition to printing solutions.

The firm, not only manufactures, supplies, operates and maintains the latest equipment, but is a byword for excellent customer service. Alkhorayef firmly believes the company's outstanding growth and success is due to a focus on long-term relationships — with clients, business partners, staff and communities. The fusion of this partnership approach and cutting-edge technical excellence has created an international force to be reckoned with, while its impressive domestic achievements include successful water and wastewater projects, such as desalination plants, along with construction schemes.



Mixing oil with water
Alkhorayef Group believes that Japanese companies have the know-how and technologies it needs going forward. It wants to take advantage of the deepening relations between the two countries, arising from the Saudi-Japan Vision 2030 agreement, to build collaborations with businesses offering the skills it is lacking.

"We are specifically interested in attracting a partner for research and development, and a partner to develop the oil sector," reveals Sheikh Saad A. Alkhorayef, Chairman of Alkhorayef Group. Our second objective is to enhance the potential of our water treatment plant and electricity development, as part of our group. In our water department, we are looking for a partner who is capable of developing projects for the Saudi Electricity Company, as well as a desalination plant. We have our experience in this area, but are also looking to attract know-how and technology."

More than 40 percent of Alkhorayef Group's operations are localized in Saudi Arabia. For example, it manufactures electric submersible pumps in the industrial area in Dammam. As the only company making this type of pump in the kingdom, it has contracts to supply all the major oil companies, including Exxon, Saudi Aramco, Kuwait Oil Company Shell and British Petroleum (BP). Although seen as important, its focus is not limited to sales within Saudi Arabia and it competes with all the biggest of its counterparts around the world. In fact, 60 percent of its largest contracts in this area are currently outside Saudi Arabia. "In Sudan, one of our pumps has been running for more than 10 years and we are one of the main producers of electric submersible pumps in the area," says Alkhorayef. "We also have experience of building early production facilities. For example, in Kuwait we built a plant for steam injection for heavy oil.

"We are now transferring that know-how outside of Kuwait, to deploy it everywhere in the region. That makes us an attractive partner for the Japanese investor interested in the oil and gas sector in the area," he states. In terms of the group's other recent projects, Alkhorayef highlights Saudi Aramco's plans to develop a new gas field in a remote area with his group's support. "We have the capability to service upcoming and existing facilities of Saudi Aramco and other big players in the oil and gas sector," he adds.


Future opportunities with Vision 2030
With the upcoming privatization of Aramco, Alkhorayef explains that many more opportunities will be emerging to work for the oil giant."It will be more important for Aramco to consider the cost of projects, so it will subcontract an increasing amount of work in the future.This will be especially beneficial for Saudi Arabian companies like Alkhorayef Group and any international partners they may have, notes Alkhorayef.

In order to meet the localization of industry goals of Saudi Vision 2030, Aramco has introduced a new initiative: the in-Kingdom Total Value Add Program.Through this, Aramco intends that 70 percent of the materials and services it uses will come from within the kingdom by 2021.Overall, the chairman of Alkhorayef Group says: "my message to the Japanese is that we are a flexible service company, looking for growth and we focus on our businesses.Alkhorayef is already involved in two joint ventures — one with BP and one with Abu Dhabi Islamic Bank, through our finance division. Both of these have been very successful, with all parties benefiting from the relationships.We have ideas to develop our business following a clear strategy. In summary, our company is open for joint ventures with Japanese businesses."

A vital component of the Saudi-Japan Vision 2030 partnership is for the two countries, and their companies, to find mutually beneficial opportunities from working together in information and communications technology (ICT). Both sides are set to gain from this. Saudi Arabia is planning major investment in advanced and cutting-edge technologies, in order to diversify and strengthen its economy, and sees Japan as the ideal partner. And Japanese companies will gain by securing their position as global technology leaders, while increasing their markets and profits.

The Saudi Arabian ICT sector has developed significantly, but the government knows that it is going to have to invest continuously, if it is going to reach its goal of being a knowledge-based economy and an active member of the global digital community. It intends to make sure that happens, with the Saudi Vision 2030 plan saying, "we will increase our investments in, and lead, the digital economy." Saudi Arabia is going to strategically invest in technologies that will help it meet the priority goals of Saudi Vision 2030. For example, technologies that deliver real value and impact to key industry sectors — like energy, health, education, transportation, logistics and water. It is particularly interested in ICTs that can be commercialized and transformed into private sector businesses, with Japanese partners, as it wants its local population to master the technologies and contribute to advancing them.

This all means there are substantial opportunities to invest across a wide range of ICT sectors, with data centers, e-commerce, e-health, e-education, smart cities, smart transportation, smart buildings, artificial intelligence and green energy being a few examples.


Technologies to drive the future
Other areas of potential interest to Japanese companies include open government data, to allow individuals and the private sector to co-create innovative and value-adding services and information. And there is a need for new tools to help engage citizens with the government. Data analytics is another sector seen as ripe for investment, as Saudi Arabia wants to start using big data to advance knowledge in the kingdom and drive the economy.

Technologies associated with the "internet of things" (IoT) are of increasing importance the world over. Saudi Arabia is not just interested in adopting them in manufacturing and distribution, but also in working with partners to adapt them to other industries, such as the power sector for energy efficiency. It also wants to be at the forefront of future uses of these technologies, for activities like customer analysis and remote management of industrial equipment.

Cloud computing represents a major shift in business models — one that the kingdom's businesses are increasingly adopting, with the cloud-based applications market growing rapidly. They are keen to adopt the best: Japanese cloud-native applications, which will allow Saudi Arabian companies to create new services.

In order for businesses to take full advantage of the efficiency and cost gains from cloud computing, Saudi Arabia also needs to attract cloud service providers and companies providing enterprise resource planning software. The government also wants to set up strategic partnerships with Japanese companies to increase its own cybersecurity capabilities. It views this as a vitally important investment — in 2016, around 39 percent of cyberattacks on the kingdom targeted the government's own digital assets and data. Additionally, it plans to strengthen cyberse- curity in other sectors, both public and private, especially in mission-critical areas like energy.



Alliances delivering the future
The best route for Japanese ICT companies looking to benefit from the opportunities opening up in Saudi Arabia, is probably through alliances with established local operators. And the kingdom's government is encouraging exactly this type of partnership. Alawi M. Baroum, executive director of BTC Networks, one of the kingdom's leading providers of integrated solutions, explains why. "Not only is Saudi Arabia increasing investment in the digital economy, but it also wants to create more jobs, in order to build national expertise in manufacturing, maintenance, repair, research and development."

BTC represents an ideal partner for Japanese companies. It is one of the largest integrated ICT solution providers in the Middle East, with branches in six countries, and it intends to stay in this position by continuously deploying innovative technologies and keeping ahead of trends. It is also proactive in finding and capturing opportunities, driving market development and building end-to-end solutions. The company has the advantage of a deep understanding of the kingdom's two development plans, the National Transformation Program 2020 and Saudi Vision 2030, and will be a key player in bringing in the technologies needed to meet their goals. It is aiming to "partner with all governmental organizations in order to identify the unique challenges faced by each in fulfilling the targets," he reveals.

BTC also understands the local private sector. Taking the example of oil and gas, he details that clients want "more efficiency, security and safety. So, they will be focusing on areas like big data, cybersecurity, automation, real-time analytics, control networks and process safety." Some of the technologies BTC would most like to work with partners on include "smart solutions, unified e-services, cybersecurity, cloud-based services, managed services, low-current solutions, data centers, virtualized and multi-tenant intelligent networking, big data, disaster recovery systems and IoT," says Baroum.

The company already has experience of working with Japanese businesses to implement cutting-edge ICT solutions. As a result, says Baroum, "Without hesitation, BTC is open to cooperation with any leading Japanese companies to deliver the technologies Saudi Arabia needs."