This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 1/22/2020

Overview
Saudi Arabia lies in an arid area of the world with severe climatic conditions and an absence of permanent natural water resources such as lakes and rivers. With the rapid development of cities, massive urbanization and industrialization coupled with a growing population, the Saudi Arabian Government (SAG) is taking drastic measures in revamping its water policies.  This in turn offers significant opportunities to U.S. companies with the expertise, experience and technologies needed to address Saudi’s critical water challenges. 

Demand for water in Saudi Arabia is high and growing due to continued industrialization, demographic trends and energy (oil) subsidies that keep desalinization costs artificially low.  Energy subsidy gets passed on as a subsidy for water, resulting in Saudis paying only a fraction of the real cost of desalinated water, discouraging efficient use of a scarce resource.

Saudi Arabia is also known to be the world’s largest consumer of water next to the U.S. and Canada, with daily water consumption of 250 liters per capita. To meet demand, Saudi Arabia has become the largest producer of desalinated water in the world, accounting for 25 percent of global supply, and is home to the world’s largest desalination plants. Per industry reports, in order to meet expected demand growth for water, the Kingdom will have to invest $5 billion a year in infrastructure development over the next 20 years.

The SAG’s Vision 2030 and National Transformation Program (NTP) aim to triple the percentage of desalinated water to 52 percent through strategic partners by 2020 and increase the percentage of cities and citizens receiving water and sewerage services dramatically. To solve its impending water crisis issues, Saudi Arabia has taken significant steps as part of its Vision 2030 plans. In 2017, the SAG earmarked $24.5 billion for the environment, water and agricultural sectors with the purpose of reducing water consumption and increasing the use of treated and renewable water. Furthermore, in an effort to streamline the sector and promote efficient water use, there has been a dramatic shift in government policy as Saudi Arabia removes subsidies by revamping the age-old water tariffs structure for consumers in Saudi Arabia. The new system will have consumers pay considerably higher charges for water use.

Saudi Arabia’s aging and inefficient water infrastructure further contributes to relatively high-water inefficiencies. It is estimated that the country loses 15-20 percent of water (600,000-800,000 cubic meters/day) before it reaches customers due to leakages in dilapidated distribution systems.  Precious water is also wasted due to lack of recycling, particularly the reuse of treated sewage water. Neighboring Bahrain and Qatar have successfully harnessed this type of water for agriculture and industrial purposes, and Saudi Arabia is increasingly adopting similar practices. In recent years, the Saudi government has taken proactive measures to reduce national water consumption and promote more efficient use of water. Projects are underway to replace municipal water distribution systems and improve drainage and wastewater networks in major cities. The government is also promoting the adoption of new technologies like solar and nuclear power to operate desalination plants.

The State is the main actor in the water sector, but partial privatizations are underway in the form of Independent Water and Power Projects (IWPP). The regulatory system for the power and water sectors has been overhauled to make it more investor-friendly by enabling private sector investment of up to 60 percent in those sectors, allowing for the development of projects on a build-own-operate basis and providing credit support. The overhaul also created the Water and Electricity Company (WEC) as a limited liability company to manage the IWPPs. Public Private Partnerships (PPPs) have been established between a number of cities and international companies for water distribution and wastewater collection. The National Water Company (NWC) was created in 2008 to manage PPP agreements in the four major cities of Riyadh, Jeddah, Makkah and Taif, while such agreements are managed by the Ministry of Water and Electricity (MOWE) in the rest of the country. The Saudi government has commissioned new projects to meet rising industrial demand for water. The government-owned Saline Water Conversion Company (SWCC) is investing billions of dollars in desalination facilities, transmission systems and power plants. SWCC aims to boost its current desalination capacity from 5.1 million cm/d to 7.3 million cm/d by 2020. Among those projects is a desalinization plant in Rabigh, in the western coast of Saudi Arabia, that is expected to supply 600,000 cubic meters of water per day by 2018.

Leading Sub-Sectors
 There are good opportunities for U.S. companies in the following sub-sectors: water network and main lines; wastewater network and trunk lines; water and wastewater house connections; wastewater treatment plants; brackish water treatment plants; lift stations; large water reservoirs; groundwater deep wells; rehabilitation of plants and networks; and related consultancy and supervision services. Industrial equipment is also needed for desalination plants and wastewater treatment systems: reverse osmosis membranes; pressure and gravity media filters; pumps; clarification equipment; odor treatment and control; aeration systems; anti-scaling chemicals; steam and gas turbines; boilers; water leakage screening equipment; potable and process water treatment systems; sludge digesters and advanced water filtration systems.

Opportunities
Saudi Arabia’s overall environmental technologies market, including goods and services, was valued at $9.4 billion in 2016. Saudi Arabia has a limited domestic environmental technologies industry and therefore imports the balance of the goods and services required to meet its environmental goals. Its preference for imported goods, pronounced water scarcity issues and vast oil and gas industry make it a top market for U.S. environmental technologies.  

The country has a relatively high level of regulatory stringency and enforcement from the perspective of The country has a relatively high level of regulatory stringency and enforcement from the perspective of international businesses operating there. This is evidenced both by the government’s recent allocation of $300 million for environmental protection and pollution control and its 2009 announcement of the formation of a Green Police unit to improve monitoring and enforcement of environmental rules. Saudi Arabia also named several environmental protection goals in its 10th Development Plan (2015-2019), including improvement of waste management and mobile and stationary source emissions reduction and protection of coastal and territorial waters.

Saudi Arabia’s efforts to monitor air quality have increased alongside efforts to develop and enforce environmental standards and regulations, creating demand for ambient air quality surveys and emission source monitoring. The Saudi government allocated $300 million for environmental protection and pollution controls in 2010 and had ordered all major industrial projects to conform to international air standards. Major emitting industries in Saudi Arabia include oil refineries, power generation, petrochemical development, cement plants and metals foundries. Saudi’s annual imports of air pollution control and monitoring equipment are estimated at $50 million, with U.S. companies meeting almost 75 percent of demand. The industrial cities of Jubail and Yanbu are prime examples of adoption of advanced monitoring and control technologies within a finite industrial zone for existing and new facilities, presenting continued opportunities to U.S. technology providers.

Technologies and Services in Demand: 

  • Continuous Emissions Monitoring Systems
  • Fenceline Monitoring Equipment
  • Ambient Air Monitoring Equipment
  • Source Emissions Measurement Technologies
  • Environmental Testing and Laboratory Instrumentation And Services
  • Dry Sorbent Injection Technologies
  • Flue Gas Desulfurization Equipment
  • Activated Carbon Injection Technologies
  • Inspection, Adjustment, Maintenance and Repair Services
  • Selective Catalytic Reduction Technologies
  • Selective Non-Catalytic Reduction Controls
The SAG has commissioned new projects to meet rising industrial demand for water.  The Power and Water Utility Company for Jubail and Yanbu is building a $230 million desalination plant to serve 26 petrochemical factories. In addition, Aramco’s efforts to explore shale gas resources, which are highly water intensive, will bolster demand for water for industrial applications. The National Water Company (NWC) has announced investment plans over the coming five years totaling billions of dollars.  Taif already has 30 water projects under construction, including supply networks, sewage systems, treatment plants and a reservoir.

The Saline Water Conversion Company (SWCC) is investing billions of dollars in desalination facilities, transmission systems and power plants. SWCC will be boosting desalination production to 7.3 million cm/d by 2020 in projects worth almost $90 billion.. In early in 2017, Saudi Arabia completed the $7.2 billion construction of the Ras Al Khair Desalination Plant, the world’s largest solar-powered desalination plant. The plant serves approximately 3.5 million people in the capital city of Riyadh by producing 1.025 million cubic meters (m3) of drinking water daily while keeping costs and emissions low via renewable energy.  Some major projects in the planning stage include the Jubail 3 Thermal and Reverse Osmosis Project estimated to be worth $3 billion. Other major SWCC projects include conversion plants utilizing reverse osmosis: Haradh BWRO ($1.6 billion), Rabigh Phase 4 ($1.2 billion), Yanbu 4 ($900 million) Jeddah 4 ($800 million), and Al Khafji solar-powered SWRO Phase 2 ($600 million).

The SWCCs expansion plans highlight vast opportunities for Desalination Technology and Engineering, Procurement, and Construction (EPC) firms. The SWCC has traditionally granted large EPC contracts for the development of facilities and continues to do so; however, it has also recently included Build Own Operate (BOO) models in its portfolio that will expand the desalination market further into services. This trend may accelerate as budgetary shortfalls as a result of falling oil prices create demand for alternative financing models. In summary, the future of desalination in Saudi Arabia is bright with additional investments being made to ensure the region will continue to be a worldwide leader.

Additionally, although desalination is a proven technology, the high costs of construction and operations further drive research into alternative technologies to investigate better and less-costly technologies for future use. Also, as water scarcity in the Middle East will continue to be a problem as rainfall remains low and limited groundwater sources are not being recharged at rates fast enough to support the water demands of growing populations. Saudi Arabia is looking to take the right steps by way of its Saudi Vision 2030 initiatives, to make water efficiency a high priority and to achieve water security in the region.
U.S. companies interested to pursue opportunities in Saudi Arabia may write to the U.S. Commercial Service team members listed below. In addition, details on projects, tender announcements are made available on the Saudi Arabian authorities websites mentioned below.

Trade Shows and Exhibitions Web Resources

For more information on opportunities in this sector, please contact Haisum Shah (Jeddah) at haisum.shah@trade.gov

 

Prepared by the International Trade Administration. With its network of more than 100 offices across the United States and in more than 75 markets, the International Trade Administration of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.