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New Saudi Railway Expected To Reduce Dependence On Crude Oil

Saudi Arabia plans to soon issue contract tenders for a 1,000-mile railway between the Red Sea and the Persian Gulf, and to extend links to serve oil giant Aramco, Saudi Railway Company’s chief executive Bashar Al Malik told Bloomberg in an interview published on Monday.

Saudi Arabia has been planning the 1,000-mile Red Sea-Persian Gulf link—Land Bridge—since 2008, but tabled it after Saudi Arabia and private companies failed to initially agree on the financial terms of a deal.

The Saudis are now “moving ahead to implement the project” after Saudi Railway saw an encouraging response from the private sector to an invitation for expressions of interest, Al Malik told Bloomberg.

The Land Bridge is expected to cut three days of the current five-day seaborne journey of freight around the coasts of Saudi Arabia in a project that is seen as an important step to reducing Saudi economy’s dependence on crude oil.

According to Saudi Railway Company’s Al Malik, the tenders will be issued at the end of this year or at the beginning of next year. International and local engineering companies and financial institutions are expected to bid in the tenders, the manager told Bloomberg. The cost for the Land Bridge construction would depend on the location of the terminus on the Red Sea and on the exact route that would be chosen, Al Malik noted.

Related: Supermajors Prepare For A Permian Bidding War

Apart from the 1,000-mile new link, Saudi Railway Company plans to expand lines to better serve Aramco, Al Malik told Bloomberg.

Heavy transport of minerals, oil, and petrochemicals is the largest source of income among Saudi Railway’s service lines, according to the company website. SAR expects to boost in the future its minerals and oils freight services to cover minerals, petroleum products, and petrochemicals via agreements signed with companies such as Aramco, SABIC, and Sadara.   

By Tsvetana Paraskova for Oilprice.com

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