Saudi Arabia country overview

The economy of Saudi Arabia

Geography, People, Culture, and Economic Profile

Saudi Arabia information index

Resources of Saudi Arabia

Saudi Arabia’s economy is heavily reliant on petroleum and its related industries. It holds the top position globally in terms of oil reserves, accounting for approximately one-fifth of the world’s known reserves. The country’s oil deposits are primarily located in the eastern region, extending southward from Iraq and Kuwait into the Rubʿ al-Khali desert and beneath the waters of the Persian Gulf.

The discovery of oil had a transformative impact on Saudi Arabia’s economy. As early as 1923, Ibn Saud granted a British company an oil-prospecting concession, although it was never fully utilized. Oil was eventually discovered in 1938, but the outbreak of World War II hindered oil production until near its conclusion. The Ras Tanura refinery was established in 1945, and rapid expansion of the oil industry followed to meet the growing postwar demand.

In 1951, the Arabian American Oil Company (Aramco) made the first offshore oil field discovery in the Middle East at Raʾs Al-Saffāniyyah, located just south of the former Saudi Arabia–Kuwait neutral zone. Oil was also discovered within the neutral zone itself in 1953. Al-Ghawār, situated south of Dhahran and west of Al-Hufūf, is one of the largest oil fields globally. The initial portion of the Al-Ghawār oil field was found at ʿAyn Dār in 1948. Extensive exploration of the Rubʿ al-Khali began in 1950, and oil fields were eventually discovered in the area during the 1970s.

In 1950, Aramco inaugurated the Trans-Arabian Pipe Line (Tapline), which stretched from Al-Qayṣūmah in Saudi Arabia, passing through Jordan and Syria, and terminating at Sidon, Lebanon, on the Mediterranean coast. However, the line only operated sporadically during the 1970s and ceased functioning beyond supplying a refinery in Jordan in 1983. In 1981, Petroline, a pipeline designed for transporting crude oil, was completed from Al-Jubayl on the Persian Gulf to Yanbuʿ on the Red Sea. This significantly reduced the distance to Europe and eliminated the need for navigation through the Persian Gulf and the Strait of Hormuz. Petroline was constructed by the government-owned corporation, General Petroleum and Mineral Organization (Petromin). Additionally, Aramco developed an extensive gas-gathering system and a parallel pipeline for transporting natural gas liquids, which reached Yanbuʿ in 1981.

During the 1970s and early 1980s, Saudi Arabia gradually gained full ownership of Aramco, and in 1984, the company was renamed Saudi Aramco, with its first Saudi president appointed in 1988.

Other resources

The government has actively pursued exploration and production of mineral resources in order to diversify the economic base. Geologic reconnaissance mapping of the Precambrian shield in the western region has revealed deposits of various minerals including gold, silver, copper, zinc, lead, iron, titanium, pyrite, magnesite, platinum, and cadmium. Additionally, there are nonmetallic resources such as limestone, silica, gypsum, and phosphorite.

Water scarcity is a persistent issue in the kingdom. Saudi Arabia boasts the largest desalination program globally, which effectively meets the majority of domestic and industrial water needs. Limited potable water is also sourced from underwater aquifers, and significant efforts have been made to construct dams for water storage and develop water-recycling plants.

The kingdom has increasingly relied on electricity, with substantial growth in electrical production since the 1970s. Initially decentralized, the production of electricity gradually came under state control during the latter half of the 20th century. In 2000, a comprehensive national grid was established by consolidating electrical production under a single corporation. Most of the kingdom’s generators are powered by natural gas and diesel fuel.

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