“Almost all the countries in the world are already built,” Saud Alsulaimani, Saudi country head for Chicago-based real estate services company ona bet:Jones Lang LaSalle, told a 🗹group of convention-goers who dropped in to ogle the 3D models. “There is nowhere else on the planet you will find $1.4 trillion worth of constructi🎀on at the same time.”
Not displayed, however, was an equally crucial player: ona bet:Saudi Aramco, the most profitable company in the world over the past decade. The state-owned e🐻nergy giant pumps out oil at a rate no other single company can match—at margins that are the envy of every competitor. Its revenues, which reached $440 billion in 2023, make up about 40% of Saudi Arabia’s GDP. Its enormous earnings finance hundreds of billions of dollars’ worth of Saudi investments, both internally—in the kingdom’s mammoth construction and tourism projects and its efforts to diversify its economy—and globally, through the intricate web of stakes that Saudi’s sovereign wealth fund, the Public Investment Fund (or PIF), has amassed in companies, sports franchises, and real estat🐬e worldwide.
While a tiny share of Aramco is publicly traded, the company is majority owned by the Saudi state, their agendas inexorably linked. Aramco in return provides the means for the crown prince’s overhaul of the Saudi economy, and his efforts to reshape the global economic order. That gives Saudi Arabia and its leader disproportionate clout beyond the kingdom, in the biggest geopolitical issues of our time—from prospects for peace in the Middle East to the global fight against climate change. And how MBS exerts that influence will hinge in part on how much money Aramco can make. This rising global role of Saudi Arabia is an outrage to some, a cause for celebration to others. The crown prince rules with laser intent and no tolerance for dissent: A CIA investigation concluded that MBS assented to the 2018 murder of journalist Jamal Khashoggi (though the Saudi government strongly denies it), and since his father picked him to run the country in 2017, Saudi Arabia’s rate of executions has risen, while human-rights activists have been sentenced to long prison terms. At the same time, MBS has pushed through the most radical remake of the country since the Saud dynasty founded its absolute monarchy in the 1930s—including outward liberalization in what had long been one of the world’s most religiously conservative countries. One key driver is Saudi demographics. Half the country is younger than 30, and a quarter is under age 15. Some of MBS’s reforms have resonated not only among the youth, but also in the West: He ended a longtime ban on movie theaters and live music—Alicia Keys and Pharrell Williams performed in Jeddah the weekend before Saudi execs arrived in Cannes—and scrapped laws forbidding women from driving cars or working most jobs. The billions the government has spent signing sports icons like soccer’s Cristiano Ronaldo and Neymar Jr. to local teams have brought young Saudis pouring into new stadiums. “I never thought I’d be sitting in a stadium in Riyadh with women, their heads uncovered, screaming for Ronaldo,” says Helima Croft, head of global commodity strategy at RBC Capital Markets in New York, on her return from a recent trip to Saudi Arabia. “The mood was electric.”If the absence of democracy is the price to pay for such pleasures, many Saudis appear to have decided it is worth the trade. The same goes for some giants of Western business—including ona bet:BlackRock, Amazon, and Alphabet—which have welcomed Saudi capital and invested in the country. The kingdom is also a player in the AI race: IBM says it is investing $200 million in an AI software lab in Riyadh. And a $40 billion AI fund is being plann♐ed by the PIF and Silicon Valley’s top VC firm, Andreessen Horowitz—a deal that could make the kingdom the world’s biggest investor in AI.
No leader expressed surprise last year when MBS clinched hosting rights for the World Expo 2030—a six-month international extravaganza. “As a female, Saudi Arabia is now the best place to live in,” says Munira Aldayood, who helps organize conferences for Riyadh’s municipal authority, explaining why she moved back from Fairfax, Va., in 2020 after 23 years in the U.S. She says she found a thriving job market for women and a less stultifying lifestyle than the one from her youth: “It’s heaven.”That paradise is largely paid for by Aramco. From fiscal 2016 through 2023, Aramco has posted an astonishing $722 billion in profits, more than any other company in the world over that span. (Apple, famously a profit machine, lags far behind, at $558 billion.) Its $159 biꦉllion in profits in 2022 was the single most profitable year ever reporte🔴d by any company.
The Aramco juggernaut was originally funded with U.S. money. It began in the 1930s, when American wildcatters trekked into the desert with camels, hunting for prospects for Standard Oil, and hit it big, creating a booming industry. Saudi Arabia nationalized oil production in 1980, while keeping an American remnant: the “am” in Aramco. (The company was once known as the Arabian American Oil Co.) While many Western experts still work there, its management is thoroughly Saudi. Today Saudi Arabia sits atop nearly one-fifth of the planet’s oil reserves. It pumps more than 9 million barrels a day—9% of global consumption—making it the world’s second-biggest producer after the U.S., which has leaped ahead this century. The Saudis can also ramp up output at short notice, to more than 12 million barrels a day, if the world needs it—something no other country can do.
If high volume means revenue, low costs mean mega-profits. Saudi reserves, in shallow sands, are so easily accessible that Aramco spends less than $10 to produce each barrel of oil. That’s a fraction, for example, of what it costs supermajors like Exxon Mobil and BP to drill in the Gulf of Mexico. “Aramco will make a profit at anything more than $10 a barrel,” says James Reeve, a Brit who serves as a se🃏nior director of investment strategy for the PIF in Riyadh; such cheap production is great news at a time when the global price exceeds $80 a barrel.
What’s more, Aramco also retains more of its revenues than its publicly traded competitors in the West. The state-owned company pumps oil in the vast Arabian desert, sends it through pipelines in which it has a majority stake, and exports it from state-owned terminals—meaning it controls more of its supply chain. In March, Aramco reported year-on-year declines in both revenues and profits for 2023, as capital expenditure rose and global oil prices dropped. But it still notched net earnings of $121.3 billion—equal to more than $332 million in profit a day, or more than $13 million an hour. Aramco’s intensive operations are highly mechanized; it employs only 70,000 people worldwide, including staff at various subsidiaries and joint ventures. It’s not generating nearly enough jobs for young, ambitious Saudis—which makes it all the more urgent that its profits help MBS diversify the Saudi economy. In 2016, when the Saudi royals unveiled their master plan for the kingdom’s future, dubbed Vision 2030, it laid out one driving purpose: to lessen the country’s heavy dependence on hydrocarbons by opening new sectors like tourism (a key reason to allow women to drive and take jobs) and tech.That service ethos was on full display this March. Aramco reported that revenues for 2023 were down 18% year over year—the kind of result that usually prompts companies to reduce their dividends. But Aramco subsequently transferred nearly $98 billion in dividends, 30% more than in 2022, to the Saudi government, which now owns 82.2% of Aramco. A week later♊,𝓀 MBS announced that Aramco had transferred 8% of its total issued shares to the PIF—a stake worth nearly $164 billion.
Indeed, the PIF has become the primary vehicle through which Saudi Arabia and MBS convert Aramco’s earnings into influence and connections far beyond the kingdom. Flush with oil profits, PIF has about $925 billion in assets under management, according to estimates from Global SWF, a research organization tracking sovereign funds. Last year it spent $31.5 billion, and its portfolio includes a head-spinning array of companies, including stakes in ona bet:Activision Blizzard, Uber, ona bet:Electronic Arts, and ona bet:Live Nation. The recently reported Andreessen Horowitz deal extends a long history of global tech investing by the PIF: It was, for a while, a large shareholder in Tesla, and it helped launch SoftBa🦄nk🌳’s huge (and often star-crossed) Vision Fund in 2017, with a $45 billion stake.
PIF chair Al-Rumayyan is the increasingly widely recognized face of the PIF. While human-rights groups accuse the PIF of being opaque and unaccountable, Al-Rumayyan remains welcome in global board rooms; he’s a director at SoftBank, India’s ona bet:Reliance Industries, and Ubeꦐr, among others. A keen golfer, he has pushed a multibillion-dollar deal with the PGA Tour, enraging many U.S. lawmakers. Since 2021, when the PIF purchased a majority stake in the U.K.’s Newcastle United Football Club and made Al-Rumayyan its chair, the PIF leader has been a regular at its stadium, sometimes appearing on the pitch in stylish team-themed clothing.
Days after the Saudi exhibitors descended on Cannes in March, Aramco CEO Amin Nasser flew to Houston to deliver a blunt message. Nasser’s speech at the oil industry’s premier global event, known as CERAWeek, might as well have been titled “Get Real.” Nasser told the hundreds of oil executives, politicians, and investors in the audience that governments’ climate policies, aimed at phasing out fossil fuels, rested on misconceived ideas dreamed up in rich Western capitals. Environmentalists were ignoring the fact that millions in other regions had no electricity, while others could barely afford to turn the lights on at home, let alone buy electric cars. “We should abandon the fantasy of phasing out oil and gas, and instead invest in them adequately, reflecting realistic demand assumptions,” Nasser said. “The world has been trying to transition in fog, without a compass, on a road to nowhere.” His words shook the audience, but Saudis have heard similar messages from their government for years; in an interview in his office in Riyadh in 2021, energy minister Prince Abdulaziz told me that those who envisioned the final demise of fossil fuels were “living in a fantasy land.” And yet it is a fantasy for which Aramco has long been preparing, and for which there is even a national plan in Saudi Arabia.
Other elements of a green-energy plan are slowly taking shape. Aramco’s power subsidiary has a 30% stake in a solar plant under construction on the Red Sea coast, which it has said will be the biggest in the world once it opens next year. And last year, Arꦡamco announced it would develop the first test site for green hydrogen—a fuel made by using renewable energy to electrolyze water—in the PIF’s $500 billion futuristic city, Neom.
The strategy has environmental limitations, but in theory, it makes some financial sense: The less oil Saudis need for their own consumption, the more that can be exported on world markets, and sold for far higher prices. “The Saudis have finally started to invest in green energy, after making promise after promise after promise,” says Jim Krane, Gulf energy expert at Rice University in Houston. Until recently, he adds, “the Saudis made a bunch of grandiose goals, and didn’t come close to meeting 10% of them.”Grandiosity was on vivid display in Cannes, at the recent real estate trade show. Laid out on room-size tables were models of entire new cities being built, including two new areas of Riyadh, whose master plan includes doubling its population by 2030, creating a metropolis of about 15 million people. The exhibits were a kind of fun-house experiment in envisioning just what fantastical ideas a near-bottomless pit of money might enable. It included a downtown area in Riyadh, called New Murabba, which is being created from scratch. At its center will sit a gargantuan cube measuring a quarter-mile on each side—the biggest single building in the world by volume, “enough to fit 20 Empire State Buildings,” said the assistant offering me a VR headset to view the interior. It is scheduled to open in 2030 as a mix of office, hotel, and residential space. At the core of the building sits a hologram resembling the Sphere in Las Vegas—but about 20 times bigger. The scale of the projects is hard to fathom. “We’re about to develop 400,000 houses by 2030,” Valentin Toubeau, strategy director for ROSHN, the PIF’s real estate wing, said in Cannes. He listed some of his needs: 4 million doors, and enough steel cable to circumnavigate the globe several times. In another hall sat a model of PIF’s biggest project of all, Neom—a sci-fi-like outpost on the Red Sea, from which will rise, in theory, a new city of 9 million people. Improbably enough in the world’s biggest petrostate, it will prohibit all fossil-fuel transportation, including cars. It will house its residents in a string of connected skyscrapers along a narrow 110-mile strip called The Line, all built on virgin land. And amid the rugged desert landscape will be a full-service luxury ski resort called Trojena. “The main challenge is logistics,” Jean-Philippe Patesson, a Belgian engineer overseeing the ski area, told a group in Cannes. “There is no water, no roads, no transportation,“ he said. “When you finish a problem, 10 other problems come.” In interviews, those overseeing the projects say MBS scrutinizes their plans, demanding regular updates, and has little patience for delays. “He is involved in every detail, he approves every rendering,” says Jerry Inzerillo, chief executive of Diriyah, a $62.2 billion sports, retail, university, and office area being built in old adobe style on a historic royal site on the edge of Riyadh. Inzerillo, who moved to Riyadh from New York in 2018 to develop the project for PIF, said he had come to Cannes after an all-night meeting with MBS, in which the Saudi leader had discussed, sometime around 3 a.m., the placement of a large arch planned for Diriyah’s boulevard, whose dimensions are identical to Paris’s Champs-Elysées Avenue. The crown prince and Al-Rumayyan face a more immediate problem than architectural details: how to pay for all these pricey projects. For years the kingdom has needed to sell its oil for $80 a barrel to balance its budget—one reason why MBS opted to cut Saudi oil output last year, rather than sell more barrels to help lower inflation. In fact, oil analysts believe that fully funding Neom, Diriyah, and other splashy cities will require even higher oil prices—“probably a triple-digit price,” says Croft of RBC. Without the gigaprojects, the kingdom’s budget might show a slight surplus at today’s prices, by some estimations. But $100-per-barrel prices seem unlikely anytime soon, given weak global demand and a surge in oil supplies from the U.S. and Guyana. That leaves Saudi Arabia having to borrow on capital markets to fulfill its ambitions: Government debt has soared about 20-fold, to $253.6 billion, since 2014, according to research firm CEIC Data. That’s a tradeoff that MBS is happy to accept in the short term. For one thing, the flashy buildings, parks, and entertainment venues help attract millions of visitors. The government says its tourism revenues were about $66 billion last year—a one-year rise of more than 50%, according to a February estimate by Riyadh financial firm Jadwa Investment. Building the spectacular projects is becoming increasingly expensive, however. There is fierce competition for construction workers, many of whom come from India, where there are plenty of building projects underway. Materials like copper, rebar, and glass are also in high demand, driving up expenses. Says Jadwa: “Cost overruns are inevitable.” The contractors, architects, and engineers in Cannes are keenly aware of the oil markets—and of Aramco’s year-by-year performance. “All we gigaprojects have a plan,” Inzerillo says. “If we’re at $80 [a barrel] and above, we can proceed. If oil prices drop, it becomes a phased project,” he says. “We all have plans to go to multiple phases.” It is too early to know whether Inzerillo will be given funding for all Diriyah’s needs, or whether 9 million Saudis will ever zip around Neom on electric trains. But as long as Aramco is pumping oil, the financial and political clout that drives Saudi Arabia’s outsize ideas will be replenished far into the future.
This article appears in the ona bet:April/May issue of Fortune with the headline, “Saudi Arabia’s power pipeline.”