Saudi energy minister says firms returning after boycott

Investment conference in Riyadh was overshadowed by a global outcry over the murder of journalist Jamal Khashoggi.

RIYADH - The Saudi energy minister said Thursday that foreign companies which boycotted a key investment forum over the murder of journalist Jamal Khashoggi have "apologised" and vowed a return to normal ties.

"Some companies abstained from the (Future Investment Initiative) conference due to political pressure as a result of an odious campaign directed from outside the kingdom which has failed," Khalid al-Falih told state-run Al-Ekhbariya news channel.

"All the companies that abstained have been calling us during the past 48 hours to apologise and express regret," and vowed to open offices and restore normal relations, Falih said.

"There were more than 25 deals signed worth $56 billion," he said, adding that US companies accounted for most of those contracts.

"The US will remain a key part of the Saudi economy because the interests that tie us are bigger than what is being weakened by the failed boycotting campaign of the conference."

Finance Minister Mohammed al-Jadaan said on the closing day that the three-day FII held in Riyadh had been "fantastic... and we are very pleased".

The investment conference, dubbed "Davos in the desert", aimed at drawing foreign investors to help Riyadh diversify its oil-reliant economy.

But it was overshadowed by a global outcry over the murder of Khashoggi, a Washington Post contributor and critic of Saudi Crown Prince Mohammed bin Salman.

'Let's go'

A long list of investors and international policymakers declined to show up in Riyadh.

Siemens chief executive Joe Kaeser, corporate chiefs from JP Morgan, Ford and Uber, and media powerhouses like CNN and the Financial Times all scrapped plans to attend.

More than two dozen top officials and executives from the US and Europe, including US Treasury Secretary Steven Mnuchin and chief executives of big banks, boycotted the investment conference over the killing of Khashoggi inside the Saudi consulate in Istanbul on October 2.

On Saturday, more than two weeks after Khashoggi's disappearance, Riyadh admitted that the Saudi journalist was murdered during "a brawl" inside the consulate.

Prince Mohammed denounced the "repulsive" murder and vowed justice will prevail, in his first public comments on the case at the investment forum on Wednesday.

Saudi organisers meanwhile sought to portray an image of business as usual, announcing 12 "mega deals" worth more than $50 billion in oil, gas, infrastructure and other sectors.

There was concern that, temporarily at least, commercial ties with the West could be damaged as the blow to Riyadh's reputation and the risk of economic sanctions over the Khashoggi affair made it harder to enter new deals.

But the three-day conference drew hundreds of businessmen and government officials from around the world to a palatial venue in Riyadh, looking to provide foreign capital to support Saudi economic reforms.

Nadhmi al-Nasr, CEO of NEOM, a Saudi mega city to be built from scratch, said that "tens of meetings" were taking place at the forum "behind closed doors".

"The emphasis of these meetings is: 'Let's go, let's move on.' The business we are in has not been affected," he said.

In 2017, the government said NEOM -- billed as a regional Silicon Valley -- would attract $500 billion from the kingdom's vast sovereign wealth fund, the Public Investment Fund, as well as local and international investors.

There will be 16 sectors in the NEOM economy, sectors that are meant to become competitive multinational corporations, al-Nasr said.

Sector planning will last until May or June 2019, then construction and implementation afterwards, he added.

Moving ahead

The global outrage over Khashoggi had prompted some Western companies to put partnerships on hold, or hold off from taking funds from the Public Investment Fund, which is chaired by the Crown Prince.

British billionaire Richard Branson earlier this month said he would suspend his directorship in two Saudi tourism projects around the Red Sea, citing Khashoggi's disappearance.

Few senior executives from China and Japan announced they were withdrawing from the event, putting pressure on Western firms to maintain a presence or risk losing business.

In sectors like banking and consulting, where Western companies have a deep presence in the kingdom, senior executives cancelled their engagements at the conference but still sent regional representatives for appearances and meetings.

Credit Suisse, HSBC, Mastercard and Siemens remained "strategic partners" for the event, while consulting firms Deloitte, EY, McKinsey, Oliver Wyman, PwC, Strategy& and the Boston Consulting Group stayed on as "knowledge partners."

Global investment banks, which according to Refinitiv data earned $2.7 billion in fees in Saudi Arabia since 2000, all sent delegations, even if their top bosses stayed away.

HSBC, which has a 40 percent stake in a Saudi bank and has played an active role in the kingdom in recent years, had one of the largest teams with around 10 people, including Samir Assaf, the head of its investment bank.

An executive from a Chinese financial firm said some Western executives there were keeping lower profiles because of the Khashoggi affair: "A lot of the movers and shakers are represented here, you just don't see them."

A short memory

A senior European banker at the conference said that while the Saudi image among some international bond investors had been damaged, investment patterns would probably return to normal in a couple months. "Business has a short memory," he said.

The amount of mega-money deals announced at the conference seemed to confirm the 'short memory' of investors: Saudi state oil giant Saudi Aramco said it had signed deals with 15 international partners worth more than $34 billion.

They included a deal to build a petrochemical complex in the second phase of a refinery jointly held by Aramco and France's Total, and an agreement with a Spanish consortium for the second phase of a high-speed railway project.

Along with NEOM, Saudi Arabia is also moving ahead with two other major development projects: the aforementioned Red Sea tourism project, and an entertainment development that will include a Six Flags theme park.

Theme park operator Six Flags is going ahead with plans to open in Saudi Arabia, Michael Reininger, the chief executive of Saudi Arabia's Qiddiya said.

Qiddiya, which is about an hour's drive from Riyadh, is being built on a 334 square km (8,400 acre) site, making it 2-1/2 times the size of Disney World.

Construction of Saudi Arabia's Red Sea tourism project will start in 2019 and open the first phase of its development in 2022, the Red Sea Development Company's chief executive, John Pagano, said.

Saudi Arabia plans to develop resorts on 50 islands off the Red Sea coast, backed by the Public Investment Fund. The Red Sea Project, to be built between the cities of Amlaj and al-Jawh, will offer a nature reserve, diving in coral reefs and heritage sites.