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Toyota Motor signed a memorandum of understanding (MOU) on Tuesday with a Saudi Arabian government agency to conduct a feasibility study into producing vehicles and parts in the Middle Eastern nation.
The move, if firmed up, would be a big step for the Saudi economy as the government tries to diversify beyond oil exports and create jobs as part of the kingdom’s 2030 Vision.
So far, Saudi Arabia and other Gulf oil exporters have failed to significantly develop industries such as automaking because they lack broad industrial bases and a skilled local workforce.
“The study would take into account the evaluation of development of a local supply base using materials produced by major Saudi companies like Sabic, Maaden, Petro Rabigh, and other major industrial companies in the kingdom,” the official Saudi state news agency reported.
The MOU is with Saudi Arabia’s National Industrial Clusters Development Program (NICDP).
Meanwhile, state-run Saudi Aramco has signed MOUs with five Japanese entities during a business forum that both nations hosted on Tuesday, coinciding with a visit by Saudi Arabia’s King Salman this week.
Saudi Aramco and Japan’s biggest oil refiner JX Nippon Oil & Energy (5020.T) agreed to consider a refinery joint venture in a third country and cooperation in trading and technology of oil and petrochemical products.
Aramco also agreed to consider a possible future cooperation in crude oil supply and downstream business with Idemitsu Kosan Co (5019.T).
In addition, Aramco and state-run Japan Oil, Gas and Metals National Corp (JOGMEC) formally agreed to expand crude storage capacity in Japan by 300,000 kilolitres (about 1.9 million barrels) from the current 6.3 million barrels from April 1.
Japan treats crude oil stored by Aramco as quasi-government oil reserves, counting half of the barrels stored by Aramco as national crude reserves.
Companies and government organizations in both nations signed a total of 20 MOUs on Tuesday, including cooperation between the Saudi Arabian General Investment Authority (SAGIA) and Japan’s three megabanks – Mitsubishi UFJ Financial Group (8306.T), Sumitomo Mitsui Financial Group (8316.T) and Mizuho Financial Group (8411.T) – on increasing investments in the kingdom.
The MOUs also included cooperation in seawater desalination.