Branson’s Saudi Deals Include Mega City, Spaceflights from Riyadi

Credit: CIC Saudi Arabia

by Douglas Messier
Managing Editor

Saudi Arabia’s non-binding agreement to invest $1 billion in Richard Branson’s three space companies is part of a broader set of ventures that includes Branson’s Virgin Group investing in a new mega city on the Red Sea and suborbital space tourism flights from the Saudi capital.

“Branson has become the first international investor to commit to involvement in the Red Sea Project and nearby Al Ola/Madain Saleh, another prime site for the development of tourism, both domestic and international,” the Saudi government proudly announced on Oct. 1, more than three weeks before the space deal was unveiled.

The $500 million Red Sea Project, known as Neom, involves the development of 150 km of unpopulated coastline that includes a lagoon and 50 islands.

“The remote area, far from any of the Kingdom’s urban centers, is set to become a destination for both local and international tourists, with rules and regulations on par with those at other popular resort areas around the world,” the government said. “The project will comprise exquisite luxury resorts, underwater nature reserves and dormant volcanoes within an area of 34,000 km² [13,127 miles²].”

Branson toured Saudi Arabia at the end of September, during which he viewed the future site of Neom while wearing a red and white checkerboard Shemagh on his head.

“I was amazed at how completely untouched the landscape is,” Branson said. “Standing on the islands, we could see turtles pulling themselves in and out of the water to lay their eggs, while eagle rays and dugongs swam past. Given the right protections, it could stay that way for decades to come.”

During an appearance in the Saudi capital last week, Branson said he had accepted an offer to be on boards of the Neom project and one or two other projects.

A Reformist Crown Prince

Neom will not be governed by Wahhabism, a strict Islamic code that has limited social and political actions in Saudi Arabia.

Crown Prince Mohammed bin Salam Al-Saud is overseeing the project as head of the government’s Public Investment Fund (PIC), the same fund that signed the non-binding MOU with the Virgin Group.

The PIC “will inject initial investments into the project and start partnerships with international companies to spur development of resort hotels and other amenities,” according to a government press release. “Another tenet of Vision 2030 is the formation of public private partnerships (PPPs) aimed at diversifying the Saudi economy and reducing the country’s reliance on oil.”

The reformist Bin Salem was recently named heir to the Saudi throne. He has pledged to turn the country away from Wahhabism and modernize the absolute monarchy, a move that Branson praised in a blog post published last month.

“It was quite an experience to be there on the day that women were given the right to drive for the first time,” Branson wrote. “In a country where women’s rights still lag behind the West, this was a huge announcement and a much-welcomed sign of progress and one welcomed by every woman we met.

“From the vantage point of a foreign observer, much of this may appear too little, too slow. But I understand what Prince Muhammad is trying to do, and I think it is an enormously difficult job to promote change while reconciling the various forces that seek to pull this vast country in very different directions,” Branson added.

Where will the money for Neom come from? Saudi Arabia is planning a initial public offering (IPO) in the state-owned oil company, Aramaco. Estimates for the value of Aramco range from $1 trillion to $10 trillion.

Virgin Deal Could Total $1.5 Billion

SpaceShipTwo glides over the Mojave Desert after being released from its WhiteKnightTwo mother ship. (Credit; Virgin Galactic)

PIF’s non-binding agreement with Virgin includes an investment of $1 billion, with the option for an additional investment of $480 million at a future date.

Under the deal, PIF would take “a significant stake in Virgin Galactic, The Spaceship Company and Virgin Orbit, alongside Virgin Group and Abu Dhabi’s Aabar Investments,” according to a press release.

“This will support the companies’ human spaceflight plans and accelerate Virgin Orbit’s manufacturing and operational capabilities,” the statement added. “It will also aid the development of next generation low cost small satellite launch systems and commercial supersonic point-to-point travel capabilities; and includes the possibility to develop a space centric entertainment industry in the Kingdom of Saudi Arabia.”

Richard Branson at the Future Investment Forum in Saudi Arabia in October 2017. (Credit: CIC)

The agreement was announced during the Future Investment Initiative (FII) Forum held in Saudi capital of Riyadi last week. The Saudi Center for International Communication (CIC) reports that Branson told forum attendees that he wants to fly suborbital space tourism flights from the kingdom.

In his FII presentation on Virgin’s space projects, Branson said a space-themed center may be built at the new Entertainment City in the Saudi capital. He gave no details but said there could be future launches from the Kingdom…

“In one of your cities .. that I look forward to be working with you on, there will be this: a space center built,” he said. “This will be in the new Entertainment City.”

He did not give a specific date, but said he would like to see it established as soon as possible….

“First of all, not just to enable people from around the rest of the world to go to space but obviously to hopefully bring spaceships and motherships to Saudi Arabia to operate them from the runway here, to educate people and do a lot of space work here; to entertain people, there is an entertainment aspect to it.”

The CIC account also said that Branson’s space companies and PIF will “cooperate to implement a roadmap, to be agreed upon, to develop the space sector in the Kingdom in accordance with existing legislation.”

The Saudi deal would require the approval of the U.S. government, as would any SpaceShipTwo flights from the Saudi capital.

  • Hemingway

    Eventually it will be bye bye New Mexico – hello Neom.

  • ThomasLMatula

    Best way to ensure that nature is preserved is to allow it to stay wild, not build a mega tourist resort around. But given how much money they have burning a hole in their pocket it’s not surprising they are putting some in VG. As Jed Camplett would say, “its just some walking around money” 🙂

  • ThomasLMatula

    ITAR

  • Hemingway

    Here is a promotional video on Neom – pie in the sky:

    https://www.youtube.com/watch?v=N53DzL3_BHA

  • Jimmy S. Overly

    Eh, I don’t think ITAR will stop this. After all, the US sold/sells Saudi Arabia lots of arms technology. AH-64s, AH-6s, F-15s, corvettes with the Phalanx CIWS, M1 & M60 tanks.

    Apropos operating outside of the US, wasn’t eXCOR (RIP) going to operate Lynx out of Curaçao?

  • ThomasLMatula

    That was the plan for it. But don’t under estimate the ability of a couple of Senators to throw a monkey wrench into things, especially if it’s s non-issue to the rest of the Senate. If I was involved in the spaceport I would be discussing it with their staffs now.

    Yes, we do sell Saudi Arabia advanced military technology and a lot of it is operated by former members of Western militaries that work for them. But the difference is that it goes to their military. WK2 and SS2 would be owned and operated by a civilian firm which makes the security threats higher.

  • duheagle

    An Arabian EPCOT. Oh frabjous day!

  • Douglas Messier

    No. It’s EPCOT, Dubai, Silicon Valley and Las Vegas all wrapped up in one. That combination contains enough contradictions that the word train wreck comes to mind.

  • Douglas Messier

    The solar energy and wind power makes the whole thing seem very clean (as long as the components for them are produced elsewhere). But, the construction of the city — and its occupation by human beings — will produce a lot of waste that you need to do something with.

  • Mr Snarky Answer

    It’s Saudi Arabia….train wreck before they started.

  • ThomasLMatula

    But wind power turbines have been shown to kill a large number of birds, so much that wind turbines often need to be made exempt from laws protecting them.

    Solar photo voltaic is fine, but if they build solar thermal units like those near Las Vegas they will also damage the bird population.

  • Douglas Messier

    The tech development aims of this remind me of Skolkovo — Russia’s massive answer to Silicon Valley that has gone nowhere.

    https://techcrunch.com/2017/06/09/chill-out-russias-skolkovo-project-attempts-a-re-boot-with-a-new-venture-fund/

  • publiusr

    Well–they tried at least.

  • duheagle

    It’s Chinatown, Jake.

  • duheagle

    Yes. Skolkovo is a monument to the utter failure of the Russian mind to accommodate the concepts of bottom-up entrepreneurship that built Silicon Valley. They came, they saw, they failed to understand what they saw, then they went back home and stood up something that amounts to the Ministry of Innovation.

    So far as I’m aware, the only consequential start-up out of Skolkovo was Dauria Aerospace. Its founders were rewarded for their enterprise by being summarily expropriated by one of Putin’s pet oligarchs a year or two back.

    Russia is on a long-term slide to oblivion over the next century. No one will miss Russia when it’s gone.