With its investment prospects rocked by the killing of dissident journalist Jamal Khashoggi, Saudi Arabia turned this week to its most trusted business ally—the oil industry.
Saudi officials said agreements totaling over $55 billion were struck in the energy, transportation and petrochemicals sectors during a three-day conference in Riyadh that ended Thursday. The mostly nonbinding pacts were striking for their focus on oil at a conference that is Crown Prince Mohammed bin Salman’s main showcase for his efforts to diversify the kingdom’s oil-dependent economy into technology, entertainment and arms production.
Most Western executives in those sectors canceled their appearances this year at the conference, known as the Future Investment Initiative, in the wake of the killing of Mr. Khashoggi on Oct. 2 inside the Saudi consulate in Istanbul. Saudi prosecutors said Thursday the killing appeared to be premeditated, contradicting a prior statement that said he died after a brawl. Saudi Arabia initially said Mr. Khashoggi had left the consulate.
The uproar didn’t faze oil-industry executives. The chief executives of Total SA, Baker Hughes , Schlumberger Ltd. and Trafigura Group Pte. Ltd. all attended. Total CEO Patrick Pouyanne was given a prominent speaking role at a panel with the Saudi oil minister, Khalid al-Falih, and offered a robust defense of engaging with the Saudis.
“We see what partnership means when you have difficult times,” Mr. Pouyanne told the audience.
Mr. Pouyanne’s company has a lot at stake in Saudi Arabia’s oil industry, among the world’s largest. This year, Total and Saudi Arabian Oil Co., known as Aramco, signed a $5 billion deal to build a large petrochemicals complex in the kingdom. The company also agreed this week to a role in Saudi Arabia’s fuel-station market.
Mr. Falih told a Saudi television station that the kingdom planned to buy 30% of a Russian liquefied-natural gas project in the Arctic, a deal that, if completed, would allow the kingdom to burn that fuel to produce electricity and export some of the crude oil it has been using.
Earlier this week, Aramco said it had signed 15 agreements potentially worth $34 billion if they are all seen through, including with Total, Halliburton, Schlumberger and Baker Hughes.
“The United States 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,” Mr. Falih said. He added that companies that skipped the conference had called him to apologize.
The emphasis on energy this week was a departure for the conference. Last year, Prince Mohammed unveiled plans to build a $500 billion city populated by robots called Neom and spun a vision of Saudi Arabia as a technology and investment hub in the Middle East.
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Those plans are part of a larger initiative known as Vision 2030, which aims to ease the kingdom’s dependence on oil revenue and which economists say is now endangered because of a series of disruptive Saudi moves that have spooked investors.
Those moves include not only Mr. Khashoggi’s killing but also Saudi Arabia’s severing of ties with Qatar and Canada and a crackdown on alleged corruption that included the detentions of hundreds of business people.
Instead of showcasing Saudi Arabia’s future, this year’s conference demonstrated how tied it remains to the oil industry, said Robin Mills, chief executive of Dubai-based Qamar Energy and former Middle East executive for Royal Dutch Shell PLC.
Oil companies are “not put off by negative PR because they are not consumer facing companies,” Mr. Mills said.
Vision 2030 now looks far harder to pull off as Western firms shun the kingdom and governments seek punitive penalties. Mr. Khashoggi’s death is likely to force the kingdom to pay higher borrowing costs, stunt foreign investment in sectors outside the oil industry, and further complicate the path to a long-delayed public listing for Aramco, said economists and analysts.
“It does quite serious harm to Vision 2030 plans,” Jason Tuvey, an economist at London-based Capital Economics said of Mr. Khashoggi’s death. “Especially given how much emphasis MBS has put on attracting foreign investment as a driver of diversification,” he added, using a nickname for crown prince.
The government also tried to highlight reasons to invest. Saudi Finance Minister Mohammed Al-Jadaan in a panel discussion Thursday announced his ministry had increased non-oil revenues 48% in the third quarter, compared with the year before, and promised record spending next year to spur economic growth.
Russian and Chinese investors flocked to the conference in search of partnerships with Saudi Arabia. Kirill Dmitriev, the chief executive of Russia’s sovereign-wealth fund, held a news conference Tuesday, praising Saudi Arabia as an investment destination.
“The Saudi market is more attractive now than it was three or four years ago, and I don’t think there has been any change over recent weeks,” Mr. Dmitriev said standing outside a small exhibition of works by Russian artists including Wassily Kandinsky that had been shipped to Saudi Arabia. He added that it was too early to talk of a “shortfall in Western investment.”
But foreign investors so far have fled, divesting more than $700 million from the Saudi stock exchange since Mr. Khashoggi’s disappearance. Foreign direct investment remains at historically low levels in Saudi Arabia.
“The recent incident has shaken foreign investors’ confidence,” said Garbis Iradian, chief economist for the Middle East and North Africa at the Institute of International Finance, a global trade group for banks in Washington.
Write to Rory Jones at rory.jones@wsj.com, Nicolas Parasie at nicolas.parasie@wsj.com and Summer Said at summer.said@wsj.com
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