From spaceports to startups, Gulf countries race to boost space sector

To:

Al-Monitor Pro Members

From:

Samuel Wendel

Senior Market Research Analyst, Al-Monitor

Date:

Jan. 24, 2023

Bottom Line:

As the global space race accelerates, the Middle East is becoming a rising hub of activity. News broke in early 2023 that Oman plans to build the regions first space rocket launch center and hopes to start launches by early 2024. That comes as the UAE continues to demonstrate rising ambitions in space, including sending the first lunar rover built by an Arab country into space in December aboard a SpaceX rocket launched from the United States. Notably, the UAE also recently announced a $816 million fund to invest in the space sector, with a focus on private companies. Meanwhile, Saudi Arabia is eyeing ambitions in space too. As private sector players attempt to reach new heights in 2023 and global competition heats up, Gulf players should have plenty of opportunities to capture a larger slice of this transformative new industry

Background Facts:
  • Led by the United States and China, a record total 180 rockets successfully reached orbit in 2022, compared to 136 in 2021, according to a report from astrophysicist Jonathan McDowell. This comes as the global space industry could generate over $1 trillion in revenue in 2040, up from $350 billion in 2020, according to Morgan Stanley, which estimates that satellite broadband internet access will represent 50% of space economy growth by 2040.  
  • The space economy attracted $272.3 billion in equity investment across 1,791 unique companies over the last ten years, led by the United States and China, according to venture firm Space Capital. However, investors pulled back in 2022 amid larger macro-economic trends, with Q3 the lowest quarter for investment in the space economy since 2013. Simultaneously, many space companies that went public in the United States in 2021 via SPAC mergers have seen share prices crater. 
  • In recent years, many countries have actively developed space programs, from Luxembourg to South Korea. Gulf countries also feature in the new space race, led by the UAE, which expects that space business growth will help propel its economy in the coming decades. The country has already achieved significant milestones: for instance, in 2020 the UAE became the first Arab country to send a probe to Mars. 
  • NASA and the UAE are collaborating too, partnering in 2022 to share scientific data from Mars missions alongside announcing that Emirati astronaut Sultan Al Neyadi would spend six months on the International Space Station as part of a NASA and SpaceX mission scheduled for 2023. That followed NASA agreeing in 2020 to train Emirati astronauts for advanced space missions. Meanwhile, in September 2022 the UAE and the China National Space Administration signed a MoU to collaborate on future moon missions
  • As of 2021, the UAEs investments into the space sector stood at $6 billion, according to its state news agency. The UAE owned 19 satellites and had 10 new spacecraft under development as of 2022, while around 3,100 engineers, technicians and specialists worked across over 80 entities in the local space industry. 
  • Aiming to attract space-related companies and boost its private sector, the UAE Space Agency introduced its first space economic zone in January 2022, housed at Abu Dhabi’s Masdar City. Alongside an incubation and acceleration package for startups that join, the zone offers business licenses for space-related companies across the launch sector, satellite communication, logistics, technology, engineering and more. The UAE is planning additional space-tech hubs too. 
  • In July 2022, the UAE Space Agency announced a new $816 million national investment and development fund for the space sector. Linked to its economic zone program, it will support international and Emirati companies co-operating in space engineering, sciences and research applications. The fund’s first project to be launched into space will be a constellation of advanced remote sensing satellites; launches are scheduled to start in three years.  
  • Notably, Abu Dhabi-based companies International Holding Company and Alpha Dhabi announced a $50 million investment into SpaceX in June 2022. Also, in January 2023 the Dubai-based maritime electronics company Elcome began working with Elon Musk’s Starlink to provide internet services to the maritime industry.  
  • A 2019 agreement with Richard Branson’s Virgin Galactic to bring space tourism flights to the UAE is no longer in effect, reported The National in 2022. Instead, the UAE is now reportedly working with Jeff Bezoss Blue Origin to set up spaceports. This comes after Abu Dhabi’s Aabar Investments injected approximately $280 million into Virgin Galactic in 2009, taking a roughly 32% stake and exclusive regional rights to host Virgin Galactic space flights.
  • Meanwhile, Saudi Arabia is expected to launch its National Space Strategy in 2023, leading to new space programs and initiatives. As of 2020, Saudi Arabia was planning to spend $2.1 billion on its space program by 2030 as part of economic diversification plans aiming to attract foreign investment and create jobs, Reuters reported. 
  • Amid the fallout from Jamal Khashoggi’s murder in 2018, Richard Branson suspended discussions with Saudi Arabia’s Public Investment Fund around a proposed investment of roughly $1 billion into his space companies Virgin Galactic and Virgin Orbit. The deal also included the possibility of developing a space-centric entertainment industry in Saudi Arabia. 
  • The Saudi Space Commission launched the country’s first astronaut program in September 2022. Two Saudi astronauts are scheduled to go into orbit as early as 2023 through a partnership with US-based space company Axiom. Saudi Arabia is also discussing plans to build new space stations with other countries, which could potentially serve as floating hotels for space tourism, according to December 2022 media reports.  
  • Space was a key item on the agenda during Chinese President Xi Jinpings high-profile Riyadh visit in December 2022. The Chinese leader gave a speech touching on space-related topics and cooperation on projects in remote sensing and communications satellites, space utilization and aerospace infrastructure. 
  • In September 2022, Luxembourg-based 5G satellite operator OQ Technology announced a roughly $13 million funding round led by Saudi Aramco’s venture arm Wa’ed Ventures. OQ Technology has also started the establishment of a subsidiary in Saudi Arabia. 
  • In December 2022, the Saudi Space Commission launched a space accelerator program in partnership with early stage startup investor Techstars, which is intended to support local and international entrepreneurs and businesses advancing space technologies in areas like drones, avionics, advanced structures and geospatial analytics. Its first cohort of companies joined the program in January 2023. 
  • Oman is planning to build the Middle East’s first space rocket launch center over the next three years, to be located in the port town of Duqm, regional media reported in January 2023, effectively giving regional space programs a launch site in their own backyard
Alternative Scenarios:

Scenario 1: China gives GCC space ambitions a boost, surpassing the US as a key partner 

Amid broader strategic moves, China aggressively targets space cooperation with Gulf countries in coming years. This leads to new partnerships, investments and missions with regional countries, pivoting the local space economy away from US influence.  

However, the US space sector already has deep and growing ties to the UAE and Saudi Arabia. China can make inroads in the GCC, but it will be hard-pressed to overshadow the relationship with NASA and US companies.  

Scenario 2: The Gulf becomes a major global space economy hub in coming years 

The UAE and Saudi Arabia develop powerful private space sectors after striking significant strategic partnerships with global space companies and governments, which sees regional launches and manufacturing accelerate. Space companies expand into the region, drawn by special economic zones, funding opportunities and government contracts.  

That said, GCC countries overall are still minor space economy players, ranking far behind countries including the United States, China, Japan, France and others when it comes to government spending on space programs. Unless investment drastically increases, opportunities to play a notable role in space will come from working with global partners rather than disrupting the status quo. 

Conclusion - Most Likely Scenario:

As the commercialization of space accelerates and competition between the United States and China rises, there should be ample opportunities for regional countries to carve out an impactful role in the space economy. The UAE in particular is positioned to boost public-private partnerships in 2023, while Saudi Arabia is likely to announce significant space-related developments in the near future too. Both Gulf players have clearly coveted a strategic deal with a high-profile space company — from Virgin to Blue Origin — but haven’t yet fully realized those ambitions. However, there are plenty of options to pursue as the launch market evolves globally and prices come down, making it easier for Gulf players to conduct more missions and expand satellite infrastructure. Other areas to watch include satellite and space-tech manufacturing, space tourism and astronaut training, among others. Either way, expect Gulf countries to prioritize further integration into the space economy in 2023, creating opportunities for global players to strike partnerships and boost space tech exports in the region.  

Contributor Background:

Samuel Wendel is a senior market research analyst with Al-Monitor covering economic, tech and business trends across the Middle East. He has previously served as a journalist with Forbes Middle East and Wamda, where he reported on key industry developments spanning a range of sectors in the region.

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