cThe cancellation in March of several contracts by Saudi Arabia’s high-profile NEOM development, a key component of its Saudi Vision 2030 program, indicates that the estimated $500 billion megaproject is being recalibrated, as several news reports published earlier this year have suggested.
NEOM was launched in 2017 as a futuristic development in Saudi Arabia’s northwestern Tabuk region along the northern coast of the Red Sea. The project, which is owned by Saudi Arabia’s Public Investment Fund, is the ultramodern brainchild of Saudi Crown Prince Mohammed Bin Salman, who is also chairman of the country’s sovereign wealth fund.
NEOM’s mega-investment would create a series of huge and luxurious resorts, residential areas, offices, shops, schools, marinas and high-tech industrial zones, including Sindala Island Resort, Magna Coastal Resorts, Trojena Open-Air Ski Resort, Oxagon Semi-Offshore Industrial Zone and, most notably, The Line, a 170-kilometer road from the inner city to on the Saudi coast.
As originally envisioned, The Line would be 500 meters high and 200 meters wide. It could accommodate some nine million people who would not use cars but rely on the rail system contained within the continuous building. Everything would run on advanced technology and work within the mirror-covered structure.
That picture of The Line and Trojena ski resort is now expected to change as NEOM’s financial reviews launched by the sovereign wealth fund in 2024 have prompted a serious rethink of the development which will lead to cuts. Now it looks like The Line will be adapted to become an AI data center, which the country hopes will bring greater financial returns in the short term.
Contracts are cancelled
It was announced that NEOM had canceled three contracts last month, two related to the Trojena resort, which was to host the 2029 Asian Winter Games. Saudi Arabia has withdrawn its bid to host the games. A third canceled contract covered the construction of tunnels for The Line railway.
Italy-based Webuild announced that Neom also canceled the construction of three dams for a freshwater lake, as well as an architectural structure called “The Bow” located at the Trojena site. Malaysia’s Eversendai Corp. Berhad announced that its contract to supply steel to Trojena was canceled and South Korea’s Hyundai Engineering and Construction said its contract to build a 12.5km double tunnel had also been cancelled.
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Neither company said it anticipated any financial fallout from the cancellations. The preliminary estimate of the value of the contracts is estimated at more than 6 billion dollars. But the cancellations were not overtly linked to the war between the US, Israel and Iran that began on February 28.
The escalation of Saudi Vision 2030 has also resulted in the halting of the gigantic construction of the Mukaab Tower, estimated at $50 billion. In January, the massive cube-shaped skyscraper intended for the center of the Saudi capital, Riyadh, was put on hold while its financing and feasibility were reassessed. Its design is large enough to fit 20 Empire State Buildings inside, as well as 2 million square meters of interior space. The future of the colossal structure is uncertain.
The contract cancellations follow the Saudi sovereign wealth fund’s decision to focus on futuristic projects and instead concentrate investment on the World Expo 2030 plan and the 2034 World Cup. The fund’s reassessment followed the publication of its annual results from 2024 to August 2025, which showed an $8 billion decrease across its portfolio of giga projects over a period of three years, according to a report on the House of Saud website.
As the main source of funding for Saudi Arabia’s mega-projects, the sovereign wealth fund has moved into a deliberate recalibration stance encouraged by oil prices hovering between $60 and $70 a barrel. To balance its budget, Saudi Arabia needs oil to reach $90-110 per barrel.
The current war has pushed oil prices close to $115 per barrel. Lower prices are not expected until hostilities end.
