New Saudi Rules Put Oil Giants on Eco Alert

Stricter permitting rules extend project timelines as firms adapt to Saudi Arabia’s greener industrial policies.

4 Jul 2025

Saudi Arabia is introducing its most extensive environmental reforms to date, imposing stricter permitting processes that are reshaping the country’s industrial supply chain. A newly launched digital system by the National Centre for Environmental Compliance aims to modernise regulatory oversight and encourage cleaner business practices, particularly in the energy and chemicals sectors.

At the centre of the changes is a tiered classification scheme that assigns projects a risk category based on their environmental footprint. Lower-risk activities can secure permits quickly at minimal cost, but high-impact projects face fees of up to SAR 275,000 ($73,000) alongside more rigorous approval processes.

Major industrial companies such as Saudi Aramco and SABIC are adjusting their operations accordingly, expanding their environmental, health, safety and security (EHSS) programmes and participating in government-led workshops. Both companies have stepped up efforts to enhance Responsible Care® certifications, an industry initiative focused on continuous improvement in health and environmental performance.

The reform programme forms part of Saudi Arabia’s wider drive to modernise its industrial base and meet global sustainability targets. Businesses report that project approval timelines have already lengthened by up to six months, prompting some to reconsider their expansion strategies and capital spending plans.

However, some analysts see a longer-term benefit. With global supply chains placing more emphasis on sustainability, Saudi firms adopting greener operations could enhance their appeal to international buyers and gain preferential access to clean energy markets.

While industry executives have raised concerns about rising compliance costs, most observers agree the new rules are likely to improve operating standards and strengthen Saudi Arabia’s industrial competitiveness in the years ahead.