By Supantha Mukherjee and Aziz El Yaakoubi

(Reuters) – Oracle Corp plans to invest $1.5 billion in Saudi Arabia in the coming years as it builds up its cloud footprint in the kingdom and opens its third public cloud region in Riyadh, a company official said.

Increased demand for cloud computing has pushed technology companies such as Oracle, Microsoft, Amazon and Alphabet’s Google to set up data centres across the world to speed up data transfer.

Saudi officials have pressed international companies to invest in the kingdom and move their regional headquarters to Riyadh in order to benefit from government contracts. “We are finalising the plans for opening the Riyadh region. We are still working with our suppliers before we can announce the actual date,” Nick Redshaw, a senior vice president at Oracle, said in an interview from Dubai.

Redshaw said the investment will be made over several years without providing detail. He added that Oracle would also expand the capacity of its cloud region in Jeddah, which the company first opened in 2020.

The company made the announcement as global tech companies gathered for a major tech conference in the Saudi capital. Though Oracle lags its bigger rivals in the race to corner the cloud computing market, it was among the first large tech companies to open a data centre in Saudi Arabia.

The kingdom has been devoted hundreds of billions of dollars to an economic transformation, known as Vision 2030, led by its de facto ruler Crown Prince Mohammed bin Salman.

But it has struggled to attract foreign direct investment (FDI), one of the pillars of Vision 2030, which aims at diversifying the economy away from oil.

FDI reached just under $4.1 billion in the first half of 2022, a fraction of the ambitious $100 billion target set for the end of this decade. While Oracle has been working with the government, Saudi Arabia has been trying to encourage foreign firms to set up headquarters in the country or risk losing out on government contracts and has given them until the end of 2023 to comply. “We are working closely with the Saudi government to finalise plans for that regional headquarter requirement and we will announce them as we finalise that with them,” Redshaw said. Oracle has also won contracts from the crown prince’s $500 billion flagship NEOM project, a futuristic mega city and economic zone which the crown prince is building on the Red Sea coast. NEOM is one of our largest consumers of cloud capability in Saudi Arabia, Redshaw said.