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Oxagon takes centre stage at Neom

29 September 2026

 

For all the talk of cancellations, Neom completed its biggest project yet in August, commissioning the $8.5bn Neom Green Hydrogen project.

The project reflects Neom’s reprioritisation, which has seen the $500bn gigaproject shift from a speculative vision towards a delivery-focused industrial development.

This shift was clearly signalled in April, when Public Investment Fund (PIF) governor Yasir Al-Rumayyan publicly backed Oxagon, Neom’s planned industrial and manufacturing hub on the Red Sea coast. Since then, there have been increasing signs that the development is taking precedence over the rest of the giga-portfolio.

Announced strategy

Al-Rumayyan’s remarks, delivered as PIF unveiled its 2026-30 strategy, were the clearest public articulation yet of where the fund’s priorities lie. Asked whether The Line needed to be delivered, he was blunt: it would be good to have, but it was not essential. 

Oxagon, on the other hand, was described as “the fundamental part of Neom”.

The comment reframed two years of speculation about scaled-back ambitions at Neom into something closer to a strategic decision, with capital following the assets capable of generating revenue, and the industrial city sitting at the top of that list.

The shift in language also matters, since PIF has been at pains to stress that no Neom projects have been formally cancelled, even as billions of dollars of contracts have been terminated or re-scoped over the past two years.

Under the new strategy, Neom has effectively been reclassified as its own reporting line within PIF’s portfolio, separated from the fund’s other domestic holdings. That separation gives Oxagon room to be judged on its own commercial merits, while distancing it from the reputational weight still carried by more conceptual elements of the wider development.

There have been increasing signs that Oxagon is taking precedence over the rest of the giga-portfolio

Conflict acceleration

The reprioritisation was already under way before the region’s latest conflict began. PIF has spent the past two years pushing Neom to identify which elements of the gigaproject were fundamental and which were aspirational, a process that has as much to do with capital discipline as geopolitics.

With the fund committing to direct roughly 80% of its $925bn portfolio towards domestic investment, while simultaneously funding Expo 2030 and the 2034 World Cup, Riyadh needed its flagship projects to start showing commercial returns rather than absorbing capital indefinitely.

Oxagon, with a port, an export-ready hydrogen plant and land that could be leased to industrial tenants, was always the part of Neom best placed to answer that requirement, and the regional conflict that began in late February only accelerated the shift. The closure of the Strait of Hormuz to a fraction of its normal commercial throughput has hit Saudi Arabia’s oil export capacity hard and pushed the kingdom into a sizeable quarterly fiscal deficit.

Riyadh has also had to contend with direct disruption to its own energy infrastructure, including the temporary closure of the East-West oil pipeline following drone strikes. Against that backdrop, an industrial city with its own deep-water port on the Red Sea, outside the Strait of Hormuz chokepoint, has taken on added strategic weight.

Oxagon offers the kingdom a second maritime gateway, one that is not exposed to the same geopolitical risks as the Gulf coast terminals that have historically carried Saudi trade. For a government having to defend every riyal of committed capital spending, a project that can plausibly generate port fees, hydrogen export revenue and data-centre hosting income within the current decade is a far easier sell than a 170-kilometre linear city that is still taking shape.

Construction ramps up

The clearest evidence of that pivot is what has actually broken ground at Oxagon recently. At a time when Neom’s recent news flow has been about contract terminations, Oxagon’s has been about starts.

The most visible of these is the artificial intelligence (AI) data-centre campus being developed by Humain, the PIF-owned AI company, in partnership with digital infrastructure developer DataVolt.

Construction on the first 100MW of a planned 360MW first phase began this year, as part of a wider 1.5GW campus that builds on the companies’ original 2025 agreement, backed by roughly $5bn of investment. The facility is designed to draw on Oxagon’s pre-zoned industrial land, renewable power and subsea cable links to Europe and Africa, with the first 100MW targeted for service in 2028.

For Neom, the project answers a question that has dogged the gigaproject for years: namely, what, beyond real estate and tourism, Oxagon actually sells.

Connectivity is following the same pattern. Neom issued an expression of interest in September for consultancy services to plan a freight rail line of more than 400km linking the Port of Neom at Oxagon to Saudi Arabia Railways’ North-South Railway at the Al-Baseeta junction.

The North-South network currently serves the kingdom’s phosphate and bauxite mining sector, running from Al-Jalamid and Baitha to the Gulf coast industrial cluster around Ras Al-Khair, Jubail and Dammam, with branches to Riyadh and the Jordanian border.

A connection to Oxagon would give that network a second maritime outlet on the Red Sea and would finally give the Port of Neom a direct rail link into the kingdom’s interior, something it has lacked since operations began in 2022.

Cargo currently depends on road transport or an additional sea leg, a constraint that has limited the port’s usefulness beyond a regional hub.

Utilities work is quietly keeping pace with the more visible projects. Neom has tendered an industrial wastewater treatment plant at Oxagon, with proposals due in early October. The scheme has an initial capacity of 35,000 cubic metres a day, (cm/d) expandable to a maximum of 45,000 cm/d as demand grows.

The plant is expected to cater to the wider industrial developments planned at Oxagon and points towards it developing into a full-fledged industrial cluster rather than a single-phase development.

Road infrastructure has moved in parallel. A design-and-build tender is currently out for the permanent upgrade of Oxagon’s Highway 55, which connects the Red Sea coast with the mainland in northwestern Saudi Arabia.

It currently serves as the only road providing north-south connectivity between Duba and the Neom region. The project is expected to support the anticipated increase in construction activity at Oxagon and facilitate the movement of cargo vehicles from Duba Port to other parts of the country and the wider region.

These construction packages represent the unglamorous groundwork needed before an industrial city can function at scale, and that foundational build-out is already being mirrored in Neom’s external connectivity. In April, a new multimodal logistics corridor linking Europe, Egypt, Neom and the GCC was enabled, offering a faster and more flexible route for European cargo entering the region.

The most advanced element of the build-out remains the port itself. Dutch marine contractor Boskalis has completed the deepening and widening of the main access channel, and Belgian contractor Besix has finished more than 4.6km of quay wall across seven berths, some with draughts of up to 18.5 metres.

The Terminal 1 development, a 900-metre, fully automated container facility designed to be one of the first ports in the kingdom to use automated ship-to-shore cranes, is being phased in through 2026. This will take capacity from the port’s current 250,000 twenty-foot equivalent units (TEUs) towards a 2030 target of 1.5 million TEUs, and an eventual ambition of 12 million TEUs once fully built out. The facility has been described as an accelerator for the kind of integrated, end-to-end supply chain the wider Oxagon concept was built around.

A development this capital-intensive will require continued private and foreign investment

Project rationale

Set against the rest of Neom’s portfolio, Oxagon’s advantage stands out. It has the potential to produce things that can be sold, shipped or leased within a timeframe investors and government auditors can underwrite.

Green hydrogen converted into green ammonia for export; port capacity sold by the container; data-centre capacity sold by the megawatt; industrial land leased by the hectare. These are conventional infrastructure economics, not the largely unprecedented urban-planning bet represented by The Line or other components of the wider Neom masterplan.

There is also a coherence to Oxagon’s individual pieces that is harder to find elsewhere in the Neom story. A port needs rail and road connections to move cargo inland. An AI data-centre campus needs power, land and subsea connectivity – things an industrial port city is well placed to provide. A green hydrogen plant needs an export terminal close by. Each project reinforces the case for the others, in a way that an industrial city announced in 2021 as one vision among several has arguably never quite managed to replicate.

Oxagon is not without risk. Schedules have already slipped once, and a development this capital-intensive will require continued private and foreign investment if its backers are serious about reducing direct funding exposure.

The direction of travel this year has been positive. With the green hydrogen plant entering commissioning, a hyperscale AI campus breaking ground, a new rail corridor being planned and a port moving towards its next phase, Oxagon is reinforcing its position as one of the kingdom’s flagship projects for the future. 

 

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Yasir Iqbal

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