For the conservative and normally closed society of Saudi Arabia, the Islamic Conference summit under way here represents a dazzling diplomatic debut on the international scene. The kingdom has never opened its doors to such a large gathering of Third World leaders, diplomats and a huge press corps, and it has spared no expense to assure its success.

Reports of the Saudi outlay for this conference -- the Islamic world's largest -- of 38 presidents, kings, sheiks, prime ministers and vice presidents begin at $1 billion and range as high as $2 billion.

Even the lower figure probably establishes a record expense for a single international conference, but Saudi Arabia is used to doing things on a vast scale and has the resources to do it. Last year, its income from oil and overseas investments reached $100 billion.

"Every blade of grass, every tree, every flower was flown in by airplane," remarked one conference official explaining the high cost of preparations, all done in just 10 months.

The mammoth effort may be linked to Saudi intentions to play a more active international role. Having taken over as president of the Islamic Conference for the next few years, the Saudis will now have an opportunity to exercise an increasingly important role in Third World councils where the Islamic nations comprise the largest single bloc.

Saudi Arabia is unquestionably the center of Islam because it is the protector of two of its holiest shrines, Mecca and Medina. Whether it can now parlay its religious prestige into political power in the Third World through the Islamic Conference remains to be seen. But this seems to be the Saudi objective, and the Saudis appear gearing up here to do so.

The contract to build the new Taif Conference Center, 47 villas for the visiting dignitaries and other elaborate arrangements was won by the French firm Oger, which set up a subsidiary, Saudi-Oger, for the project. Company sources here will neither confirm nor deny a report that it was a $2 billion contract but their smiles seemed to indicate that this was the cost.

They do say, however, that it required 1,400 French, Tunisian and Portuguese workers to complete it on time.

The centerpiece of the preparations is the shiny marble-and-glass-domed conference palace, built in none months with all the materials flown in at a cost of $260 million. Its simple clean-lined design is said to be Saudi in inspiration but in appearance it seems modern Moresque with a touch of Las Vegas gaudiness here and there.

It includes a five-story hotel with 171 rooms and 50 suites, 25 of them seven-room imperial ones that will become the summer residence of the royal family afterwards. All these facilities will undoubtedly be put to practical use since Saudi Arabia is one of the world's most hotel-and-accommodation short nations.

The Saudi government also built 42 two-story villas for its royal and presidential guests seven miles outside Taif adjacent to the Intercontinental Hotel. They are said to be equipped with the latest and best in Western accoutrements.

Taif, the official summer resort of the kingdom, has been scrubbed, painted and bedecked with banners. Its walls have been covered with welcoming signs put up here and there to hide the seamier sights along the new four-lane bypass carrying the presidents, kings and sheiks from their living quarters to the conference palace.

The horde of 500 to 700 foreign reporters, television teams photographers and commentators is being housed 20 miles outside Taif in the brand new French-built noncommissioned officers quarters at the Prince Fahd Air Base. Each apartment comes equipped with television, radio, a lightly stocked kitchen and two or three house boys. In the center of the sprawling air base housing development are six mobile clinics, with a team of nurses and doctors on duty 24 hours a day.

The food, served in the officers' mess hall, is probably the best reporters covering this kind of conference have ever seen. The government is paying for the journalists' room and board as well as for their communications. pThe only problem reporters are complaining about is the absence of any restaurants at the conference center, requiring a 40-mile round trip to the air base to eat.

Hundreds of brand new cars, buses, motorcycles and limousines, the majority American, have been bought to carry delegates and journalists between their distant lodgings and the conference center.

Security is tight, partly as a result of Saudi determination to see no repetition of the "accident," the term used to describe the seizure of Mecca by Moslem fanatics in November 1979. Partly, too, it reflects concern about possible attempts by Libyan agents to disrupt the conference. But none have occurred.

Taif was initially sealed off from the outside world for the arrival of the 38 Moslem leaders and the Army and National Guard have been put in charge of security for the city. Soldiers and guardsmen are scattered discreetly about city streets and police patrol in Chevrolet cars mounted with flashing colored lights.

But Saudi security agents have been relatively polite and gentle compared to others at similar conferences of this kind. There has been no shoving and pushing of reporters, mostly because they have been sealed off from the conference palace and delegates, left to watch the proceedings from a nearby hall on closed-circuit television.

The Ministry of Information, meanwhile, is handing out a thick, beautifully designed book entitled "Saudi Arabia and its Place in the World." Another being distributed free is a gorgeous volume of color pictures by photographer Robert Azizi, illustrating the old and the new of the kingdom side by side. CAPTION: Picture, The Taif Conference Center, built by Saudi Arabia for the Third Islamic Summit, is reported to have cost well over $1 billion. VPI