Saudis to keep oil policies to meet demand
Print Edition
SAUDI Arabia’s new energy minister said yesterday the world’s largest crude exporter was committed to meeting demand for hydrocarbons from its customers and would maintain its petroleum policies.
“Saudi Arabia will maintain its stable petroleum policies. We remain committed to maintaining our role in international energy markets and strengthening our position as the world’s most reliable supplier of energy,” Khalid al-Falih said in an e-mailed statement.
“We are committed to meeting existing and additional hydrocarbons demand from our expanding global customer base, backed by our current maximum sustainable capacity.”
Since 2014, Saudi Arabia has led OPEC through a new survival-of-the-fittest strategy aimed at defending market share rather than reducing production to support oil prices.
Falih’s comments yesterday support analysts’ views that no shift in Saudi oil policy is likely as a result of his appointment.
“Falih appears very firmly of the view that the market needs to be balanced through low oil prices ... All the statements about the Saudis having the capacity and being able to wait for that recovery to come, it signals that he is comfortable with the current policy,” said Richard Mallinson, senior analyst at Energy Aspects.
Falih’s appointment to replace former oil minister Ali al- Naimi, 80, was part of a bigger Saudi shake-up announced on Saturday as King Salman restructured some big ministries in a major reshuffle to support wide-ranging economic reform.
Naimi took the reins at the oil ministry after a long career at Aramco, following a path by which the Saudi ruling family keeps highly experienced technical experts involved in wider energy strategy.
As part of the restructuring, the Petroleum Ministry has been renamed the Ministry of Energy, Industry and Mineral Resources.
“The creation of a new ministry in Saudi Arabia that brings together the Kingdom’s abundant and unrivalled energy and mineral resources and industrial capabilities is in line with the ambitious objectives of Saudi Vision 2030,” Falih said.
Falih is one of a handful of Saudi figures whose views are closely watched by traders and analysts for any insight into the kingdom’s energy policies.
“We see the market balancing sometime in 2016, we see demand ultimately exceeding supply and soaking up a lot of the excess inventory, and prices in due course will respond, regardless of when and by how much,” Falih said in Riyadh in late December.
“Saudi Arabia more than anyone else has the capacity to wait out the market until this balancing takes place,” he said.
After graduating in 1982 with a degree in mechanical engineering from Texas A&M University, Falih has spent more than 30 years in Aramco, where he was chief executive from 2009 until he was named chairman last year.
Naimi, who now becomes an adviser at the Royal Court, has always tried to use Saudi financial muscle and oil supply scale to drive out higher-cost producers or rivals during oil market downturns.
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