Prince Abdul Aziz the antidote to oil market uncertainty

Prince Abdul Aziz the antidote to oil market uncertainty

Prince Abdul Aziz bin Salman. (AFP)

The appointment of a new energy minister is always big news in Saudi Arabia, but the naming this week of Prince Abdul Aziz bin Salman is even bigger news, domestically and globally. Saudi Arabia is at an existential crossroads as it builds its non-oil-dependent future, while globally the oil markets are facing uncertainties about supplies, prices and non-oil alternatives. Prince Abdul Aziz may be the antidote in these uncertain times. His appointment should reassure markets and give hope to many young Saudis whose dreams are pinned to their country’s transformative policies.

Under Saudi Arabia’s Vision 2030, the mandate of the minister of energy has domestic impact over fiscal policy, industrial policy and economic diversification. Fiscally, the ministry’s actions affect how much revenue the public purse gets from the sale of oil and gas. And Vision 2030’s diversification goals depend in major part on the success of the policies undertaken by the Ministry of Energy.

As the largest global oil exporter, Saudi Arabia’s energy policy is as important to the rest of the world as it is to the country itself. Prince Abdul Aziz was preceded by five ministers who gained international prominence as ministers of petroleum and later energy. Abdullah Al-Turaiqi, the first Saudi minister of petroleum and a US-trained oil engineer, was instrumental in setting up OPEC and starting the discussions of national control of oil production decisions and a more equitable revenue distribution between producing nations and oil companies. For 24 years, the second minister, Ahmed Zaki Yamani, was OPEC’s most recognizable face and a colorful international figure. He presided over the gradual nationalization of Aramco and the establishment of the Saudi petrochemical industry. Subsequent ministers also made an impact domestically and on the world energy stage.

As colorful and competent as they were, however, oil ministers in the end carried out Saudi Arabia’s sovereign energy policy. That policy is an all-government effort led by the king and crown prince. Prince Abdul Aziz has the advantage of being privy to those discussions for decades, even having an important role in shaping them.

Saudi Arabia is on the cusp of real, existential decisions affecting its future, including those related to an Aramco initial public offering and diversification policies. Unlike other countries, diversification in Saudi Arabia is a complicated process that has at least four fundamental meanings. First, the diversification of the economic base from the dominance of the oil and gas industries to a more balanced mix that includes other sectors, such as manufacturing and services. The second is diversification of exports. Currently, oil represents more than 90 percent of Saudi exports and Vision 2030 calls for drastically reducing that share. Third, diversification in Saudi Arabia means diversifying government revenues from near-total reliance on oil to a more normal mix of oil and non-oil sources, so as to avoid the volatility to government finances that comes from over-reliance on oil income. Fourth, diversification in the energy mix itself, from fossil fuels to renewables. All of these four levels of diversification are closely related to the post of the minister of energy. Prince Abdul Aziz is well versed in all of them and his appointment should have a positive impact on how Saudi Arabia achieves these forms of diversification within the timeframe set by Vision 2030.

He is at ease as an academic economist, industrial engineer, oil technocrat and high-level policy-maker.

Abdel Aziz Aluwaisheg

The timely implementation of Vision 2030 is crucially important. There is no time to waste and, with the new, experienced minister, there will be no learning curve, as he is highly qualified and has been involved in these decisions for some time. For 30 years, Prince Abdul Aziz served as an adviser and then deputy and assistant minister of petroleum. In 2017, he was appointed as minister of state for petroleum. Before joining the ministry in 1987, he was a researcher and academic at his alma mater King Fahd University of Petroleum and Minerals, Saudi Arabia’s equivalent of America’s Massachusetts Institute of Technology. He is at ease as an academic economist, industrial engineer, oil technocrat and high-level policy-maker.

One of Prince Abdul Aziz’s lesser-known but extremely important achievements was the establishment of the Saudi Energy Efficiency Center. It was established in 2010 to promote energy efficiency and conservation policies. It sounded the alarm about runaway energy consumption in Saudi Arabia, which was growing at alarming rates, far outpacing the rates of population growth and economic development. According to the center, about 38 percent of all oil and gas produced in Saudi Arabia is consumed locally. Much of it was being wasted because of inefficient appliances, insufficient building codes and outmoded production processes. All were encouraged by low domestic energy prices.

Globally, Prince Abdul Aziz is well known to the energy markets and his appointment should be reassuring. He has witnessed many ups and downs in the oil market, from below $10 for a barrel of oil in the late 1990s to over $160 in 2008, with many highs and lows in between. As Saudi Arabia’s energy minister, he will be interested in the long-term oil policies that benefit both producers and consumers. As a major energy exporter, Saudi Arabia is deeply invested in the global economy, whose health is key to its ability to export at sustainable prices.

One of the first tasks the new minister faces is what to do about the global oil glut. OPEC oil ministers are this week meeting with their non-OPEC counterparts in Abu Dhabi to discuss why prices remain stubbornly low despite big output cuts by the OPEC+ group and supply reductions in Venezuela, Libya and Iran.

  • Abdel Aziz Aluwaisheg is the GCC Assistant Secretary-General for Political Affairs and Negotiation, and a columnist for Arab News. The views expressed in this piece are personal and do not necessarily represent GCC views. Twitter: @abuhamad1
Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view

Oil output deal is here to stay, new Saudi minister vows

Saudi Arabia’s newly appointed energy minister Prince Abdulaziz bin Salman said the kingdom is proceeding cautiously with its planned nuclear power program. (AFP)
Updated 10 September 2019

Oil output deal is here to stay, new Saudi minister vows

  • Prince Abdul Aziz bin Salman is center of attention at World Energy Congress in Abu Dhabi
  • Saudi Arabia has said it wants to tap nuclear technology for peaceful uses

ABU DHABI: A deal agreed a year ago by major oil producers to limit output was “until death do us part,” Saudi Arabia’s new energy minister pledged on Monday.

Prince Abdul Aziz bin Salman wants the Organization of Petroleum Exporting Countries (OPEC) to strengthen and extend its agreement with non-OPEC producers, including Russia, he said in his first public appearance since being appointed on Sunday.

Previous attempts to limit output had been “successful but temporary in nature…Now it is different in quality, size and perpetuity,” Prince Abdul Aziz told a packed house at the World Energy Congress in Abu Dhabi.

The output deal was sealed at an OPEC meeting in Vienna in December 2018. “Soon we will celebrate the anniversary of the charter that will continue to bring us together, and it is until death do us part,” Prince Abdul Aziz said.

The minister also hinted that it would desirable to widen OPEC to give non-members a more permanent role. “This industry has to have the institutions that can give the notion of support toward sustainable energy supplies commensurate with what the world economy requires,” he said.

But he said non-OPEC producers — including the biggest, Russia — should be subject to a process he summed up in the motto of President Ronald Regan: “Trust, but verify.” He will meet other producers, including Russian energy minister Alexander Novak, in the UAE later this week.

Many industry analysts see a greater threat to the oil price from falling global demand, mainly because of the economic fallout from trade disagreements between the US and China.

Prince Abdul Aziz appeared sanguine on this subject, though he said the “jury was out” on future demand projections. “I am fundamentally an optimist, and if I’m not optimistic, I’d make every effort to create a situation where I could regain my optimism. They are not yet trade wars,” he said.

The minister’s appeal for a stronger and deeper OPEC came in an eagerly awaited interview on the first day of the concgess. A career energy professional over more than three decades, the prince underlined his respect for his predecessor, Khalid Al-Falih, and his dedication to the Saudi energy industry.

“I haven’t lost a friend because he will always remain a friend. He was a schoolmate at university, and we spent 30 years working together,” he said in a voice tinged with emotion.

“You’ve seen Upstairs, Downstairs,” he said, the popular British TV drama. “Well, I am downstairs. I like to work in the kitchen serving my country and my king.”

Most of the audience thought his message went beyond a continuation of existing Saudi energy policy, and amounted to to a “doubling down” of the overall strategic direction in the run-up to the initial public offering of Saudi Aramco, expected imminently.

“It’s the same as before, but reinforced and reinvigorated,” said one oil expert.

On the recent change of management at the top of Saudi Aramco, Prince Abdul Aziz said it was correct to separate the oil company from his ministry. “There is nothing I would not do to protect the interests of this state-owned company,” he said.

“I think the best thing we could do was to ensure the commerciality of the company and the ‘arm’s length’ relationship — to keep it owned by the state and to work as any other international oil company. The IPO made us all focus on exerting every possible effort to highlight this and magnify this.

“That model saved us in terms of our economic well-being. The separation of the corporate from the ministry is a must,” he said, suggesting there would be further safeguards in Aramco IPO documents


This section contains relevant reference points, placed in (Opinion field)

Prince Abdul Aziz said that when Saudi Aramco this year attracted interest of more than $100 billionn for its historic corporate bond, “it was one of the best days of my life.”

There were some surprising elements in his responses to questions from Helima Croft, energy expert from Canadian financial institution RBS Capital. On nuclear power, he made it clear that the Kingdom was keeping all its options open.

“We are proceeding with it cautiously. We are experimenting with two nuclear reactors. We are fortunate enough to have lots of uranium resource and if we scale up we want to go for the full cycle — from producing, enriching and using uranium, even acquiring new technologies….We want to make sure the energy mix is comprehensive,” Prince Abdulaziz said.

On domestic energy reform, he was adamant: “I’m not wasting my time discussing a la la land scenario whether Saudi Arabia will be a net importer of energy by 2030. We have made big improvements in consumption at home, with the energy mix, with efficiency and with price reform. Consumption will be conservatively reduced by 1.5m barrels per day,” he said.

Before his appearance on stage, the prince had reviewed displays at the congress, and lingered to chat casually with journalists at the big Saudi pavilion. “I’m not a horse that can be tamed. I’m known to be excessively spontaneous, a bit of an elephant in the room,” he quipped.

Prince Abdul Aziz also confessed to feeling emotional at the welcome he had received from Suhail Al-Mazroui, the UAE energy minister. “This is a city and a country that gives you a sense of belonging, a sensation of being part of the UAE fabric,” he said.

“I never bet my career on the notion of wanting to be minister of energy. I know energy, I like energy, and I want to be part of that energy, because I get to be energized by it.”


Saudi showjumpers ride for places in Tokyo Olympics team

Updated 16 December 2019

Saudi showjumpers ride for places in Tokyo Olympics team

  • International exposure key to Saudi riders’ success: Equestrian federation chief
  • Visitors enjoyed a fun and exciting atmosphere as riders gave their best performances on the field

RIYADH: Saudi showjumpers at this month’s Diriyah Equestrian Festival aren’t just riding to win — they are battling for places at next year’s Tokyo Olympics, the country’s equestrian chief said on Sunday.

“Saudi riders’ participation in international championships is very important,” said Prince Abdullah bin Fahd bin Abdullah, president of the Saudi Equestrian Federation.

“Coming in contact with international riders will provide them with what they need to achieve their ambitions, which we all know are very big. That is why Saudi riders always have remarkable presence on the international level — hard competitors to beat, like the young rider Waleed Al-Ghamdi, who came second in the first stage of the competition.

“We are waiting for the results of this championship to draft the program for the Tokyo Olympics. We have a good chance at winning but, in this sport one can never be sure until the end of the stage. We will always be sure of the self-confidence our riders have, which will be felt as they represent the Kingdom in any competition,” he added.

Prince Abdullah expressed his happiness at the start of the first stage of the International Show Jumping Championship as part of the Diriyah Equestrian Festival

“The success is due to God, the support the sport has from the wise leadership of Prince Abdul Aziz bin Turki Al-Faisal, chairman of the General Sports Authority (GSA)," he said

The festival — which concludes next weekend, Dec. 19-21 — is taking place at Al-Duhami Farm, the equestrian arena built by Saudi Olympic legend Ramzy Al-Duhami and his wife Sara Baban.

In addition to showjumping, the attractions include art and photography exhibitions, cultural activities and a range of cafes and restaurants.

Visitors enjoyed a fun and exciting atmosphere as riders gave their best performances on the field, showcasing their skills and talents.

Diriyah has always been a symbol of authenticity and culture, while entertainment came with its international sports activities characterized by their sophistication, strength and diversity.

Mohammed Al-Mudayfar, owner of the artistic incubator “Resin Art” taking part in the activities, said: “The exhibition aims at highlighting the Kingdom’s identity in line with the festival’s. By participating, I seek to revive the Kingdom’s culture and introduce it to the visitors.

'Resin Art' exhibition is part of the activities lined up during the two-week Diriyah Equestrian Festival. (Photo/Supplied)

“The exhibition includes 60 Saudi artworks. They received huge support so they can showcase them in a suitable manner, in line with this year’s fun and exciting activities,” he added, noting: “Featured handicrafts, paintings and sculptures are all up for sale.  

“We provide the necessary space and materials for any artist that wishes to showcase his work. Supporting young Saudis and talented ones in particular is a national duty that society should sense its importance especially when it is related to our heritage and traditions.”

The activities area had a part dedicated to kids that has educational and entertainment activities such as painting horse heads made of cork.

Another exhibition called “Objectives” managed by 24-year-old Lama Al-Thubaiti offered visitors a variety of jewelry and accessories that could be modified according to their requests. Al-Thubaiti works as a doctor for people with hearing disabilities and has been working to develop her brand for five years now.

“We are very happy with the visitors’ reaction and our presence here is remarkable as we get ready to open our headquarters soon,” she said.  

The activities area also featured a wide range of restaurants, Saudi and international cafes, a photography corner and cultural facilities such as Arabian and historic horse exhibition, engraving, henna and local artists.

Diriyah Equestrian Festival is taking place for the second year in a row to bring the international event to the Kingdom, reflect the traditional values of equestrianism according to European standards. The event will run for two weeks, providing participants with the chance to qualify to the 2020 Tokyo Olympics and the World Championship.