WASHINGTON: Saudi Arabia has never adopted a policy of hiking oil prices, Petroleum and Mineral Resources Minister Ali Al-Naimi said yesterday.
“The Kingdom has only aimed at maintaining the equilibrium of the oil market so that a sound world economy could be ensured,” Al-Naimi said during a speech at the Center for Strategic and International Studies in Washington. The objective of Saudi Arabia’s oil policy is not to have high prices at any cost,” he said.
Al-Naimi said he welcomed the surge in US domestic energy production from shale oil and gas fields, which he said will add depth and stability to global oil markets.
“Newly commercial reserves of shale or tight oil are transforming the energy industry in America — and that’s great news,” he told an audience of policy makers and academics at the Center for Strategic and International Studies in Washington. “It is helping to sustain the US economy and create jobs at a difficult time.”
But he called the US push for energy independence “naive,” saying the country will continue to need Middle Eastern oil long into the future. He said it was not realistic to believe this would help the US eliminate imports of oil, a goal of some Americans who argue energy independence is crucial for the country’s security.
He said the new shale boom in the US would not affect the market. He stressed the role of fossil fuel as a driving force for economic development in the Kingdom like it is in the US.
“The fossil fuel is the energy source with a long life, and alternatives to it such as solar energy are expensive. Fossil fuel will remain unique in terms of cost, reliability and effectiveness,” he said, adding that enough investments in research will find ways to overcome the environmental problems caused by the fossil fuel.
Despite the domestic production gains, US imports of Middle East oil in the second half of 2012 were higher than any time since the 1990s, Al-Naimi said.
The US “will continue to meet domestic demand by utilizing a range of different sources, including from the Middle East. This is simply sound economics.”
“I believe this talk of ending reliance is a naive, rather simplistic view.”
Al-Naimi, meanwhile, emphasized that Saudi Arabia remains able to sustain its reserves at the current 266 billion barrels and said that could increase, especially if technology for extracting “tight” shale oil and gas improves.
He said the Kingdom has no plans to dramatically expand its oil production capacity to 15 million barrels per day.
He said his country will be “lucky to go past” its current oil production of about 9 million barrels per day (bpd) by 2020, as new petroleum production from other countries comes into the global market.
“Supplies are coming from everywhere,” Al-Naimi said. “And we are happy for that. It’s coming from all over.”
Supplies are coming from the US, Iraq, the Caspian area, Brazil, and Africa, Al-Naimi said.
Looking ahead, he said there was “no call” for Saudi Arabia to go past 11 million bpd or 11.5 bpd of oil production by 2030 or 2040.
World oil prices, meanwhile, slid more than 1 percent, headed for their biggest daily decline in almost two weeks after US data showed Midwest business activity contracted in April and European data showed record unemployment.
Brent fell $1.56 to $102.25 a barrel by 1617 GMT. US crude was $ 1.06 lower at $ 93.44 a barrel, on track to end the month down nearly 4 percent
The spread between Brent and US crude narrowed to less than $9 for the first time since June 2012.
Oil traders are looking ahead to see if economic stimulus measures are forthcoming from US and European central banks.
— additional input from agencies
