Al-Naimi: New supplies add depth to world oil markets

Saudi Arabia welcomes additional supplies from other producers that may help to stabilize oil prices, said Petroleum and Mineral Resources Minister Ali Al-Naimi.
“New supplies are welcome. They will add depth and, I hope, greater stability to world markets,” the minister said.
“The Middle East has also expanded its supplies, and I feel there is much more to come,” he said.
“Saudi Arabia remains committed to its role as a stable and reliable supplier that has consistently stepped up production to offset any shortfalls,” Al-Naimi said. Saudi Arabia seeks stable oil prices, he said.
He was addressing the fourth Annual Energy Forum at Istanbul International Center for Energy and Climate.
“Energy, economics and education will remain three critical pillars upon which the future success of our nations will rest,” Al-Naimi remarked during his speech, a copy of which was received here.
The minister also said: “The theme of this event is the new global energy landscape and I will offer my thoughts on the vital role played by Turkey, and the wider Middle East. My talk today will cover three broad themes, which seem appropriate for this event: energy, economics and, lastly, I will say a few words about education.”
He added: “First, I will turn to energy. I became Saudi Arabia’s Minister of Petroleum and Mineral Resources in 1995. Global GDP was some $ 29 trillion and a barrel of oil was trading for around $ 16. At that time, there were concerns about how these high prices might impact economic growth. But here we are, 18 years on, oil is trading closer to $ 100 and global GDP, even despite recent severe setbacks, has more than doubled to $ 70 trillion. How did that happen, you might ask? Well, two reasons are economic growth and higher levels of education, which I will cover later. But another key number is rising population.”
He said: “In the mid-1990s, the world population numbered some 5.7 billion people. Today, there are another 1.3 billion people alive. That translates into increasing demand for all forms of energy. By 2040, the UN estimates this figure could rise to anything between eight and ten billion people.
But while demand rises, global supplies are also increasing. Thanks to new technology, the past decade in particular has witnessed a rise in shale or tight oil and gas from North America, offshore drilling in Brazil has increased and there is greater development in the Arctic.”
Al-Naimi said: “As I said in a speech in Washington at the end of April, I believe all new supplies are welcome. They will add depth and, I hope, greater stability to world markets.”
The minister added: “From a Turkish perspective, it is increasing its activity in the Black Sea and Mediterranean, and that’s good news.”
He said: “Turkey’s continuing role in the global energy market remains, of course, absolutely vital. Not just in a physical sense – its status as a critical energy hub is without question. I mean it also has a pivotal role as a steadying influence in the wider Middle East region.”
The minister said: “Turkey’s near neighbors between them possess three quarters of the world’s proven petroleum and natural gas reserves. The nation is an essential energy corridor between Caspian, Central Asian and Middle Eastern countries and consumer markets in Europe and beyond.”
He said: “As I said, when I spoke in Ankara in October 2012, I am gratified to see that Turkey is placing great emphasis on its key role as an energy hub, and increasingly in terms of natural gas.
The minister said: “We certainly see gas rising in importance over the coming decades although, of course, oil will continue in its preeminent position for many decades to come.”
He said: “So I am pleased to see that Turkey continues to rise to the challenges, and to balance the range of demands placed upon it. I would like to repeat, for the record, that Turkey’s ongoing role in helping maintain the long-term stability of energy supplies is welcomed and its importance should not be underestimated.”
Al-Naimi also said: “Saudi Arabia remains committed to its role as a stable and reliable supplier. We have consistently stepped up to offset any supply shortfalls. Since 2009, Saudi Arabia has carried a spare capacity of between 2.5 and 3.5 million barrels. This scale of investment, at this time, was taken to ensure the world would continue to be adequately supplied. Only Saudi Arabia has the capacity and ability to take steps such as these. And we have never failed in our commitment to global energy market stability.”
Ultimately, he said Saudi Arabia seeks stable oil prices.
“This stability brings certainty for governments, and for people. It also helps in terms of planning and economic growth. Constantly fluctuating prices are in no one’s best interest. And this brings me on to economics, the second part of my talk here today,” said the minister.
He said: “It is clear that the global economy is still suffering the aftermath of the crash in 2007/2008. Europe, in particular, continues to grapple with austerity measures and anemic levels of growth. That said, other regions are showing signs of progress. Asian economies are leading the way, and the US economy is improving. Nations such as Saudi Arabia and Turkey are faring better than many.”
The minister also said: “Since the mid-1990s, Turkish GDP has increased six-fold to nearly $ 800 billion. Over the same period, Saudi Arabia’s GDP has risen from just over $ 140 billion to almost $ 600 billion. Its GDP has trebled since 2002, and so has GDP per capita.”
Al-Naimi said Turkish companies are also increasingly investing in Saudi Arabia — they are currently engaged in projects worth some $ 10 billion.
“Exports are up, tourism is up — including many more from Saudi Arabia – and all of this has combined to see Turkey become the 16th largest economy in the world,” he said.
The minister added: “Turkey is expected to be the fastest growing OECD member economy between 2013 and 2017. All of this is encouraging news for Turkey and its people — and it will help benefit the region as a whole.”
He said: “We need strong economies, higher standards of living, and economies that present a greater range of opportunities for our citizens.”
Of course, driving this growth, in part, is Turkey’s own population growth. The minister also said: “Since 1995, this has increased from 60 to 73 million, and this translates into greater energy requirements. Saudi Arabia’s own economic and population growth is on a similar trajectory. And this is also reflected in rising demand.”
He said: “Both nations, I know, are striving to meet that demand through a range of different energy sources and through increased efficiency measures. And I am sure that there is potential for our two nations to collaborate in energy matters.”
Al-Naimi said: “Nowhere is potential collaboration more vital than in terms of education and research. Which brings me to the third aspect of my talk here today.”
He said: “While I speak of assets, there can be no greater asset for any country than its people. Increasing educational standards is a must throughout the region, and a lot of hard work is going into developments in both Turkey and Saudi Arabia. In fact, 10 percent of Saudi Arabia’s total budget is now spent on higher education.”
He said: “The King Abdullah University of Science & Technology, or KAUST, located near Jeddah, is a prime example of our investment and our aspirations. King Abdullah’s aim for the institution was to rekindle and spread the great and noble virtue of learning that has marked the Arab and Muslim worlds in earlier times. As a new ‘House of Wisdom,’ we hope KAUST will be a beacon for peace, hope, and reconciliation.”
Al-Naimi said: “I am pleased to note that Turkey, also, is looking to create new education establishments to help its young people. Sabanci University, under whose auspices this event is being run, is a great example of what is possible. It speaks of Turkey’s economic progress that one of its great conglomerates can contribute to this educational advancement. There can be no better investment.”
He said: “The Middle East will not fulfill its potential without well-educated young people. We need educated people to help drive economic growth, to create businesses, create value and opportunities.”
The minister also said: “I hope both Sabanci University and KAUST, although catering for different students, go on to successfully compete in a challenging global market.”
He said: ‘More than this, I hope both on to contribute to the development of new scientific methods and techniques. Because before us are many challenges. “
Al-Naimi said: “The world’s demand for energy will be central. Issues of climate change will also require answers. I believe that, with hard work and determination, these great challenges will be overcome. I hope that it is universities, and students from this region, who will lead the way forward, as they did so often in the past.”
He said: “Energy, economics and education will remain three critical pillars upon which the future success of our nations will rest.”
Al-Naimi added: “As for the role of Turkey in this new energy landscape, I have no doubt that it will remain vital. Saudi Arabia and Turkey both have a critical role to play. I am certain that we can, through our efforts, make a positive difference.”