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
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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.”