Saudi energy minister meets historic challenges
Sept. 8, 2020 will mark the first anniversary of Prince Abdul Aziz bin Salman becoming Saudi energy minister.
The year brought historical events and challenges that have not been seen during the previous 60-year history since the establishment of the Ministry of Oil and Mineral Resources in the Kingdom in 1960, which became the Ministry of Energy in 2016.
There are many complex files in the Ministry of Energy that Prince Abdul Aziz bin Salman managed efficiently and professionally. The past year was full of historic events and challenges that may not be seen again in the oil industry. He was able to overcome them professionally, wisely and diplomatically, as he turned those challenges into achievements and successes.
The first achievement was transforming the Sept. 14 attacks on Abqaiq and Khurais from disasters into achievements. This was the largest attack on an oil facility in history and it happened to strike the largest in the world.
During his first week in the ministry, the world’s largest oil facilities in Abqaiq were attacked. The attacks were the most severe and destructive in the history of the oil industry, resulting in a temporary suspension of 5.7 million barrels per day (bpd) — nearly half of the Kingdom’s production.
Prince Abdul Aziz bin Salman was able to work in team spirit with the national cadres at Saudi Aramco, and he succeeded in returning oil exports only 36 hours following the attacks. He also oversaw a return to pre-attack production levels only two weeks after the strikes, which astonished energy experts around the world.
Market balance and price sustainability was preserved by maintaining supplies to stabilize the global economy and avoid sharp price fluctuations thanks to the minister’s efforts.
Prince Abdul Aziz bin Salman also succeeded in launching the Saudi Aramco IPO on the local Saudi stock exchange “Tadawul” after approval by Saudi Arabia’s Capital Market Authority.
The Saudi Aramco IPO will ensure the sustainability of the oil giant with the vitality and efficiency required, which can be achieved by appearing as a natural commercial trading company with transparent financial statements, governance and evaluation by an independent board of directors.
The Saudi Aramco IPO is an important milestone toward delivering Vision 2030, the Kingdom’s blueprint for sustained economic diversification and growth.
It has also enhanced the sustainability of its business, taking advantage of technology and innovation to increase the efficiency of production of crude oil and gas, raising the level of reliability and sustainability.
In the four months after Prince Abdul Aziz bin Salman assumed the energy portfolio, he also oversaw an important file — the resumption of oil production in the shared neutral zone with Kuwait after more than 5 years of suspension due to environmental and technical reasons.
This year saw the announcement of the development of the giant Jafurah gas field in the eastern region of Saudi Arabia. Jafurah gas field has proven gas reserves of 200 trillion cubic feet that will add to the already 300 trillion in the Kingdom, bringing total gas total reserves to about 500 trillion cubic feet.
Accordingly, Saudi Arabia will be at the forefront of gas production in the world, moving ahead with the implementation of phased strategies for stronger and diversified sources of income. Gas plays a vital role as one of the most important pillars of sustainable development.
Prince Abdul Aziz bin Salman’s achievements this year not only focused on hydrocarbons, but also included energy in general and renewables. Shortly before he concluded an agreement with NEOM for energy cooperation, he implemented the electrical interconnection project between the Kingdom and Jordan.
The electrical interconnection plans in the Kingdom are in line with the Saudi Vision 2030, which focuses on using the Kingdom’s strategic location to make it a regional center for linking and exchanging electric power grids. The Saudi electricity network is the largest in the Middle East.
Prince Abdul Aziz bin Salman’s endless efforts with OPEC and OPEC+ have been astonishing. He took OPEC+ to its fourth consecutive annual agreement, which appeared to be the most difficult and challenging in oil history.
More importantly, he led producers inside and outside OPEC to the largest oil production cut in history — nearly 10 million bpd — with sustainability that continues for 2 years with gradual reduction in order to absorb the biggest shock of lower oil demand caused by the coronavirus pandemic. His historical successes have resulted in the deepest agreement to reduce production throughout the history of the oil industry, with the joining of major producers for the first time in history with historical cooperation. The agreement came to achieve sustainability in equilibrium in the oil market in the medium term and not in the short term, as the Kingdom’s goal remains to ensure global energy security through market balance, then sustainability in prices and ensuring the continuity of supplies.
This agreement has accomplished an unprecedented level of compliance after being closely monitored by the Joint Ministerial Monitoring Committee meetings that he emphasized on a monthly basis.
• Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco. Twitter:@faisalfaeq