DAVOS, 31 January — Minister of Petroleum and Mineral Resources Ali Al-Naimi has called on petroleum importing countries to scrap heavy taxes to bring down retail oil prices. "In view of prospects of an increase in demand in the coming years, abandoning of taxation and other measures should be considered," he told top oil executives meeting here.
Addressing a symposium of oil and energy governors, representing major oil companies and various international organizations concerned with energy, Al-Naimi underscored the political and regulatory pressure on oil industry. "There is no other industrial commodity on which high taxes are imposed or which is restricted by regulatory policies like oil," the Saudi minister said. "In many countries, the retail price of refined oil products exceeds greatly the costs of drilling, production, refining, transportation and marketing," he pointed out.
He said it was due to governmental taxes that reach up to 8 percent of the retail price. "We should be realistic that tax imposition on oil consumption will stop the wheel of economic growth that has been achieved in the past...," he explained.
Al-Naimi underscored the initiative taken by Saudi Arabia to promote constructive dialogue between oil producing and consuming countries. He said the proposed secretariat for the International Energy Forum in Riyadh would work for enhancing understanding among oil producers and consumers and strengthening oil market stability.
Saudi Arabia has already started contacts at international level to set up the secretariat. Crown Prince Abdullah, deputy premier and commander of the National Guard, while inaugurating an international energy conference in Riyadh last year, had offered to host the IEF secretariat in Saudi Arabia.
Al-Naimi said the secretariat would not be a place for taking obligatory decisions. "On the other hand, it will be a flexible body that will not impose any obligations," he added. "It should be comprised of professional people who should take care of the interests of both producers and consumers," he said.
In his key-note address, the Saudi minister underscored the significant role of oil in boosting economic growth all over the world. He noted that since the discovery of oil in commercial quantities in 1859, it has become the major mover of world growth.
Al-Naimi said the seventh international energy conference in Riyadh gave an impression that understanding between producers and consumers had never been so closer. "The forum helped in paving the way for better understanding between the two sides," he added.
Spelling out the challenges facing the oil industry, Al-Naimi said there was lack of transparency. He said that no accurate figure was available on oil consumption, stocks and production.
"Another challenge is that there no internationally recognized standards on a number of aspects of the oil industry. Regulatory restrictions vary from one country to another," he pointed out. Al-Naimi said the absence of good relations with mass media as another challenge facing the industry.
