OSAKA, Japan, 22 September — Saudi Arabia yesterday hit back at critics questioning its role as a reliable source of oil and moved to calm consumer fears of supply disruption in the event of Middle East conflict.
"I can’t think of any producing nation that has gone to the extent of the Kingdom in servicing its dedicated customers and shoring up any weaknesses in the global oil market," Petroleum and Minerals Minister Ali Al-Naimi said.
"We certainly don’t claim to shoulder all the efforts in this regard, but we do have a significant track record," Naimi told a symposium before the opening of the International Energy Forum of oil producing and consuming nations in Osaka.
Naimi was speaking after Thursday’s OPEC meeting that decided against raising oil output limits, despite crude prices near $30 a barrel and the threat of a US attack against Iraq. That oil price, if sustained, is considered by many Western governments the main threshold for fragile economic recovery.
"Saudi Arabia is committed to maintaining a stable worldwide oil market, free of disruptive price swings yet responsive to changing conditions," Naimi said.
"To that end we will continue our longstanding policy of keeping excess production capacity on standby." Saudi Arabia, as the holder of the world’s largest oil reserves, was able to quickly tap into its fields in case of a world oil supply emergency, he said.
"We have invested billions of dollars to build production capacity and to construct diverse export routes," Naimi told the delegates from some 60 nations.
"We continue to keep some 30 percent of our production capacity unutilized to be ready in times of supply interruptions. In addition to the over 10 million barrels per day export facilities in the Eastern Province ports, we have five million barrels per day of export capacity from Red Sea ports to contribute to oil supply security," he said. The Kingdom produces around 7.7 million barrels per day.
Naimi rubbished reports that Saudi and Russia were poised for an "energy battle." He considered the growing role of oil producers outside of OPEC, particularly Russia and the Caspian states, cultivated by the United States in a drive to diversify its supply base away from the turbulent Middle East.
"They currently supplement, not supercede, existing world oil supplies and are not fundamentally altering the world’s energy landscape," Naimi said.
US Energy Secretary Spencer Abraham, also attending the three-day conference, broke his journey in Azerbaijan, where US oil giants are engaged in a multibillion dollar oil search.
Saudi Arabia in June was the top supplier of oil to the United States, the world’s biggest oil consumer.
With OPEC producers sitting on two thirds of world oil reserves "the emergence of substantial new reserves from Central Asia is not seen as a threat but as further hope that future world economic health can depend on petroleum as a pre-eminent energy source."
Saudi Arabia had always consulted with producers outside of OPEC, Naimi said, "not paying attention to those who would like to create a wedge between us and other important oil and gas producers. That any single entity...can control the price of oil is absolutely erroneous," the minister said.
Naimi said the Kingdom had also worked to "transform the old antagonistic relation between OPEC and the International EnergyAgency (IEA) to a more harmonious one."
The petroleum and minerals minister said Saudi Arabia was using the revenue from its oil sales judiciously, while at the same time striving to lessen its reliance on oil.
"In real terms, while our economy was growing at 3.5 percent annually in the past 25 years, the non-oil sector was growing by more than five percent annually," he said. "To me, that says oil is still very important, but not the sole source that seems to stick with some viewers."
Naimi yesterday met with Japanese Minister of Economy, Trade and Industry Takeo Hiramuma and reviewed the situation in the international oil market.
Speaking on the occasion, Hiramuma expressed support to the initiative of Prince Abdullah, the regent, for establishing the general secretariat of the International Energy Forum in Riyadh. (SPA)
