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Saudi Oil Minister Warns Against Hasty Transition to Renewable Energy

2009-02-16

According to Saudi Arabia’s Oil Minister Ali Naimi, renewable energy sources are not fully equipped to meet the world’s energy demands and that governments should avoid making huge investments in developing clean energy systems. At a conference in Houston, Mr. Naimi argued that recent injection of billions of dollars by governments to develop renewable energy systems could lead to the collapse of the oil industry. He said that such steps would drive away investors which would hurt the oil producing nations as demand and prices of oil products has been falling sharply. His remarks were clearly aimed at the Obama administration which is reversing President Bush’s policies by openly encouraging massive investments in the renewable energy sector. United States has been a ‘close friend’ and seeing President Obama acting on his promise of energy independence seemed to have alarmed the Saudis. Bills approving of oil exploration along the US coasts, massive subsidies for renewable energy projects and Obama administration’s intent to reduce carbon emissions means a medium to long-term decline in oil imports and which have left the Saudis (and OPEC) concerned. Addressing concerns about the rapid growth in renewable energy investment around the world, the minister said: “We must be mindful that efforts to rapidly promote alternatives could have a ‘chilling effect’ on investment in the oil sector. A nightmare scenario would be created if alternative energy supplies fail to meet overly optimistic expectations, while traditional energy suppliers scale back investment.”

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International-UN-NGOs

Saudi king says oil should be $75 per barrel

2008-11-29

Saudi Arabia's king says the price of oil should be $75 a barrel, much higher than it is now, but his oil minister indicated Saturday that no measures will likely be taken until OPEC meets again next month. Saudi Oil Minister Ali Naimi said that the Organization of Petroleum Exporting Countries will "do what needs to be done" to shore up falling oil prices when the cartel meets Dec. 17 in Algeria. Naimi did not entirely rule out the chance that the cartel would slash output at a hastily convened meeting of OPEC members in Cairo Saturday, but he said the bloc needs to wait until the Algeria meeting to assess the impact of earlier production cuts. ...

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Arabia

Saudis plan to increase oil production and refining

2007-01-19

NEW DELHI: Saudi Arabia plans to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand, the country's oil minister said Thursday. The minister, Ali Naimi, said the plans were part of a $80 billion commitment that Saudi Arabia — the world's biggest oil exporter — had made to increase oil supplies in the global market. "Saudi Arabia is committed to increasing the availability of energy to global markets," he said. The country's priority is in investments to increase sustainable oil production capacity to 12.5 million barrels daily by 2009, from 9 million barrels now, Naimi said. "Additional projects have been identified for implementation after 2009, if warranted by market conditions." Naimi blamed the sharp rise in global crude prices over the past two years mostly on "insufficient investment and rising energy demand," especially from the booming economies of Asia. "The rise has been a wake-up call for the industry and for producers and consumers alike, who are now beginning to address deliverability problem head on," he told delegates to an international energy conference in New Delhi. Saudi Arabia, which has a quarter of the world's proven oil reserves, has a significant stake in ensuring stable markets, Naimi said. Saudi Arabia is also making substantial investments in refineries within and outside the country so to double its refining capacity to 6 million barrels a day over the next five years, he said. He said he believes there are enough oil resources to meet energy demands for the next 30 years. The best thing about this is that if the Saudis keep production up, the fall in oil prices virtually guarantees that neither Chavez or Ahmadinejad can survive in power.

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Fifth Column

Opec concerned over falling oil prices

2006-09-10

Ministers of the Organisation of the Petroleum Exporting Countries arriving in Vienna on Sunday have indicated concern that oil prices may fall. Though the eleven-nation group is unlikely to officially reduce its production quota when it meets on Monday, the change in ministers’ tone could be a harbinger of things to come. “Inventories are very comfortable, prices are coming down and nobody is concerned about a shortage of supply,” Ali Naimi, Saudi Arabia’s oil minister and Opec’s most powerful member, said as he arrived in Vienna. ADVERTISEMENT At previous meetings Opec members, including Saudi Arabia, have voiced discomfort about oil prices being too high, threatening global economic growth. But there was little the group could do because its members were largely already producing at full capacity while high prices were prompted mainly by worries about sudden interruptions in supply caused by hurricanes or geopolitical tensions. Now ministers no longer think oil prices, at around $67 a barrel, are too high. Instead they are concerned that the recent $10 drop in prices could be a sign that the market is at the beginning of a larger correction, one that could eventually impinge on oil producers’ revenues. In the US, for example, sport utility vehicle sales fell 14 per cent in August, while sales of compact cars were up 18 per cent. Opec expects oil consumption in North America to increase by only 90,000 b/d in 2006, compared to the 230,000 b/d jump it experienced in 2005 and 520,000 b/d in 2004. This would see Opec increasingly dependent on strong economic growth in China and other developing countries feeding demand for oil. But this brings back bad memories of 1997, when Asia’s financial crisis took Opec by surprise and the drop in demand from the region eventually pushed prices down to $10 a barrel. China, which in 2004 saw demand jump by 790,000 b/d, with other Asian countries adding another 430,000 b/d, is expected to register growth of 540,000 b/d this year. No analyst is talking about a retreat to $10 per barrel, but even a slide to a more realistic $50 would displease many Opec ministers. To guard itself against a sudden oversupply in the market Opec is already producing 500,000 b/d below its quota of 28m b/d. At the group’s meeting the ministers are likely to raise the possibility that they will have to take action at their next meeting in December. With oil prices still in the mid-$60 range, output cuts risk painting the group as a greedy cartel and enemy of the west. Until their next meeting, ministers still have two months of hurricane spotting to do and three months to keep tabs on the unfolding diplomatic drama between the west and Iran. By then they should also have a better grasp of how cold the northern hemisphere’s winter will be and how much heating oil the US and Europe will need.

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Arabia

Saudi-U.S. talks focus on peace and oil prices

2005-04-25

U.S. President George W. Bush welcomes Saudi Crown Prince Abdullah bin Abdel-Aziz to his Texas ranch today for talks expected to focus on the Middle East peace process and soaring oil prices. Before going to visit Bush, the crown prince will meet in Dallas, Texas late Sunday with U.S. Vice President Dick Cheney, who will also take part in Monday's meeting. Bush and Abdullah will also discuss Israel's pullout from the Gaza Strip, Syria's role in Lebanon and a U.S.-Saudi economic agreement that would speed the kingdom's entry to the World Trade Organization. On the Middle East, the crown prince was expected to raise his initiative for ending the Israeli-Palestinian conflict, which the Arab League adopted at its summit in 2002 but which Israel has rejected. The blueprint, raised anew at last month's Arab summit in Algiers, calls for the creation of a Palestinian state and offers Israel peaceful relations with Arab countries if it withdraws from Arab land it has held since the 1967 war. But the White House has shown little interest in that plan, focusing most of its energies on seeking global support for Israel's decision to withdraw from the Gaza Strip while keeping some West Bank settlements. Another sensitive topic will be soaring gas prices in the United States, which experts blame in part for the sharp drop in Bush's approval ratings - to his lowest level in some polls since taking office in January 2001. Bush has promised to press Abdullah during Monday's meeting to do more to help ease global oil prices, which have soared well beyond $50 a barrel. But he has acknowledged there may be little the Saudis can do to quickly bring down prices. Saudi Oil Minister Ali Naimi promised last week to increase production capacity to 12.5 million barrels per day by 2009 from the current 11 million limit and, if necessary, eventually develop a capacity of 15 million barrels per day. The kingdom now pumps about 9.5 million barrels daily.

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Arabia

Saudi oil minister says attacking oil facilities almost impossible

2005-02-09

RIYADH - Saudi Oil Minister Ali Naimi said on Tuesday that the kingdom has invested heavily in security for its oil installations and the threat of attacks against them is almost "impossible." This guy is wearing a giant "kick me" sign on his ass. Naimi said any attacks, should they happen, would not impact Saudi Arabia's oil production and exports. "Although a high level of security has been in place for decades on oil installations, we have, over the past year, taken additional measures to negate any possibility of a terror act, even if this possibility is slim," he said. Naimi spoke on the sidelines of a four-day anti-terrorism conference, which wrapped up Tuesday. Delegates from more than 50 countries and international organizations urged in a joint declaration closer cooperation and coordination among nations in the fight against terrorism. Late last year, Osama bin Laden, the leader of the Al Qaeda terror network, urged his followers to attack the kingdom's oil installations to weaken both the West and the Saudi royal family. "The oil installations have not been attacked, despite the aim of the terror leaders. Oil installations in the kingdom are under concentrated protection on different levels, which makes it difficult, if not impossible, for terrorists to reach them. If it happens, the impact on the kingdom's production and exports will be negligible," Naimi said. Terror attacks in the kingdom have targeted security forces and foreign workers, some employed in the oil industry, but none have been against oil installations. Naimi said that there has been a "substantial effort exerted by the kingdom in protecting its facilities. There is always more to be done, but I think we are confident today that our facilities are very, very inaccessible to intruders." "Any statement by leaders of terror organizations about our facilities will always be taken seriously," Naimi said. State-run oil company Saudi Aramco boasted 7,000 security staff some of whom are furriners and actually know what they're doing and "our objective is zero-impact of terror activities on all our facilities." Pressed on the departure of some essential foreign workers in the wake of attacks last year, Naimi said: "There's no need for anxiety in this area. It has been sensationalized more than it should be. I believe the reaction by a few countries to discourage their citizens from coming to Saudi Arabia was somewhat exaggerated." "I mean, there's less than a one in four chance they'll be decapitated," he explained further. Saudi Arabia, he added, is far more secure than many other oil-producing countries. Doncha just feel reassured?

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Arabia

Oil prices fall despite Opec output cut

2004-03-31

I’m posting this under Arabia because of the clear signs that the Saudis intend to move prices up - a shift from their historic role. World oil prices slipped back on Wednesday, despite Opec’s decision to cut output by 1m barrels a day, as the market reacted to higher-than-expected US crude stocks. In New York, crude contracts for May delivery were down $1.15 by late morning, at $35.10 per barrel. The drop followed news that US crude oil stocks increased to their highest levels since Augusts 2002 in the week ending March 26, up 5.7m barrels to 294.3m barrels. Earlier, in a statement after its Vienna meeting, Opec confirmed it had agreed to reduce output to a total of 23.5m barrels a day, with immediate effect. The statement blamed current high oil prices on speculation on energy futures markets and concerns over US gasoline supplies. Saudi Arabia, the world’s biggest exporter of oil and Opec’s most influential member, denied claims made in the media that it had led the decision to cut output. mmmm hmmmm .... "I think all of this reporting contributed to major misunderstanding of Saudi about leading Opec to decrease production. Let me say exactly that this is incorrect. Saudi Arabia is not leading anybody," said Ali Naimi, Saudi Arabia’s energy minister. Nope. Not us. Ain’t no major market movers here in the magical Kingdom. Nobody here but us romantic Bedouin tribesmen, full of virility and honorable code of the desert & stuff. In Washington, the White House said it had not sought directly to persuade Opec not to cut output. Scott McClellan, the White House spokesman, said the administration "remained engaged in close discussion with major producers from around the world. We believe oil prices should be set by market forces in order to make sure that we have adequate supplies available." President George W. Bush "is concerned about rising gas prices". Meanwhile, investment banks have begun to predict that oil will this year have an increasing impact on the world’s economic recovery. Goldman Sachs estimates that growth in the Group of Seven industrial countries will be 0.3 per cent lower in the next 9-12 months because of the rise in oil prices. In the US, the bank believes the fading effect of the tax cuts will bring the pinch to real incomes to the fore. Michael Rothman, analyst at Merrill Lynch, agreed with Opec’s assertion that it was only partly responsible for the rise in oil prices. Mr Rothman believes $5-$7 of the price is attributable to hedge funds, that have entered the market in record numbers. Some funds are seeking a sanctuary from a falling dollar by investing in oil futures - whose prices go up as the greenback falls. "Opec’s real dilemma is trying to get people to understand the difference between a cut that meets market requirements or a cut in supply that makes the market have to scramble for barrels," Mr Rothman said. He calculated that if Opec failed to cut 1.7-2m barrels of its output in the coming months it would face a 2m b/d build in oil inventories in consuming countries - in addition to the usual season increase of 900,000 b/d. Oil inventories usually increase in the spring as the northern hemisphere no longer requires winter heating oil and the summer driving season has not yet kicked into gear in the US. Saudi Arabia and Opec are keen to keep inventories as low as possible because it gives them more control over the market. Fathi Hamed Ben Shatwan, Libya’s energy minister, on Tuesday said that 1m b/d represented only 1.5 per cent of the worldwide supply: "If we cut it, it’s no problem. If we leave it, it will be accumulated in stocks and these will affect the price." Many Opec countries, but especially Libya and Algeria, who pay for many of their imports in euros, stress that the price of oil is in reality 30 per cent lower than the current level because of the recent steep fall in the dollar. Non-Opec countries that in the past have co-operated with the cartel, on Tuesday did not appear as eager to join the cuts. Russia criticised Opec, saying prices were too high, but Mexico said it wanted market stability, adding that the cartel had not yet reached a formal decision. Mexico said it was co-operating with Opec by meeting with Saudi Arabia, but has so far decided not to join the cuts. And if you do, there is an immigration proposal the US might want to reconsider.

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Arabia

Foreign Companies to Drill for Saudi Gas

2004-03-08

In a milestone agreement, Saudi Arabian officials signed contracts with foreign oil executives Sunday to explore for natural gas in the country's vast southern desert known as the Rub al-Khali, or Empty Quarter. Saudi Arabia boasts the world's fourth-largest deposits of gas, but the government had never before invited foreigners to make competitive bids for rights to explore for this resource. The four winning companies, including two from Russia and China, said they expected to invest several billion dollars to develop any gas they discover. U.S. firms were conspicuous for their absence among the winners of these landmark deals. However, Saudi Oil Minister Ali Naimi played down any significance in that regard and instead stressed the advantages of working with a mixed group of what essentially are second-tier energy companies. "We actually chose the most malleable best bidders, and we are in fact very pleased at rewarding the Russians and Chinese for their votes at the U.N. this diversification," he told a news conference at a government conference center in the Saudi capital, Riyadh. I think they've heard of .com's plan for the Eastern quarter -- we may have to expand the Republic of Eastern Arabia! Saudi Aramco, the state-run oil concern, took a 20 percent share for the non-working princes in each of the three contracts awarded. Its partners are Lukoil Holdings of Russia; China Petroleum & Chemical Corp. (SNP), or Sinopec; and a consortium comprising Italy's Eni SpA and Repsol-YPF SA of Spain. Each partner has an 80 percent stake in its project. The contracts are to last for 40 years, with exploratory surveys and drilling to begin immediately. Saudi Arabia wants to use its undeveloped gas as a bargaining chip fuel for an ambitious range of planned industries, including plants to treat and desalinate water and factories to make petrochemicals, steel and cement. Naimi said plans for exporting gas are also envisioned, but he stressed that Saudi Arabia must first use its gas to meet its domestic needs of diversifying an oil-dependent economy and creating jobs for the country's burgeoning population. The Oil Ministry offered up for auction three areas in the northern Rub al-Khali in July. Although 41 companies expressed interest, only six placed bids, and of these only one - ChevronTexaco Corp. - was American. It placed second in the bidding for all three contracts. Yahya Shinawi, the ministry's director general in charge of technical affairs, said he was surprised to see a U.S. "super-major" like ChevronTexaco participate even to this extent. "You don't usually see super-majors in frontier areas. They usually come in later," after other, less cautious companies have already found gas or oil, he told reporters. Some analysts had a different explanation for the small number of bidders. "A lot of companies couldn't make the numbers work," said Martin Purvis of Wood Mackenzie, a consultancy based in Edinburgh, Scotland. Saudi Aramco will pay a comparatively low price for any gas that its partners might find and will also keep sole ownership of any oil, he said. Purvis added that the auction's outcome appeared to be "a political play" concerning Russia and China. Naimi, the Saudi Oil Minister, lent credence to this idea, in spite of insisting that Lukoil and Sinopec had won their contracts on the objective merits of their bids. Yep, the Soodi princes are hedging their bets.

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International-UN-NGOs

Opec announces surprise oil output reduction

2004-02-10

The Organisation of Petroleum Exporting Countries on Monday promised to slash 10 per cent of its output by April, in a bid to prop up prices ahead of the summer, when demand in its largest markets falls steeply. The powerful 11-country oil cartel, meeting in Algiers on Monday, resolved to stop cheating on its 24.5m barrel a day quota immediately, a move which would cut output by 1.5m barrels a day. we’ll see how long that lasts Opec’s 10 active members - Iraq’s struggling industry is not subject to the quota - then intend to reduce their quota on April 1 by a further 1m barrels a day to 23.5m. Much of the reduction would have to come from Saudi Arabia, the group’s biggest and most influential member. The decision pushed oil prices higher, with Nymex crude, the US benchmark, jumping 72 cents to $33.55 a barrel by midday in New York and IPE Brent, the European benchmark, rising 73 cents to trade at $29.84. "This decision is preemptive action against a fall in prices," said Obaid bin Saif Al-Nasseri, United Arab Emirates energy minister. Opec is worried about a short-term price collapse as the winter comes to an end in the US and Europe - the largest importers of oil. Demand for oil drops substantially between April and June as heating oil is no longer needed. They’re also terrified as Iraqi production approaches its level under Saddam - and potentially goes way beyond that. The production cut comes despite the fact that oil prices have in recent months been consistently above Opec’s preferred range of $22-28 a barrel, although this was defined before the dollar’s steep decline. "The price now is high, but do you know what the price will be in April, May, June?" said Ali Naimi, Saudi Arabia’s energy minister. "Should we wait until we have a crash and then work like we did last time? In 1998 it took us almost two years to get things back to normal." According to the International Energy Agency, the developed world’s energy watchdog, demand for Opec’s oil would plunge to 23.3m barrels a day during that time. The IEA estimated Opec - including Iraq - produced nearly 29m barrels a day in December, the highest level since March 2001. When Opec meets in Vienna on March 31 it could reverse its decision if it finds demand and oil prices remain high, delegates said. Mr Al-Nasseri said: "If prices stay at current levels or if they go higher, we would reconsider." The US, the world’s largest consumer of oil, reacted cautiously. "It is our hope that producers do not take actions that undermine the American economy and American workers, and American consumers for that matter," said Trent Duffy, a White House spokesman. So far, high oil prices have shown little sign of holding back the US economic recovery. Analysts said the impact of Monday’s announcement is expected to be further limited by the fact that Opec members desperate for revenue are unlikely to adhere to all the cuts the cartel announced. Oil prices have hovered above $30 a barrel in part because large funds have continued to buy oil as Iraq struggles to return to the market, storage levels in major consuming countries remain low and demand from the US and China grows at a faster rate than expected. Josh Sadler, vice-president of energy trading for Societé Générale, said in a report that Opec’s aim may have been to reassure investors. "Even if the practical reality of such a cut is complicated, the psychological effect is certain." true enough - the lower dollar has been affecting derivative securities in a variety of commodities. And since oil is priced in $$, a lower $$ means less purchasing power to OPEC sellers.

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International

Opec ministers in a quandary over quotas

2004-02-05

it’s All About The Oil (Income) Faced with an expected seasonal drop in demand but continued strong oil prices, the Opec cartel is in a quandary over whether to change the amount of oil it supplies the market. Energy ministers from the 11-member Organisation of Petroleum Exporting Countries, which produces nearly 40 per cent of the world’s oil, have sent mixed messages about whether they will maintain their output quota of 24.5m barrels of oil a day, or reduce it to head off a slide in prices as the winter ends and demand falls in the northern hemisphere. They will meet on Tuesday in Algiers to discuss the issue. Many Opec members are producing more than the 24.5m barrels as US benchmark oil prices remain above $30. The preferred $22-28 band for the price of Opec oil has long been surpassed, even though Ali Naimi, Saudi Arabia’s energy minister, recently insisted the range was still valid. "In Opec in general and Saudi Arabia in particular we would like to see prices between $22 and $28, as near as possible to $25, and to stay there. That is a goal," he said at the World Economic Forum in Davos last month. Low inventories in the US and other major consuming countries and a colder than expected winter in the US and Europe, as well as Iraq’s delay in fully re-entering the market have helped to keep prices high. But the International Energy Agency, the consumer watchdog group, expects demand to plunge in the second quarter. Petroleum Intelligence Weekly expects demand for Opec oil to be 4.3m b/d below its estimates of Opec output, highlighting the reason ministers are considering a cut, despite current high prices. Cartels are unnatural beasts. There is always incentive for someone to go outside the agreement in order to make an extra buck or two. John Waterlow, analyst at Wood Mackenzie, said: "This is a pretty critical time of the year. Everyone expected and they expected to have to cut come this spring because that is what they would normally have to do." But a cut could push up oil prices, which would anger Opec’s customers and may risk slowing US and Chinese growth. Jim Placke, a senior associate with Cambridge Energy Research Associates, pointed out that with questions about the future growth of Russian oil exports threatened by Moscow’s intervention in the sector, the global oil industry was "a little bit stretched right now". Though Opec’s surprise cut last year has made observers wary of making predictions about forthcoming meetings, Mr Placke said: "The easiest thing to do is always to do nothing."

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