Saudi Oil Minister Ali bin Ibrahim Al Nuaimi addressing the audience during a lecture at the Center for Strategic and International Studies in Washington DC yesterday.
WASHINGTON: Saudi Oil Minister Ali bin Ibrahim Al Nuaimi yesterday called the US push for energy independence “naive,” saying the country will continue to need Middle Eastern oil long into the future.
Ali bin Ibrahim said he welcomed the surge in US domestic energy production from shale oil and gas fields, which he said will add depth and stability to global oil markets.
“Newly commercial reserves of shale or tight oil are transforming the energy industry in America — and that’s great news,” he told an audience of policy makers and academics at the Center for Strategic & International Studies in Washington. “It is helping to sustain the US economy and create jobs at a difficult time. I welcome these new supplies into the global oil market.” he added.
On the other hand, he said, it was not realistic to believe this would help the United States eliminate imports of oil, a goal of some Americans who argue energy independence is crucial for the country’s security.
Despite the domestic production gains, US imports of Middle East oil in the second half of 2012 were higher than any time since the 1990s, Ali bin Ibrahim said. The United States “will continue to meet domestic demand by utilising a range of different sources, including from the Middle East. This is simply sound economics. I believe this talk of ending reliance is a naive, rather simplistic view.”
Ali bin Ibrahim, meanwhile, emphasised that Saudi Arabia remains able to sustain its reserves at the current 266 billion barrels and said that could increase, especially if technology for extracting “tight” shale oil and gas improves.
But he contradicted comments by another top Saudi official, former intelligence chief Prince Turki Al Faisal, on Saudi oil development plans.
In a speech on Monday at Harvard University, Turki said Saudi Arabia would increase production capacity to 15 million barrels a day from the current 12.5m b/d. “Saudi Arabia’s national production management scheme is set to increase total capacity to 15 million barrels per day and have an export potential of 10 barrels per day by 2020,” Turki said.
Ali bin Ibrahim suggested Turki misspoke. “We have no plans” for that, Naimi said. “We don’t really see a need to build a capacity beyond what we have today.”
Experts say Asia and Iran are the keys to maintaining a strong - but evolving - US-Saudi Arabia energy relationship. As the United States produces oil at the highest levels in 20 years thanks to the shale boom, Saudi Arabia’s confidence in Asian markets could help keep relations between the two countries on track.
“The Saudis don’t see the North American oil boom as a threat, not in the context of the global oil market,” said a Washington-based energy consultant to governments and businesses. Ali bin Ibrahim said in a speech early this month in Doha that nobody should fear new oil supplies when global demand is rising, adding that Asia’s population growth should be a driver for future oil demand.
Saudi Arabia, the main source of global spare oil production capacity, will be one of the few places with the ability to supply China and other Asian countries. In contrast, extra barrels from North Dakota and Texas will be consumed in the United States, at least until laws are changed to allow the country’s producers to export substantial amounts of crude.
The relationship between Riyadh and Washington may be changing but the two countries still share important goals on balancing oil markets going forward. One is to keep oil prices from going too high in order to keep Iran from in check.
The United States is trying to choke funds to Tehran’s disputed nuclear programme through the application of sanctions on its oil sales. High global crude prices could hurt that effort. Saudi Arabia also does not want Iran to get nuclear weapons and is expected to keep oil prices stable.
“We are still partners but less intimate partners than we once were,” said Chas Freeman, who served as US ambassador to Saudi Arabia under former president George H W Bush.
For decades Saudi Arabia and the United States had a special relationship: the kingdom provided the United States oil, and the United States provided Saudi Arabia protection against enemies. As Saudi Arabia becomes less of an important supplier to the United States, the world’s biggest oil consumer, some see that special relationship declining.
Even as Saudi looks to other markets, it still is the second largest oil exporter to the United States after Canada, with shipments averaging 1.4 million barrels per day in the first 10 months of last year.
AFP/Reuters
