In the name of oil

In the name of oil

Giancarlo Strocchia
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Saudi Arabian Energy Minister Khalid Al-Falih, speaking at CeraWEEK in Houston, has given a specific warning: although the development of technologies for renewables is making great progress and the costs of these energies have significantly reduced, the "thirst" for oil worldwide remains very high and, therefore, it is necessary to continue to invest in new extraction and infrastructural projects

A breath of optimism. Following the common thread of good prospects, came the speech of Energy Minister Khalid Al-Falih at CeraWEEK 2017. Backed by the recent agreement to rebalance the oil market reached within OPEC, with the contribution of a wide array of non-OPEC producers led by Russia, the minister began by stressing that "Neither climate change policies nor technology shifts have quenched their insatiable thirst for oil. Indeed, demand for petroleum imports will continue to grow steadily in the developing world, especially with the decline in their indigenous oil and gas production". For this reason, the minister said he is "concerned that misguided projections of peak demand and stranded petroleum resources may discourage the trillions of dollars in investments needed to underpin essential oil and gas supplies, during the long transformation of our global energy system". In this sense, the Saudi government, according to the minister himself, is doing its duty by "optimizing the productive life of our reservoirs; developing our industry professionals and new technologies; or strengthening the relationships we enjoy with our partners, customers, suppliers and other stakeholders". "Despite the recent downturn," continued Al-Falih "we’ve kept up our capital spending. That has resulted in our drilling rig count remaining near an all-time record as we maintain our maximum sustainable capacity for crude oil and work to double our gas capacity, while also building the world’s largest downstream portfolio."

A demand that is expected to rebound

The minister expressed positive hopes as regards the recovery of demand. "At short term, we expect that the demand will remain fairly healthy, in the range of about 1.5 MMBD, which is higher than last year’s growth. And on the supply side, while production might increase somewhat in major non-OPEC producers like the US, Brazil and Canada, it is likely to be more than offset by natural decline among other non-OPEC producers like China, the North Sea and Mexico". Al-Falih acknowledged that "these improving market fundamentals have been boosted by the recent OPEC agreement, augmented for the first time by a new cooperative framework with major non-OPEC producers". According to the minister "OPEC remains an important catalyst to the stability and sustainability of the market, which remain the Organization’s highest priorities and have brought its members into greater alignment than at any time in recent memory". "I am optimistic about the global market outlook in the weeks and months ahead" noted Al-Falih "though I caution that my optimism should not tip investors into irrational exuberance."

Consistently positive relations with Washington

Clouds have entirely thinned out on the front of the relations between Riyadh and Washington. "Saudi government and private sector investments in the US are vast, and we will continue to strengthen our presence here", said the minister, "including multiple research centers, a number of petrochemical opportunities for SABIC, and Saudi Aramco’s flagship investment in Motiva and America’s largest refinery, just east along I-10 in Port Arthur". The minister gave words of appreciation for the new administration that has recently taken office at the White House. "We welcome the new administration’s attention to strategic energy issues, in particular its pragmatic and inclusive approach to developing all sources to build a diverse energy portfolio, and their pro-business and pro-petroleum sector policies. I personally look forward to working with the new administration—especially my friend and fellow Aggie, the Secretary of Energy Rick Perry—for the mutual benefit of our two great nations and indeed for the entire world."