Stable global oil prices and long-term investment plans have combined to usher Saudi Arabia into an unprecedented period of progress, and nowhere is this more evident than in our energy sector. Wildly fluctuating oil prices are in no one’s best interest and I am pleased to note that the markets remained relatively calm all throughout 2013, despite a number of geopolitical and economic challenges. On the supply side, it is worth noting that over the past five years, proven global oil reserves have increased by more than 200bn barrels, despite a global consumption of 150bn barrels. Meanwhile, total resources of natural gas are believed to be in the range of more than 28,000trn cu feet – enough for some 250 years at current consumption rates.
From the government’s perspective, our fundamental message remains unchanged. Saudi Arabia, alongside other producers, is both willing and capable of meeting additional demand. It is thanks to our long-term, prudent investment plans that Saudi Arabia is able to step up and meet any new demand. We are more focused than ever on maximising the value of every drop of our precious hydrocarbons endowment. Indeed, it is by the careful management of these resources that we intend to create more jobs in the Kingdom.
Saudi Arabia will invest significant sums of money over the next five years in crude oil exploration and development to keep our production portfolio robust. Our Manifa offshore programme, one of the country’s most complex production projects to date, is evidence of the government’s commitment to this agenda. Further to this, Saudi Aramco also plans a substantial increase in conventional and unconventional gas supplies over the next couple of decades, for example through the Karan Gas Field project. Furthermore, there are still vast areas of Saudi Arabia that have not been adequately assessed, and which will need to be explored.
The downstream changes that are taking place are no less remarkable. Saudi Aramco is embarking on a great effort to evolve into a fully integrated business. For instance, it is moving ahead with an expansion of its global refining capacity, pushing the total worldwide capacity of refineries it either owns or operates as a joint venture to some 8m barrels per day over the coming decade – this is the largest of any company in the world. This investment in upstream and downstream is building great potential in Saudi Arabia’s petrochemicals industries, creating new businesses and most crucially, providing new jobs for our young people.
Saudi Arabia will continue to expand its potential in terms of unconventional gas: some estimates have even suggested that the Kingdom could hold the world’s fifth-largest unconventional gas reserves. In addition to its hydrocarbons reserves, Saudi Arabia has another distinct comparative advantage in its potential for solar energy, as any summertime visitor will agree. The Kingdom receives roughly 3000 hours of sunshine each year, and emits about 7000 watts of energy per sq metre, among the highest in the world. We have vast open spaces of desert, where large solar farms can be established on relatively cheap real estate. We are also blessed with deposits of quartz which can be used in the manufacture of polysilicon and photovoltaic cells. This presents further opportunities. We have already installed a 500-KW solar farm on Farasan Island in the Red Sea, as part of our efforts to compare photovoltaic technologies and gain operating experience.
Needless to say, the Kingdom remains mindful of the work it needs to do in the coming years with regards to energy efficiency and the reduction of its levels of energy intensity, as part of the global efforts to reduce climate change. The government certainly takes its responsibilities seriously and is an active participant in various international groups, such as the Methane Initiative and the Carbon Sequestration Leadership Forum.
It is clear that a great deal of change and progress is taking place in the Kingdom. It is also evident that Saudi Arabia is clear about its priorities, both in terms of global oil market stability and its domestic economic growth. I expect that 2014 will offer yet more opportunities, and look forward to the challenges ahead.
