Minister of Petroleum and Mineral Resources Ali Al-Naimi said on Monday that Saudi Arabia will continue to be a reliable, steady and dependable supplier of energy to the world.
Giving a frank and forthright assessment of the oil industry while delivering the keynote address at Chatham House energy conference in London, Al-Naimi said: "Saudi Arabia's domestic growth will not impact on exports now or in the future."
The highly experienced minister explained in detail as to why oil would continue to play a major role in the overall energy mix for many decades. "It is clear that a petroleum-free transportation system is decades away; and if you look at the vast range of products derived from crude oil, everything from lubricants to asphalt, medicines to plastics, it is clear petroleum is here to stay," he said.
He said Saudi Arabia has invested massively for the Kingdom's future and for the future stability of global oil markets. "It is because of our ongoing investment that we are able to respond to shortages around the world," he said. "Take issues with Libyan production last year, for example ... It is because of our investment that any future shortages will be handled."
Admitting that the Kingdom's domestic energy demands were rising, Al-Naimi said: "This has been a trend for many years and is normal for any growing economy ... The same occurred in Europe, the same is happening in China, but ever-increasing economic growth is not exponential, as Europe and the US are currently witnessing, and neither is increasing energy usage."
He pointed out that Saudi Arabia is going through a period of rapid and extraordinary economic growth. "It has a young and fast-growing population, and a GDP growth rate currently around 7 percent. Industrialization is increasing and we are witnessing an unprecedented expansion in the country's infrastructure," he said, and added that Saudi Arabia was not leaving domestic energy consumption unchecked.
According to Al-Naimi, the oil industry is experiencing a dynamic change with the US and Canada increasing domestic production, Brazil seeking to unlock its large offshore reserves, and countries such as Iraq and Libya aiming to increase production. "So (these are) dynamic times, but also a time of opportunities ... (And) this is true for many countries, including Saudi Arabia."
He updated the prestigious think-tank's delegates on some of the key investments and measures Saudi Arabia has put in place to promote the oil and gas sector and also energy efficiency.
"In 2009, the Kingdom completed a massive program to increase oil production capacity; this investment and effort is aimed at retaining our position as No. 1 supplier of oil to the world and the investment continues," he said.
Al-Naimi pointed out that Saudi Arabia was making large investments to increase refining capacity - both at home and abroad - and to broaden the range of refined goods created in the Kingdom, both for use on the domestic market and for export.
"In addition to oil, there are four major gas fields under development and Saudi Arabia has also identified potential reserves of unconventional gas. This ongoing focus on gas, for use in domestic consumption, is one of Saudi Arabia's economic priorities," he said.
Saudi Arabia has proven gas reserves of 286 trillion cubic feet, the fourth largest in the world, and finding additional gas reserves is one of the Kingdom's top priorities.
"We have increased gas production from 1.65 billion standard cubic feet per day in 1981 to 10.7 billion in 2011," said Al-Naimi. "We expect overall gas production capacity to be around 16 billion by 2020; this increase will meet a large part of our energy consumption, and will also free up even more oil for export."
According to Al-Naimi, there will always be short-term supply issues somewhere in the world. "But, in my view, it is not supply that will be a problem in the near future, it is demand," he said. "Europe faces a difficult time and it is clear that its economic readjustment will result in falling demand for goods and services; this, in turn, will impact on oil demand and imports."
On the efficient use of energy, he said it is as much an issue for Saudi Arabia, with its huge natural resources, as it is for all countries. "Increased efficiency makes sense environmentally, but also economically, and it is only by working together that countries can find solutions to these global problems."
He agreed that the Kingdom's rapid economic growth is creating additional demands on existing energy systems. "As such, we have embarked on a number of ambitious programs to enhance energy efficiency in the industrial, government, commercial, and residential sectors."
Al-Naimi said the Kingdom was taking steps to raise awareness among the public, and specifically addressing children and schools about the tangible benefits of energy efficiency.
He said the Kingdom was investing manpower, and brainpower, in efforts to develop new thinking on energy efficiency.
"I would like to particularly mention the Riyadh-based King Abdullah Petroleum Studies and Research Center; we hope and expect that it will rise to the level of an internationally renowned and respected think-tank," he said.
He said Saudi Arabia's investments went beyond oil and gas and beyond exploiting additional energy resources.
"We are investing in industrial parks and clusters which will create added value products from our natural resources - and opportunities for business. Plus, we have invested heavily in the King Abdullah Financial District in Riyadh which is set to become a center for finance in the region," said Al-Naimi.
He described the young people of Saudi Arabia as the ultimate resource. "We know that pumping oil out of the ground does not create many jobs. It does not foster an entrepreneurial spirit, nor does it sharpen critical faculties. So our investment is focused on creating jobs and employment opportunities," he said.
The veteran oil minister said Saudi Arabia has invested billions of dollars educating the young people. "We have invested in vocational training, and building educational establishments within the Kingdom; we are investing in research and development, and we are also continuing to make further investments in other critical areas, particularly health care and physical infrastructure."