The oil market can expect a “significant improvement in market conditions” which will benefit producers, operators, the supply chain and the financial industry alike, said HE Khalid A Al Falih, Saudi Arabia’s Minister of Energy, Industry and Mineral Resources and chairman of Saudi Aramco, speaking at the Oil and Money conference in London on 19 October
Market forces are clearly working and supply and demand are rebalancing, said the minister, to the extent that some analysts are now forecasting a supply shortfall.
The minister highlighted the “positive stabilising influence” which OPEC can exert on the market, adding that the recent agreement in Algiers signalled “real progress”, with “productive discussions” underway in the run-up to the OPEC’s next official meeting in November. A high level committee has been established to clarify production levels of individual OPEC members in advance of the meeting, he added. He highlighted the “critical” role of non-OPEC production, which accounts for around 60 per cent of total global supply, commenting that the willingness of non-OPEC members to freeze or cut production to promote market stability is encouraging, and noting the current positive atmosphere of collaboration.
“With improving fundamentals, rebalancing and joint action, I fully expect that market conditions will continue to improve,” said the minister.
Turning to Saudi Arabia itself, Al Falih highlighted the focus on the localisation of the oil and gas supply chain within the framework of the Vision 2020 programme to diversify the economy and promote private sector development and localisation. The Kingdom continues to make investments in the “three pillars” of oil and gas, chemicals and mining “to be ready for the cyclical upturn”. Saudi Aramco is reinforcing its upstream leadership position, doubling gas production and improving the energy mix, he said. The company is on the way to becoming the world’s largest refiner, and the Sadara project currently starting up is the world’s largest petrochemicals project, with further projects underway in the drive to add value.
The minister also highlighted Saudi Aramco’s ambitions to “go global” and the potential benefits arising from the forthcoming IPO, which would demonstrate the company’s financial strength to the broader global community and provide the transparency needed to compete in global upstream projects. It is a “win win” for global industry, the markets, the Saudi people and Saudi Aramco employees, he concluded.
