By Shane McGinley
Billionaire says Saudi oil officials are oblivious to economic threat posed by surging shale output in the west
Saudi billionaire businessman Prince Alwaleed Bin Talal said the kingdom’s government does not “get it” that increased shale output in the west poses a real threat to the country’s economic stability and addressing it urgently is “a matter of survival”.
Speaking to Canada’s The Globe and Mail newspaper, the prince said new shale oil discoveries “are threats to any oil-producing country in the world” and the kingdom urgently needed to urgently diversify its economic output in order to guarantee its long-term stability.
“It is a pivot moment for any oil-producing country that has not diversified,” he was quoted as saying. “Ninety two percent of Saudi Arabia’s annual budget comes from oil. Definitely it is a worry and a concern.”
However, his concerns have fallen on deaf ears as the kingdom’s deputy oil minister on Wednesday said the Riyadh government remains unconcerned by surging US shale output, which threatens to eat into OPEC's market share, and sees no need to cut production to support prices.
"I think that the world economic growth will be sufficient to handle growth from all sorts - shale oil, shale gas, tight oil and including renewable," Prince Abdulaziz Bin Salman Bin Abdulaziz told a conference in Dubai.
As a result, Alwaleed said he would use all outlets possible to him to convince the government to take the threat from shale seriously, as he believed many Saudi shared his concerns.
“I will make them get it; there is no doubt about that. I’ll make them get it. It is matter of survival. There is no choice but to get it. I will keep pushing until they do.
“The majority of Saudi Arabians get it. We will mobilise the media; mobilise the people to put maximum pressure on the government to do things to rectify the problem.”
While US shale oil is much more costly to produce than Middle East crude, a surge in global oil prices over the last four years has made it economic to produce and reduced demand for other crudes.
The move by Washington means the US, a top consumer of Saudi Arabian crude, is aiming to be energy self-sufficiency by 2020.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
its actually by 2017 however the IEA has said that while OPEC might see a decline in demand by 2022 the demand will rise again. Due to many things increased development in other countries and more importantly shale oil/gas wells do not have a long life expectancy because they do not produce a lot of resources per a well compared to conventional methods. the biggest threats to OPEC would properly be the Canadian oil sands. Canada has the third largest proven reserves after KSA and Venezuela. With new technology the oil sands will continue getting cheaper to produce than it does now.
Hybrid cars have taken off in Australia. The government here are expanding the use of trams, making bicycle lanes, and adding ethanol to petrol. A huge shale oil supply has been found also. The Saudis have to find a new line of industry and I believe they have plenty of sand to experiment with.
This is taken from an article on KSA: "Saudi Arabia has the largest mineral deposits in the Middle East. In the west of the country, the Arabian Shield is a major source of precious and basic minerals such as gold, silver, copper, zinc, chromium, manganese, tungsten, lead, tin, aluminium and iron. Mainly in the east, extensive sedimentary formations contain industrial minerals such as gypsum, feldspar, mica, sulphur and salt. KSA is also a source of highly prized rare earth elements such as tantalum - for which it has a quarter of the world's reserves - and niobium." Oil is nice, but without it, this place can still prosper; if only they were more inclusive and provided certain non-threatening freedoms.
The Prince is right. There is no doubt that the US wants to significantly decease it's reliance on oil supply from outside North America. The supply from US and Canadian shale, as well as vast resources in the Canadian Oil Sands, will enable them to accomplish this. All the more reason for a greater sense of urgency within Saudi Arabia, and other oil producing nations, to push forward their economic diversification initiatives. Now.