Total’s chief executive Patrick Pouyanne has warned that Saudi Arabia’s social and economic reforms might be a bit too ambitious, and might not go as smoothly, not to mention as quickly, as their proponents seem to believe.
Speaking at an event in London, Pouyanne said “You don’t change into a secular regime just like that,” reminiscing about the situation in Russia after the toppling of its last Soviet leader, Mikhail Gorbatchev. Chaos, Pouyanne said, was the first stage of the transition.
The Saudi Vision 2030 program, initiated by Crown Prince Mohammed, envisages sweeping reforms in the Kingdom’s economy and society, most of them hinging on a complete transformation of its energy industry aimed at reducing its dependence on oil.
Plans for several renewable projects and allowing women to drive cars and enter stadiums are the latest indications that Riyadh is taking the initiative seriously. However, these are early steps and a lot more will need to be done if the Kingdom is to accomplish its goals.
Perhaps ironically, Saudi Arabia’s shift away from oil is supposed to be funded with proceeds from Aramco’s IPO, which has been plagued by reports about problems that may lead to a delay or even a cancellation of the international listing. The authorities in Riyadh are dismissing all such reports.
But there is another problem with the reforms, inherent in any society, as Total’s CEO noted. While about 70 percent of the young Saudis are in support of the reform, there are many older citizens of the Kingdom who might not be so forthcoming with the radical transition that Vision 2030 envisions.
Total has a very strong presence in the Middle East, with operations in Saudi Arabia, the UAE, Qatar, and, from this year, Iran, where it will partner with the local state gas company to develop the huge South Pars field.
By Irina Slav for Oilprice.com
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