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Julianne Geiger

Julianne Geiger

Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.

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Saudi Arabia Says It is No Longer An Oil Producing Country

When Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman announced that Saudi Arabia was no longer an oil-producing country, he likely didn’t mean literally. 

“Saudi Arabia is no longer an oil country, it’s an energy-producing country,” the Energy Minister told S&P Global Platts this week.

Saudi Arabia has high green ambitions that include gas production, renewables, and hydrogen. 

“I urge the world to accept this as a reality. We are going to be winners of all these activities.

Saudi Arabia will surely benefit from the green transition. While the Exxons, Chevrons, and Shells of the world are busy doing climate activists’ bidding in the boardroom and courtroom, NOCs--particularly in various OPEC nations--are all-too-eager to take advantage of what will surely be increased oil prices. 

Already Saudi Arabia has raised its official selling price for the month of July to Asia.

But that doesn’t stop Saudi Arabia from pursuing its green ambitions--the Saudi Green Initiative--while funding those green ambitions through oil sales. Saudi Arabia plans to generate 50% of its energy from renewables by 2030, in part to reduce its dependence on oil. In 2017, renewables made up just 0.02% of the overall energy share in Saudi Arabia. 

But that doesn’t mean Saudi Arabia is planning on producing any fewer barrels of oil. And it doesn’t mean that Saudi Arabia is planning on halting funding for all new oil and gas projects, as the recent IEA bombshell report has suggested the world must do to reach net-zero by 2050. Saudi Arabia has long maintained that oil will remain a dominant energy source for decades.

Saudi Arabia’s Energy Minister said that the IEA’s net-zero pathway spelled out in its most recent report was like a sequel to La La Land. In fact, several oil-producing and oil-consuming nations have dismissed the report.

Saudi Arabia’s oil revenues--which will fund any green aspirations the country may undertake--have dwindled over the last year and a half, and state-run oil giant Aramco had to hold bond sales just to pay its hefty dividend to the state.

Nevertheless, the world’s largest exporter of crude claiming it is no longer an oil-producing country is noteworthy indeed.

By Julianne Geiger for Oilprice.com

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  • Mamdouh Salameh on June 06 2021 said:
    Since the discovery of oil in Saudi Arabia in 1938, Saudi Arabia has been an oil-producing country producing overwhelmingly crude oil and natural gas with its budget dependent on the oil export revenue to the tune of 85%-90%. Nothing has changed since then.

    So it is no more than semantics for Prince Abdulaziz bin Salman, the Saudi energy minister to announce that Saudi is no longer an oil-producing country but an energy-producing one.

    Even when Saudi Arabia replaces oil and natural gas with solar and nuclear power for electricity generation and solar power to fuel its water desalination plants as part of its drive for diversification and also produces blue hydrogen for use in its industrial plants, it will still be an oil-producing country because its revenue comes overwhelmingly from crude oil exports.

    And whilst International Oil Companies (IOCs) are coming under heavy pressure from boardrooms, courtrooms and ill-thought-out proposals from the IEA as a roadmap to the illusionary zero emissions, the National Oil Companies (NOCs) are stepping in to fill the gap and benefit from rising crude oil prices.

    The battle for global oil dominance and reserves is already being won by the NOCs since the IOCs are finding it extremely difficult to replace the reserves they use because of resurgent resource nationalism.

    Whilst top IOCs such as Total, BP, Shell, Chevron, ENI, ConocoPhillips, ExxonMobil, Equinore and Repsol have reserve to production (R/P) ratios ranging from 8.0-10.5 years, the NOCs of countries like Saudi Arabia, Iraq, UAE, Venezuela and Kuwait to name but a few have access to proven reserves whose R/P ratios range from 66-91 years at the 2019 production levels. For instance, Shell expects to have produced 75% of its current proven oil and gas reserves by 2030, and only around 3% after 2040.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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