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Saudi Arabia Continuous Dependence On Oil Toughest Challenge: Al-Naimi

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By Siraj Wahab

A top-ranking member of the Saudi Cabinet has called for urgent steps to advance and develop the Kingdom’s downstream industries with a view to stimulating the economy, generating jobs and creating investment opportunities for small and medium enterprises.

Ali I. Al-Naimi, the minister of petroleum and mineral resources, was delivering a keynote address at the 2nd Saudi Downstream Strategic Forum on Tuesday. The two-day event, being organized by the Royal Commission for Jubail and Yanbu, has acquired immense importance in the industrial circles because of Custodian of the Two Holy Mosques King Abdullah’s patronage.

In attendance were global investors, entrepreneurs, economists, industrialists and chief executives officers of leading Saudi and international companies and corporations. Inaugurating the forum, Prince Saud bin Abdullah bin Thunayan, chairman of the Royal Commission for Jubail and Yanbu, said: “Our economy continues to flourish due to the unremitting efforts and great care and attention of the government which contributed to enhancing the tributaries of the national economy and diversifying sources of income that have made it strong enough to withstand the crises that swept through many global economies.”

Saudi Basic Industries Corporation CEO Mohamed Al-Mady delivered a keynote address outlining the key role in enabling entrepreneurship. Forum Chairman Abdulaziz N. Atarji of the Royal Commission for Jubail and Yanbu delivered the welcome address.

The focus of the first session was, however, Al-Naimi’s ministerial address. In one of the most candid and elaborate assessments of the current economic situation, he pointed out both the challenges and the possible solutions.

One of the toughest and the most important challenges, Al-Naimi said, is the continuous dependence on oil for government revenues. “Oil is volatile in terms of prices and production rates. For example, during the second half of 2008, prices dropped from $147 per barrel to $35 per barrel. At the same time, the Kingdom’s production slowed from 9.5 million barrels per day to 8 million barrel per day. In light of such unpredictable fluctuations, it is not appropriate to depend on the production and export of oil as a basis for national income and sustainable economic development,” he said.

He felt the Kingdom should leverage oil revenues, products and various usages to create other sources of economic growth and prosperity.

Al-Naimi described continuous population growth as another challenge. “During the first half of the 1970s, the Kingdom’s population stood at approximately 6 million. Now, the population is about 20 million, and is expected to exceed 30 million in less than 20 years … This requires the expansion of numerous services in the areas of education, health and housing,” he said.

“Equally important is the creation of appropriate job opportunities estimated at about 300,000 jobs per year. This requires the continuation of economic growth and the establishment of a sound, excellent educational and professional base to help citizens obtain the right jobs and achieve high productivity,” Al-Naimi added.

Underlining the need for promoting and expanding downstream industries, Al-Naimi said: “The Kingdom produces numerous raw materials such as oil, gas, petrochemicals and minerals. However, this was not accompanied by an appropriate increase in related secondary and finished products. In most cases what happens is that raw, or half-manufactured, materials are exported to the outside world and then re-imported back into the Kingdom as finished products, thus depriving the country, the citizen and the national economy as a whole of a lot of important investment opportunities.”

He acknowledged that the Saudi petrochemical industry has come a long way during the past 10 years. “The private sector has begun to participate in it and has capitalized on the numerous competitive edges and is making distinguished profits,” he said.

He exuded optimism that challenges can be tackled. “I am an optimist by nature. Still, optimism needs to be supported by will and effort. God willing, if we utilize our resources and effectively face the problems, these challenges can be easily overcome.”

Among those who were listening to the speeches with rapt attention was Basil Al-Ghalayini, CEO, BMG Financial Group, who drove all the way from Riyadh to attend the conference. “This is my first time at a conference on downstream industries, and the message that I took from all that I heard in Jubail is that the name of the game is coordination among business giants and small and medium enterprises,” he told Arab News. “This will provide a fillip to the economy and generate jobs and promote growth.”

Participants at a panel discussion in the afternoon focused on a number of issues including the importance of downstream industries, the promising investment opportunities they offer, the national and international future trends and their importance in diversifying sources of income.

Prominent among those who took part in the deliberations were Tony Potter, managing director, Middle East, Chemical Market Associates Inc., Saleh Fahad Al-Nazha, president and CEO, Tasnee, and Richard Crosby, general manager, SABIC Innovative Plastics. The forum has an interesting lineup of sessions on Wednesday.

Arab News

Arab News

Arab News is Saudi Arabia's first English-language newspaper. It was founded in 1975 by Hisham and Mohammed Ali Hafiz. Today, it is one of 29 publications produced by Saudi Research & Publishing Company (SRPC), a subsidiary of Saudi Research & Marketing Group (SRMG).

One thought on “Saudi Arabia Continuous Dependence On Oil Toughest Challenge: Al-Naimi

  • Avatar
    March 7, 2012 at 1:41 pm
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    The economy suffers a slow economic diversification and all projects initiated such as The Economic Cities in Jazan, Hael and Madinah are still cities on paper. With this slow growth in other industries, the Saudi economy will remain a single-commodity economy for the coming 50 years!

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