Saudi Arabia and the Opec oil states must wean their economies off energy exports immediately or spiral into decline as America’s shale revolution shatters the world order, a top Saudi business leader has warned.
Ambrose Evans-Pritchard
The Telegraph [UK]
29 Jul 2013
Prince Alwaleed bin Talal, the country’s best-known global investor, said the business model of Middle East oil exporters risks unravelling rich industrial states find ways of cutting demand. “Our country is facing a threat with the continuation of its near-complete reliance on oil: 92pc of the budget for this year depends on oil,” he said in a letter to Saudi oil minister Ali Al-Naimi.
Mr Al-Naimi and Opec leaders have taken a relaxed view of growing US shale output. “This is not the first time new sources of oil are discovered. There was oil from the North Sea and Brazil, so why is there so much talk about shale oil now?” he said last month.
Opec admits that new output from hydraulic “fracking” could chip away its dominant position in the market but secretary general Abdalla El Badri still insists that Opec “will be around after shale oil finishes”. The group is more worried about recession in Europe and a hard landing in China.
Prince Alwaleed said oil demand from OECD rich states is in “continuous decline”, and the Saudis will not be able to ratchet up their output from 12.5m to 15m barrels per day (bpd) to cover growing budget costs. “It is necessary to diversify sources of revenue, establish a clear vision, and start implementing it immediately,” he said.
A report last month by Leonardo Maugeri at Harvard University said US shale oil output could triple to 5m bpd by 2017, turning America into the world’s top producer once again…
The article continues at The Telegraph.
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