Could Saudi Arabia learn from Norway when it comes to oil?
Norway has oil and gas. It is their bread and butter and so is the case with Saudi Arabia. We also have oil and gas but it is not only our bread and butter, it is also our dessert.
In other words, in Saudi Arabia we use the huge income from the energy sector to build the country but we simply overspend on our projects and waste lavishly big portion of what we extract from our depleted source of income, or the only source of income.
Oil was discovered in Saudi Arabia in 1938 and we are still failing to find ways to diversify the source of income. As a matter of fact, we have even failed in producing oil experts and strategists.
We are the most important oil and gas producing country in the world and Saudi analysts get their energy analysis from Western sources. Saudi Arabia is one of the few countries, if not the only, in the world that can produce 12 million barrels every day, 365 days a year without a sweat.
Few days ago, an Offshore Northern Seas Energy Conference was held in Stavanger, Norway. The conference was attended by our top oil expert in the Kingdom, Saudi Aramco CEO, Khalid Al-Falih. The day I read I about the conference in Norway, I recalled two articles that I wrote in this paper. One was titled, “What Norway’s Statoil did that Saudi Aramco could not do?” The other was titled “Kingdom needs oil industry think tank.”
During the conference, Saudi Aramco CEO expressed his concerns about the increasing oil sector costs and global conflicts which could result in a lack of oil supplies in the long-term, if oil firms fail to make "prudent and timely investments." But may be this is for the rest of the world. So what is it for Saudis and Saudi Arabia and how should we define prudent and timely investments?
During the conference Saudi Aramco CEO announced that there will be tens of billions of dollars in investments but at this time the prudent thing in Saudi Arabia is to simply do what the Norwegians have been doing for a long time. It is to decrease our dependence on oil wealth by finding ways of diversifying our income and establish a transparent sovereign fund for future generations.
At this time the only diversification of income that we have in the Kingdom is the petrochemical industry. And it is true that we now have one of the biggest chemical industries in the world but it came at a price. First, the chemical industries are linked with the oil and gas industry and secondly this industry harms environment.
There is another thing that we should learn from the Norwegians just by walking or driving through their streets. You don’t see highly expensive cars driven by teenagers. In other words, we have to teach our young to respect the current wealth. We must teach them not to waste it.
Currently, there is no need to increase oil production. Instead, it is vital that we cut down on our expenditures. We seem to exaggerate in our development plans and with mega and unnecessary projects we open the doors for corruption and misuse of the public funds.
Oil and gas is very important for Saudi Arabia and now we are simply burning it to cool our homes and buildings and we subsidies many strategic commodities such as electricity, fuel at the pump and the highly expensive desalinated water.
In Norway, they pay ten times what we pay at the gas pump. At the end, Saudi energy experts, please read my lips. Look at Norway and do it their way. Oil will not be here forever and we have future generations to look after.
By Abdulateef al-Mulhim
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