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Saudi Oil Minister Calls US Energy Independence Idea 'Naive'

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Saudi Oil Minister Calls US Energy Independence Idea 'Naive'

WASHINGTON - Saudi oil minister Ali al-Naimi on Tuesday called the U.S. push for energy independence "naive," saying the country will continue to need Middle Eastern oil long into the future.

Naimi said he welcomed the surge in U.S. domestic energy production from shale oil and gas fields, which he said will add depth and stability to global oil markets.

"Newly commercial reserves of shale or tight oil are transforming the energy industry in America -- and that's great news," he told an audience of policy makers and academics at the Center for Strategic & International Studies in Washington.

"It is helping to sustain the U.S. economy and create jobs at a difficult time."

"I welcome these new supplies into the global oil market," he added.

On the other hand, he said, it was not realistic to believe this would help the U.S. eliminate imports of oil, a goal of some Americans who argue energy independence is crucial for the country's security.

Despite the domestic production gains, U.S. imports of Middle East oil in the second half of 2012 were higher than any time since the 1990s, Naimi said.

The U.S. "will continue to meet domestic demand by utilizing a range of different sources, including from the Middle East. This is simply sound economics.

"I believe this talk of ending reliance is a naive, rather simplistic view."

Naimi, meanwhile, emphasized that Saudi Arabia remains able to sustain its reserves at the current 266 billion barrels and said that could increase, especially if technology for extracting "tight" shale oil and gas improves.

But he contradicted comments by another top Saudi official, former intelligence chief Prince Turki al-Faisal, on Saudi oil development plans.

In a speech Monday at Harvard University, Turki said Saudi Arabia would increase production capacity to 15 million barrels a day from the current 12.5 million bd.

"Saudi Arabia's national production management scheme is set to increase total capacity to 15 million barrels per day and have an export potential of 10 barrels per day by 2020," Turki said.

Naimi suggested Turki misspoke.

"We have no plans" for that, Naimi said. "We don't really see a need to build a capacity beyond what we have today."

Copyright (c) 2012 Dow Jones & Company, Inc.

WHAT DO YOU THINK?

Post a Comment Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Canada Geo | May. 8, 2013
Naimi is basically in the right. Just because he doesnt sweeten the truth, like North American media broadcasting channels do, doesnt warrant any doubt on what he said. I suspect it echoed well to the audience so close to the White House. The whole thing of American energy independence is a big lie launched to get Canadian oil more cheaper. At the current rate they wont be nowhere near of not needing to suck oil from other countries.

Ron Craik | May. 3, 2013
For all your oil and gas requirements the United States only has to look to their northern, democratic, non-combative, friendly neighbor Canada. We are happy to have you as our only market for our gas and oil. Who else on the planet would sell you oil at 30% below world prices just to help you out of your economic doldrums? What other country would be so conservative as to not add all our Oil Sand potential and claim the largest recoverable reserves in the world. Guess who is holding on to a 200 year supply just for you guys?

Phill Gregory | May. 1, 2013
I feel that this type of comment is typical of a business man feeling threatened. I also sense that this individual is in denial by making a comment such as, "America will be dependent on Middle-Eastern oil long into the future." I rest my case.

Philippe | May. 1, 2013
It is not far fetch to see that the US east cost is, so far, stuck, in buying Bent crude. There is no pipeline west / east to flow crude from the Bakken North Dakota WTI. But, lately, crude by rail is starting to make a difference. Yes, the rail transport cost between Bakken and East coast destinations is presently $16. The Brent is $102.39 and the WTI $92.69 or a spread of $9.70. The pressure is on Brent. The west coast, Washington, is also a popular rail crude destination. The rail crude transport is $9.75. This makes the Bakken crude more competitive. The discount price of WTI is $6.25 or the rail transport cost. This is more pressure on the Brent. The GOM rail transport to Saint James LA or Houston is $15.00. This is $5.00 more than the existing pipelines which are unable to flow all the Mid-West WTI production. None the less on the GOM the coast of Brent is $102.39. Its competition is the LLS at $103.70 which has already put pressure on the Brent. The rail crude is making a difference. The rail crude transport from the Bakken by passes the Cushing OK bottleneck. With the WTI at $92.69 the discount from the Bakken is a profitable alternative to the Cushing waiting time. New pipeline will be online within the next 12 months that will put more pressure on the Brent price. The US Brent imports should take a dive, but will never be totally stopped. The Brent asking price for the US market should be more in line with the WTI. The LLS will align itself with the WTI. Saudi may believe that it is nave to see the US market self-sufficient, I would not hold my breath.

Eddie | Apr. 30, 2013
Saudi Arabia is clearly worried that USA will import far less from KSA and that will change the geopolitics of the entire Middle-East. KSA depends on USA for its protection and also fund its massive expenditures. Without oil exports to USA or even greatly lowered oil prices, KSA will face a major instability. Research on alternative energy continues strongly and with public sentiments against crude oil, it is not too far away when gas and alternative energy will largely replace oil in advanced economies.

West Houston Geo | Apr. 30, 2013
Quoting: "I believe this talk of ending reliance is a naive, rather simplistic view." Commenting: Its already happened for Natural Gas and well be exporting same before long. For Oil, it might be 10 years away. Five years without Obama. This guy is whistling past the graveyard. Denial aint just a river in Egypt, mfriend!.



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