Saudi Aramco CEO: Sluggish Demand in West Not Offset by China

NEW YORK (Dow Jones), Sept. 29, 2009

Oil demand remains "sluggish" throughout the developed world, and growth in China isn't making up for the loss, said Saudi Aramco CEO Khalid Al Falih.

"It will take time to make up for the millions of barrels of lost demand that we have experienced," said Al Falih, the head of Saudi Arabia's state oil company, in an interview to air Monday evening on the Nightly Business Report on PBS. "But ultimately, it will come."

Saudi Arabia, the world's biggest oil exporter, is seeing its efforts pay off to hold down production within the Organization of Petroleum Exporting Countries. While supplies are higher than normal worldwide, prices are holding steady around $70 a barrel, roughly where Al Falih said it is necessary to encourage investment in new production. Al Falih was interviewed by anchor Susie Gharib last week in Jeddah.

Al Falih said Saudi Arabia "can survive on much lower prices than others," and that the kingdom has been "more than replacing our production." As the biggest source of cheaply produced oil, Saudi Arabia's ability to continue to replace reserves is a major concern among major energy-consuming nations.

"Our resource base is huge and it's growing," he said.

Although Saudi Arabia is looking to expand its economy beyond crude, Al Falih said "oil will be with us, not for decades but for generations to come." Attempts by the U.S. and other countries to diversify away from oil will take decades to come to fruition "in any meaningful way," he said.

Al Falih said he supports investment in alternative energy technology, but added, "I believe political pronouncements about shifting away from oil are counterproductive."  

Copyright (c) 2009 Dow Jones & Company, Inc.