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February 24, 2006 |
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OUR PROGRAM AIMS AT INCREASING OUR PRODUCTION. SAUDI ARABIA STARTS PUMPING AHEAD OF SCHEDULE FROM ITS HARADH OILFIELD. KOFI ANNAN CALLS FOR AN END TO POLLUTION OF THE ENVIRONMENT AND URGES OIL PRODUCING NATIONS TO SPEARHEAD EFFORTS TO DEVELOP CLEAN ENERGY. Saudi Minister of Petroleum and Mineral Resources Eng. Ali bin Ibrahim Al Naimi reiterated Saudi Arabia's commitment to provide enough oil supplies and help create a stable oil market, but he said the challenge is bigger than could be shouldered by the Kingdom of Saudi Arabia alone amid increasing demand and ailing resources base in several areas. In a key speech before the 4the annual conference of Cambridge Energy Research Associates, currently ongoing in Houston, Texas, USA, Al Naimi gave definitions for oil ideal market, oil balanced market and said when oil prices drastically or drop, they lose their ability to continue, obliging the oil prices to always provide an impetus to rationalize this source of energy without pushing consumers to look for an alternative. He said there is need to draw road maps for both demand and supply of oil. Saudi Arabia's road map, its future plans to increase its capacity in the field of production and refining and its views on the future of energy have been drawn, he told the conference. However, he said, the oil road map is one of the most difficult to draw as it is subject to changes, fluctuations and interference of unforeseeable elements, he said. He said oil prices predictions could not be seen on the map despite their importance. He said nobody could ever give for granted price predictions for the next month, next year or after ten years. He said oil prices are the product of a complicated reaction among a number of forces and abrupt incidents which together work on daily bases in the oil market. Our understanding of these forces and the way they affect the oil prices is limited due to the lack of accurate information, he said, adding that, the matter will be more complicated if we add to it our failure to predict unpredictable things e.g. political, economic or natural incidents that could turn the situation upside down. He said better understanding of these forces and their implications will much help us to increase our knowledge of the road's landmarks ahead. This will lead me to speak about the current situation of oil industry before tackling the future of this industry and the obstacles on the way, he said. He drew attention to the fact that oil industry was characterized by abundance of sources, easiness of producing these sources in big quantities and at a relatively low cost. Today, we are no longer facing the increase of supply or find ourselves busy running a surplus of energy within our limited supply network, he said, adding that, we face a completely different issue. There are restrictions imposed on the side of supply and are said to be coming out of the nature of investment patterns in oil industry and the change of base of the cost of oil supplies, Al Naimi said, adding that, the main impetus after this was profit-taking, leading to inflicting several wells dire harms. He cited the discovery of a giant oil field in east Texas in the early thirties of the past century as leading to an historic drop of oil prices. He said the role to control prices and not allow the supply factor to determine the price was left in the eighties for OPEC to play rather than oil producers in the States. Al Naimi said low oil prices led to a revolution in infrastructures and development in Europe and America before tending to rise. By the 1970s, it became apparent that low oil prices could no longer continue as demand was dramatically increasing and the surplus capacity was drastically diminishing. He said OPEC then realized that there is need for higher oil prices to encourage rationalization and efficiency of use. He said the changes witnessed in the 1980s was swift and painful for the oil industry as there was a decrease in production and a lack of efficiency at the consumption network. As the changes caused by high prices were unfortunately not strict, the index retreated again towards an increase of supply, he said, adding that with the decrease of demand and increase of supply, the oil industry capacity and its desire to meet the market supply with refined products has vastly over passed the needs of consumers. He said the only way to restore equilibrium is to increase demand with/ or decrease the productivity capacity. This took 20 years to do, he said. But the surplus capacity has now vanished to the extent that we are no longer able to absorb any big increase of demand without new giant investments in this field. Speaking about the future of oil industry, Al Naimi said the current situation was seen by some as ideal as oil prices are high, demand is growing and the productivity capacity is relatively limited. But the ideal situation is when supply and demand are balanced with a surplus suffice for supplying the market at the occurrence of any disruptive incident. This situation is not available today, he stated. He said the current deficiency in capacity would lead to an ugly scenario if a small confusion of supply or increase of demand took place. The minister said the ideal balanced market is when prices go to the benefit of both consumers and producers. Producers should in any case earn what could not harm their economic growth. Oil prices should always provide the incentive to rationalize this vital source of energy, without pushing consumers to explore for an alternative, Al Naimi said. He said the question today is to look for a way or ways so that the oil industry could create a balanced market that guarantee a prosperous future for it and simultaneously meet the aspirations of the world peoples. This is possible, he stated. He said the matter requires cooperation of all parties. We are going to provide secure and clean products for energy, but this will not take place without skilled effort and an extent of taking risks that lie in the sides of supply and demand, he said. He started to discuss demand before supply when he presented the major hazards and obstacles expected to face the Kingdom of Saudi Arabia, the world's leading oil producer and exporter, on the way. He said what makes us optimistic about the future is the long-term growth of the world economy within globalization. He said world economy growth benefits the sector of business. This achieves a big increase on demand on oil over the coming years. But the question is how much increase? This is a source of difference among experts as regards the economic growth strength, efficiency of increasing rates in using energy and the role of types of alternative energy. At this point, petroleum takes a good position, he said, adding that oil will likely remain the favorite energy in the transport sector. He added that we are expected to enter into gigantic projects that require pre-paid considerable capitals that would not yield its earnings before long time has gone. Therefore, there is no room for error when we deal with such sizable projects, Al Naimi said. He added that the problem, then, is lack of enough information and precise analyses. In addition, our ability to know and expect the factors affecting the increase of demand on oil in a number of countries is weak at the best. He reiterated that the oil industry is inflicting big capital commitments to meet the future needs of energy for world peoples. For this reason, we are ready to support consuming countries' road maps on demand as this will definitely help us find our way in our map for the future, he concluded. He said much remains to say about demand in terms of quality that encourages taking investment decisions. Al Naimi said we have to provide clean energy but at an affordable cost for poor consumers. He warned against arguments to reduce living costs for the sake of clean environment as this is like replacing a health danger by another health danger. This is exactly what would happen if we coerce consumers, as some have suggested, to refrain from using petroleum to pave the way for other less effective and more costive alternatives that don't match with the market requirements. The Saudi minister said the most rational way is to improve products we are using and the way we are using them. He cited the Kingdom's support for research on technologies of separating carbon that drastically curb the condensations of carbon dioxide in the atmosphere at far less cost than the radical solution of refraining from using hydro carbonates. However, he cited that the Kingdom would support innovation that leads to better solutions for human being. He recalled that mankind has changed to oil, putting aside wood and coal despite the fact that none of them has depleted as a raw material. Today, we are using hydro carbonates, who knows what we will use tomorrow, he interrogated. He said the problem is that nobody could predict the day or period of that change from oil. However, the possibility remains there, he said, adding that we don't see something in the offing that hints to any change. But the possibility of the explosion of the volcano is always existing. He called on the governments of the world to contribute to supporting energy consumption efficiency not through tax systems but through investment in research and development of new technologies. On the future of oil supplies, the minister drew the attention to the fact that the problem concentrates in the ability to provide supplies rather than the existence of supplies. He said the ability to provide supplies to consumers is a logistic one while the availability of supplies is a matter of resources. He said the impact of prices and technology might not receive the desired interest. He cited that two months ago and while touring the divided area between Saudi Arabia and Kuwait, he witnessed a scientific experiment to increase the rates of extraction from heavy oil fields according to "steam injection" method that is expected to increase the rates of extraction from heavy oil fields from about 6 percent to more than 40 percent. Regarding Saudi Arabia's future plans in the field of oil, Al Naimi said our main objective is to remain a stable source of world energy markets. To this effect, the Kingdom is adopting a giant program to gradually augment the capacity over the four coming years from its current levels of 11 million bpd to 12.5 million bpd, he said, adding that the first step in this way is to add 300,000 bpd of light crude from Haradh field. In terms of refining, the Kingdom is playing its role in alleviating the pressure of the refining problem downstream through investment locally and internationally, the minister said, citing the construction of two new refineries in Jubail and Yanbu at an estimate refining capacity of 400,000 bpd for each. Al Naimi gave several examples of domestic and international refining projects. He cited agreements and studies for joint ventures in the United States of America, China, Japan and South Korea. He said this would increase our refining capacity by 50 percent over the coming five years to about 6 million bpd. This is a clear and ambitious road map and that the investments we are exerting are vital to a stable oil market in future. Concluding his lecture, Al Naimi said the oil industry is facing serious challenges but not unsolvable ones. The difficulty of today goes back to the seventies and the eighties when the over flooded market has not provided enough incentives to continue investment in the world energy infrastructure, he said, adding that again the lack of a future vision is peeping out as the future challenge is in the first place an investment problem that has nothing to do with the availability of oil supplies. He concluded that if enough levels of investments were made available together with the technological inventions, this would be enough to forecast a prosperous future for oil industry. On the other hand Saudi Arabia has started pumping ahead of schedule from its Haradh oilfield, which is expected to add 300,000 barrels per day (bpd) of new Arab Light crude by the second quarter of the year, Saudi Aramco said. 'Initially, oil and its associated gas began pulsing through the new Haradh GOSP-3 ... Once fully on-stream, the facility will crank out 300,000 barrels of oil and 140 million standard cubic feet of gas per day,' the state oil firm said in a statement. The statement said full production would be reached within the second quarter of 2006. It gave no details on current pumping rates. Under the patronage of Shaikh Hamdan bin Rashid Al Maktoum, UAE Minister of Finance and Deputy Ruler of Dubai, the Saudi Law Training Centre (SLTC), with the support of DIFC and CNBC Arabia, will stage the First GCC Capital Market Forum at the Al Bustan Rotana Hotel Dubai from March 14-16,2006. The opening ceremony will take place at the Burj Al Arab on March 13, 2006. The conference organiser Majed Mohammed Garoub, Head of the SLTC, explained that the forum is being held to discuss the strength of the Gulf's financial markets. The region is rapidly developing into a strong presence in global finance, and governments are working hard to develop their nations politically, economically and socially. The establishment of a common Gulf market, along the lines of other regional groupings such as the European common market, is a critical factor in dealing with the huge regional and international challenges that must be dealt with by governments. The 1st GCC Capital Markets Forum will explore these subjects with the participation of renowned and expert speakers on financial and market related topics. The SLTC with the help of the DIFC has launched the 1st GCC Capital Markets Forum to be a stepping stone to explain and discuss the procedures, laws and rules that will enhance performance of the Gulf stock exchanges. Discussions in the forum shall focus on explaining the general law framework and listing procedures, and explaining the legal responsibilities of listed companies and their managements. The role of banks, brokerages, consultancies, experiences of neighbouring countries, and the impact of media on the markets, will also feature among the topics discussed. Special papers will be presented on the main themes of the forum the legal responsibility of board members and management, impact of financial markets on family owned companies in the Gulf and on concepts of corporate governance. Garoub said that invitations have been sent to heads of financial markets in the Gulf and banks, and specialists in administration, economy and the law to share their experience and expertise at the forum. He expects the number of attendees to exceed 400 from the finance and economics sectors, investors and financial market players, owners of funds and heads of major banks. In Dubai United Nations Secretary-General Kofi Annan called for an end to pollution of the environment and urged oil producing nations to spearhead efforts to develop clean energy. Speaking in the United Arab Emirates, a major oil producer, where he received the Zayed International Prize for the Environment, Annan said the world was doing too little to safeguard the environment by continued reliance on fossil fuel. Following is the Secretary General's speech: Your Highness, [Sheikh Mohammed Bin Rashed Al-Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai] Your Excellency Mr. Witoelar, [Indonesian State Minister for the Environment and President, UNEP Governing Council] Excellencies, Dr. Fahad, [Chairman, Zayed Prize] Fellow prize-winners, Klaus, Ladies and Gentlemen, It is an honour to be in the United Arab Emirates to receive this prize, named after Sheikh Zayed Bin Sultan Al Nahyan, whose commitment to the environment was well known here and around the world. I would like to thank His Highness Sheikh Mohammed Bin Rashed Al-Maktoum for his vision in creating this award, and his generosity in serving as its patron. I must also offer my sincere condolences to His Highness and to the people of Dubai for the loss of the former Ruler, Sheikh Maktoum Bin Rashed Al-Maktoum, whose death last month came as a shock to us all. During this period of grief, our condolences go especially to Sheikh Mohammed and the rest of the Maktoum family. Ladies and Gentlemen, To stand here in the UAE, and especially in Dubai, is to stand on the soil of one of the world's great economic miracles. It is a country whose leaders and people have learned the importance of using scarce resources efficiently. It is a land that knows the importance of human and intellectual capital. Here in the heart of the world's oil region, Dubai itself derives less than 10% of its income from oil. And it is a civilization grounded in strong cultural and spiritual values, which recognizes that sustainable development will not succeed without caring for and conserving the world's natural capital. That understanding lies at the heart of the United Nations' global mission of peace and development. Yet all too often, the environment has been viewed as a domain of limitless bounty -- a realm over which humans could exercise heedless dominion. And protecting the environment has been considered an afterthought, or even a luxury. Again and again, from antiquity to the modern era, humankind has been shown the folly of such assumptions. Today, we understand that respect for the environment is one of the main pillars of our fight against poverty, and essential for achieving the Millennium Development Goals. But still, despite some real improvements in some parts of the world, our efforts to safeguard the global environment and make a transition to sustainable development lag behind what is truly needed. The Millennium Ecosystem Assessment that was completed last year under the auspices of the United Nations and others and which is itself a winner of one of this year's Zayed prizes shows the terrible toll human activities are inflicting on the resources and networks that support life on earth. Prosperity built on destruction is not prosperity at all, but rather only a temporary reprieve from tragedy. There will be little peace, and much greater poverty, if this assault continues. Action on climate change is particularly urgent. Scientists largely agree that without major policy changes in the next few years, we face a future filled with danger. Now that the Kyoto Protocol has entered into force, the world has a dynamic tool for stabilizing and reducing emissions and supporting climate-friendly projects in developing countries. Moreover, the world is about to embark on two parallel tracks aimed at intensifying global action. The first will involve discussions among the parties to the Protocol, and will look at binding targets for the industrialized countries beyond 2012. The second will be a dialogue involving all parties to the wider Climate Change Convention, and will look at a broader range of cooperative action, involving technology, adaptation and voluntary action by developing countries. I urge all countries to take those discussions seriously. Regional and other initiatives are important, but the Framework Convention remains the multilateral framework for action. And as these processes unfold, let us be clear what is at stake: the carbon-based economy is like an uncontrolled experiment with the global climate, with serious risks for ecosystems, business and human health. We must cut emissions. But we must also help the poorest of the poor and the vulnerable adapt to the climate change that is already under way. Ladies and Gentlemen, A change in mindset is equally important. The world remains locked into short-term thinking, from election cycles in politics to profit-taking in the business world. Sustainable development cries out for a long-term perspective. The world remains captive to the old idea that we face a choice between economic growth and conservation. In fact, growth cannot be sustained without conservation. One of two jobs worldwide -- in agriculture, forestry and fisheries -- depends on the sustainability of ecosystems. Health problems cannot be fixed by the health sector alone. Our fight against poverty, inequality and disease is directly linked to the health of the earth itself. And the world remains perilously wedded to oil and other fossil fuels. The challenge here is twofold. First: we must husband this resource, and use it efficiently, while limiting the impact on the environment by delivering cleaner coal and using cleaner ways to generate fossil fuels. All humankind must get the maximum benefit from every barrel, gallon or litre consumed much as we try to do with water, where "more crop per drop" is our mantra. Prince Zayed himself understood that the true value of oil is in what it can do to improve the lives of people. Two billion of our fellow human beings today lack affordable energy services. Second, we must look ahead, beyond the finite life of fossil fuels, and promote clean, alternative, renewable sources of energy such as solar, wind and biofuel. The soaring demand for oil is concentrating the minds of the world as never before. Today's high oil prices make the economic and environmental arguments even more mutually supportive. This country and this region are well placed to spearhead the effort. Oil-rich countries can invest in new technologies and in the transfer of existing ones to poorer countries. Doing so would be prudent self interest as well as a mark of solidarity with those less well off. It would be a breath of fresh air for the planet. The Middle East was the main energy supplier of the last century. I hope that through your investments and leadership, you will become a primary source of alternative energy in this one. Everyone has a role to play in changing the mindset. Governments have immense capacity to set the rules and create the tax and other incentives that will promote sustainable development. Developed countries in particular -- with their wealth and power -- need to take the lead. Businesses have unparalleled ability to innovate and to steer behaviour and capital flows -- in the right directions. They should do even more to support green technologies and make them one of tomorrow's growth industries. I urge institutional investors and pension fund managers to continue their efforts to reward companies that have a long-term vision to deal with environmental risks and opportunities. The UN Global Compact corporate citizenship initiative has been working very closely to embed environmental principles in corporate activities and global markets. I am glad that so many of them are showcasing their work at an exhibition elsewhere in this hall. And let us not forget people power: consumers; voters determined to exercise their democratic rights; legions of citizens' groups and their skill at popular mobilization and carrying out small-scale projects at the local level. It is appropriate that one of this year's Zayed prizes is being awarded to the head of one such organization. Ladies and Gentlemen, Tomorrow, the representatives of nearly 160 countries -- including some 125 environment ministers -- will gather for the UN Environment Programme's Governing Council and Global Ministerial Environment Forum. Both figures reflect unprecedented participation. I can think of no better time than now for you, some of the world's leading political actors, to act on the understanding that ecosystem services underpin all our hopes for defeating poverty, stimulating economic development and building a more stable world. Political energy is another of the world's renewable resources. Our challenge -- and your challenge -- is to tap into it far more than we have. We need to stop being so economically defensive, and start being more politically courageous. I can think of no better use of the funds bestowed by this generous prize than devoting them to the cause of sustainable development. Accordingly, I plan to use the award as seed money for a foundation I will establish to work in Africa for agriculture and girls' education. Agriculture, because Africa's people need a green revolution. And girls' education, because there is no more effective tool for development. Finally, I can think of no better place than here, in the heart of the Middle East, to add a few words about the anger felt by many Muslims about the recent publication of caricatures which they see as insulting to their religion. I understand, and share, their anguish. But it cannot justify violence, least of all attacks on innocent people. Once again, I appeal to Muslims to accept the apology that has been offered, and to act as I am sure Almighty God, who is compassionate and merciful, would wish them to do that is, to act with calm and dignity, to forgive the wrong they have suffered, and to seek peace rather than conflict. And I urge all who have authority or influence in different communities, both religious and secular, and men and women of goodwill in all faiths and communities, to engage in dialogue and build a true alliance of civilizations, founded on mutual respect. Dear friends, Thank you again for the honour of this prize. I am proud to accept it on behalf of the men and women of the United Nations, who are strongly dedicated to their mission of peace, tolerance and human dignity, and who work valiantly to improve both the natural and the human environments. Thank you very much. On the other hand Oman will host two important exhibitions from March 20 to 23 at the Oman international Exhibition Centre. This was announced at a press conference held at the Oman Chamber of Commerce and Industry attended by Ahmed bin Saleh Ba'abood, managing director, Oman International Trade Exhibitions (OITE); and Sadiq Ahmed Khan, director sales and marketing, OITE. The Gulf Property and Investment Exhibition is aimed at helping private and corporate investors to have an interface with vendors and experts in property and other investment fields and will showcase new projects, strategies, investment opportunities to diversify individual and corporate investment portfolio. The expo will also focus on the latest trends in real estate. The exhibition provides a platform to leading developers to showcase their property while focusing on promoting, popularising and familiarising property investment and other liquid investment opportunities in Oman and abroad. According to Sadiq Ahmed Khan this will provide an excellent opportunity for Oman's listed companies to showcase their corporate profile, current position and future development strategies through attractive and interactive visual display by means of exhibition stands. Existing and potential individual and commercial investors, property dealers, investment experts, government officials and regulatory authorities can benefit from this property and investment exhibition. This expo is organised under the aegis of Oman International Trade Exhibitions (OITE), supported by Capital Market Authority among others. The Muscat International Fair, running simultaneously with the property expo, will bring together on one platform the largest gathering of business entrepreneurs and established business house representatives who are eager to discover new products, technologies, solutions, suppliers and business networking opportunities. Sadiq said that Muscat International Fair over the years has built a reputation for Oman's most prolific biennial trade show. He said the expo sought to build bridges between international trade partnership seekers and Omani trade partnership seekers. The event is organised under the auspices of Ministry of Commerce and Industry, backed by major government bodies. The highlight of this expo is the Oman pavilion wherein a special section will be created to showcase Omani products and promote Omani manufacturing industry, Omani companies representing international brands, small and medium enterprises and large industries. On the sidelight will be a seminar on 'doing business in Oman'. The expo can serve as a get-together of Omani prospective entrepreneurs. In Cairo President Hosni Mubarak yesterday presided over a meeting of the government's Financial and Economic Policies Committee, the presidential spokesman said. During the meeting, the President reviewed government plans to enhance the performance of the economy, the national economic and financial policies, and plans for upgrading the local banking sector and the stock exchange, spokesman Suleiman Awwad added. The meeting discussed a report presented by Prime Minister Ahmed Nazif, Awwad said. The report was in three sections, of which the first dealt with economic indicators, the second with on-going programmes for managing state-owned capital and revenues, and the third covered government plans to develop the banking sector, Awwad said. The first part of the paper indicated that the Egyptian economy had gained momentum and that economic growth was rising and inflation rates were down, he said. Inflation dropped from 16 per cent in 2003 to 3.3 per cent in 2005, the report said. According to the Premier's report, investment was up and the nation's reserve of foreign currencies was on the rise, Awwad said, adding that the report also indicated that the Stock Exchange trading registered more activity. The report indicated that 837 new joint ventures were established last year, the spokesman said, adding that these projects created 110,000 jobs for young people. It also showed that unemployment fell by 9 per cent during FY2004/2005 as new investment projects created 700,000 jobs The second part of the report focuses on government plans to manage state-owned capital and the revenues it generates, the spokesman said, adding that the President enquired about the current status of public sector companies and the Cabinet's future plans for them. The final part of Nazif's report deals with the government's plans to upgrade the banking sector and enhance the performance of the Stock Exchange, Awwad was quoted by the Middle East News Agency (MENA) as saying. Governor of the Central Bank of Egypt (CBE), Farouq el-Okda told the President that last year the government had launched a plan to merge small state-owned banks with bigger commercial banks in order to strengthen this sector, he told MENA. President Mubarak instructed the government to continue with economic and financial reform plans, which were spelled out in his election programme last August. He also ordered the committee to speed up processing a battery of economic and financial legislation for approval by parliament as soon as possible, Awwad added. President Mubarak told the committee, which comprises the premier, ministers of finance, planning and investment, that the private sector should be more involved in infrastructure and service development projects implemented by the government, the spokesman added. The President has also inquired about the government's progress in upgrading mechanisms to promote mortgage systems and small-sized enterprises along with means to attract more foreign capital, he said. |
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