Saudi Arabia No Longer An Oil Producing Nation — Energy Minister

Saudi Arabia's Energy Minister, Prince Abdulaziz bin Salman, stated last week that Saudi Arabia is no longer an oil-producing country.

“Saudi Arabia is no longer an oil country, it’s an energy-producing country,” the Energy Minister told S&P Global Platts in an interview, although he most likely didn't mean it literally.

“Not only we are an energy country, but we also are a very competitive energy country, and we are low-cost in producing oil, low cost in producing gas, and low-cost in producing renewables and will definitely be the least-cost producer of hydrogen. I urge the world to accept this as a reality. We are going to be winners of all these activities,” Prince Abdulaziz stated.

Saudi Arabia has raised the July official selling prices (OSPs) of most crude grades it sells to Asia, a pricing document showed.

The top oil exporter set the July OSP for the flagship Arab light crude at $1.90 a barrel above the Oman/Dubai average for Asia, up 20 cents from June. It also set its Arab Light OSP to Northwest Europe at a discount of $1.90 a barrel against ICE Brent for July, compared with a discount of $2.90 for June.

But that doesn’t stop Saudi Arabia from pursuing its green ambitions — the Saudi Green Initiative — while funding those green ambitions through oil sales. Saudi Arabia plans to generate 50 percent of its energy from renewables by 2030, in part to reduce its dependence on oil. In 2017, renewables made up just 0.02 percent of the overall energy share in Saudi Arabia.

The green initiative, however, does not mean Saudi Arabia is planning on producing any fewer barrels of oil and it does not mean that Saudi Arabia is planning to halt funding for all new oil and gas projects. These activities are in contrast to what the recent IEA (International Energy Agency) report suggested the world must do to reach net-zero by 2050. Saudi Arabia has long maintained that oil will remain a dominant energy source for decades.

Saudi Arabia’s Energy Minister said that the IEA’s net-zero pathway spelled out in its most recent report was like a sequel to La La Land. In fact, several oil-producing and oil-consuming nations have dismissed the report.

Saudi Arabia’s oil revenues — which will fund any green aspirations the country may undertake — have dwindled over the last year and a half, and state-run oil giant Aramco had to hold bond sales just to pay its hefty dividend to the state.