10-06-05

Saudi Arabia has plenty of oil -- more than the world is likely to need -- along with an increasing ability to refine crude oil into gasoline and other products before selling it overseas, a top Saudi official says.

"The world is more likely to run out of uses for oil than Saudi Arabia is going to run out of oil," Adel al-Jubeir, top foreign policy adviser for Saudi Arabia's de facto ruler Crown Prince Abdullah, said.

Al-Jubeir said relations between his nation and the Bush administration were strong but "the environment in which the relationship operates... still leaves a lot to be desired."

He denied his country has any nuclear weapons ambitions, despite international concerns about a Saudi request to lower international scrutiny of its lone nuclear reactor. He said he was "bullish" about the Saudi economy, which although based on the country's vast oil reserves has also diversified to include a galloping stock market.

Al-Jubeir dismissed speculation, including in a recent book, that the country was hiding the true picture of its oil reserves and that it may have far less than publicly assumed. He said Saudi Arabia has proven reserves of 261 bn barrels, and with the arrival of newer technology could extract an additional 100 bn to 200 bn barrels.

"We will be producing oil for a very long time," al-Jubeir said.
Saudi Arabia now pumps 9.5 mm barrels of oil daily, with the capacity to produce 11 mm bpd. The country has pledged to increase daily production to 12.5 mm barrels by 2009, and the nation's oil minister said earlier the level of 12.5 mm to 15 mm barrels daily could be sustained for up to 50 years.

High oil prices benefit the Saudi economy in the short run, but al-Jubeir said his nation wants a stable price that won't hurt consumers so much that they reduce their energy demands. The problem for both the Saudis and the United States is what happens after the oil is pumped.

"If we send more oil to the United States and you can't refine it, it's not going to become gasoline," al-Jubeir said. The United States has not built a refinery since the 1970s, and other markets have similarly outmoded or limited refining capacity.

Environmental concerns and local opposition make it unlikely new US refineries can be built quickly, even with the current gas price crunch. Saudi Arabia has partly stepped into the breach, with new refineries being built inside the kingdom as well as in China and soon in India, al-Jubeir said. The country has also invested in gasoline stations, part of a strategy of "going downstream" from oil production to distribution, al-Jubeir said.

"We continue to do it, and we have one of the largest refining and distribution systems in the world," he said.

Ordinary Saudis remain deeply distrustful of the United States in the aftermath of the Iraq invasion and revelations about mistreatment of Muslim prisoners at the Abu Ghraib prison in Iraq and a range of complaints about conditions at the US military prison at Guantanamo Bay, Cuba, al-Jubeir said.
"Why do they hate you? They don't hate you, they just don't like your policies."

Al-Jubeir said the Saudi regime takes no umbrage at US efforts to spread democracy in the Middle East. President Bush and Secretary of State Condoleezza Rice have made democratic expansion a centrepiece of Bush's second term foreign policy.

"We believe that the idea of spreading freedom and democracy is a noble one," but change must come on terms each country can accept, al-Jubeir said.

Source: The Associated Press