Middle Eastern oil is the world's 'safety valve': Saudi official

Dubai (Platts)--13Feb2006

US President George W. Bush's declaration that he intends to slash crude
oil imports from the Middle East by 75% by 2025 is "unreasonable" and harmful
to the producer-consumer dialogue and its goal of market stability and
security, Saudi Arabia's OPEC governor has said.
     Majid al-Munif, writing in the Saturday edition of the Saudi-owned
newspaper al-Hayat, said that while this was not the first time a US president
had talked about cutting US dependence on foreign oil, Bush was the first to
refer specifically to the Middle East in his State of the Union address.
     Munif said this contradicted the current US policy, which has been
focusing increasingly on the region and was working to boost trade relations
with Middle Eastern countries through free trade agreements.
     "The surprise is not only in this contradiction but an apparent ignorance
of undisputed facts the most important of which is that oil is a commodity
like any other that is sold where there is demand," said Munif, writing in a
private capacity as a Saudi economist.
     He noted that the US imported 2.5-mil b/d of crude oil from the Middle
East, accounting for 20% of total US imports and 12% of consumption. Saudi
Arabia, the world's biggest crude oil producer and exporter, supplies 1.5-mil
b/d of the total with Iraq, Kuwait and others making up the difference.
     This compares with Japan, which relies on the Middle East for 90% of its
crude imports, China 45% and the European Union 26%. These levels are set to
rise with Chinese imports expected to increase sixfold by 2025, said Munif.
     "Yet while the governments of these countries and public opinion are
aware of the region's importance, now and in the future, to the world's energy
balance...this contrasts with the negative attitude of the US Congress, the
media and some administration officials regarding oil imports from the Middle
East although this region has shown in times of war, peace and natural
catastrophes that it is the safety valve for the world's oil needs when there
has been shortages," Munif wrote.
     "This attitude renders menaingless the producer-consumer dialogue, of
which the US is a key participant," he added.
     These remarks also send a negative signal to Saudi Arabia at a time when
it is working to raise its production capacity to meet future demand, be it
from the US or elsewhere, he said.
     "The remarks or goals set by Bush send a negative signal to these
countries and their public opinion that consumers, or some of them at least,
will not in the future want this oil and may take steps to curb its
consumption or imports. These contradictory remarks do not help the goal of
the producer-consumer dialogue, which is to achieve market stability and the
security of supply to preserve world economic health," said Munif.
--Kate Dourian, kate_dourian@platts.com

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