Macroscope | Forget about peak oil ... here’s the real reason Saudi Arabia is selling its oilfields
New technologies are poised to displace oil as our dominant fuel source
“The Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil,”
Sheikh Zaki Yamani, Saudi Arabia’s energy minister in the 1970s
This sentiment arguably still chimes with Riyadh’s outlook in 2016 particularly with countries such as China exploring long-term alternative sources of clean energy.
Saudi Arabia’s Vision 2030, announced in April by Deputy Crown Prince Mohammed bin Salman, the first phase of which, the National Transformation Plan, was approved last week by the cabinet in Riyadh, envisages a huge diversification of the Saudi economy away from its dependency on oil production over the coming decades.
In the near term, Saudi Arabia continues to target oil market share, pumping at near record highs, although, as current Saudi energy minister Khalid al-Falih said on June 2 at a meeting of the Organization of Petroleum Exporting Countries “there is no reason to expect that Saudi Arabia is going to go on a flooding campaign”.
Undoubtedly Saudi Arabia’s pumping strategy continues to reflect, at least partly, Riyadh’s desire not to hand market share to its regional rival Iran as the latter seeks to ramp up oil production following the easing of Western sanctions related to Tehran’s nuclear programme.