“We will not allow our country ever to be at the mercy of commodity price volatility or external markets”, Salman was quoted by Reuters to have said at his first news conference with global journalists in Riyadh palace.
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The Saudi Arabian cabinet has approved a suite of sweeping economic reforms which are meant to wean it off its dependency on oil.
KHOBAR, Saudi Arabia Saudi Aramco [SDABO.UL] expects a recovery in oil prices by the end of this year, the state oil giant’s chief executive said on Monday, emphasizing that Saudi Arabia will always meet customer demand.
“I think by 2020, if oil stops we can survive”, said Prince Mohammed in an interview on Al-Arabiya channel today. But the plan gave few details on how this would be implemented, something that has bedevilled previous reforms.
The Deputy Crown Prince Mohammed bin Salman outlined the new plan and stressed that it represents a road map for achieving Saudi Arabia’s goals for development. There will be more entertainment options, and a greater contribution by women to the workforce.
“We plan to set up a $2 trillion sovereign wealth fund… part of its assets will come from the sale of a small part of Aramco”. Its foreign currency reserves as of February stood at 2.22 trillion riyals, down 17% from a year earlier. Iran is estimated to have already added close to 500,000 b/d since January, according to Opec estimates. Prince Mohammed said the kingdom would raise the capital of its public investment fund to 7 trillion riyals, from 600 billion riyals.
Aramco is believed to have crude reserves worth 265 billion barrels, more than 15% of global oil deposits, and produces more than 10 million barrels per day, three times as much as the world’s largest listed oil company ExxonMobil. The prince said, besides listing of Aramco, its subsidiary companies will also be listed separately.
He said the lack of transparency of Aramco has “upset” many people.
By “selling even one percent of Aramco, it will be the largest IPO in the world”, he said.
“We have considered the draft of the Saudi Kingdom’s “Vision 2030″ that was submitted by the Council of Economic Affairs and Development”.
Salman criticised military spending in Saudi Arabia saying: “When I enter a Saudi military base, the floor is tiled with marble, the walls are decorated and the finishing is five stars”.
While Mohammed has been careful not to challenge Saudi Arabia’s conservative traditions and powerful clerics, some in the country hope he will be a social reformer.
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Karen Young, a senior resident scholar at the Arab Gulf States Institute in Washington, said these initiatives are particularly important to the kingdom as sectarian tensions with rival Iran play out across the region.
