Saudi Arabia has a bold plan for the future in which business sectors other than energy power the economy, and a senior Saudi Aramco executive detailed how the company is supporting that vision recently at the SciTech Center in al-Khobar.
Salim S. Al-Aydh, senior vice president of Engineering and Project Management, outlined the situation for members and guests of the Saudi Society for Technology Development and Transfer on Feb. 7 at the center.
“We are currently living in a period of robust oil prices,” Al-Aydh said. “In real terms, however, they are below the oil revenues in 1980 and 1981.”
He said that the Kingdom’s growing population means that even in the current oil market, per capita oil revenues, now about $7,500 per person, are much lower than in 1980, when they were about $37,000 per person. Al-Aydh also noted that the oil market has tended to be cyclical.
“Like a bird, we have been caged by oil markets that have driven oil prices up to $140 a barrel, then down to $35 a barrel and back to $80 a barrel within 18 months,” he said. “To escape from that cage we must remain strong in the oil industry and use that strength to develop a strong non-oil economy.”
Al-Aydh said that the largest growth was taking place in China, India, Brazil and Russia, but he doubted that the standard of living in those countries could be raised to the standards of Europe and the United States without new technologies and systems being developed for the extraction and application of the world’s natural resources.
He said that raised three important questions: “What technologies will the world need for China and India to keep growing? How will those technologies affect global oil consumption? And what will their impact be on Saudi Arabia?”
He urged people not to be lulled into a false sense of security because oil prices are high. He said demand over the next decade is expected to grow and noted that Saudi Aramco has launched a series of megaprojects, the last of which is scheduled for completion in 2014, which will increase the Kingdom’s output by more than the entire output of Venezuela.
But he also noted that consumer nations are responding as well, with some calling for energy independence and auto manufacturers working on electric and electric hybrid technology. Al-Aydh also pointed out that the United States has eclipsed Germany as the world’s No.1 producer of wind energy.
He said that there were several possible scenarios for the Kingdom in relation to the global energy market. “Under all scenarios, we need to become a more innovative and technological society,” Al-Aydh said. “Happily, we could have the resources for this transformation. We have to give our future generations the tools to shape the future they want.”
He said that Saudi Arabia had an even greater resource than oil.
“We expect hydrocarbons to be vital to our future, but if you compare Saudi Arabia’s demographics with Japan’s, you will see we have a lot of young people,” Al-Aydh said. “With about 60 percent of our population under the age of 20, we have the basic raw material for learning — an abundance of fresh, young minds. I firmly believe that youth — not oil — is the real wealth of Saudi Arabia.”
He then explained how Saudi Aramco has long been concerned about these issues and talked about several of the company’s initiatives to stimulate the local economy.
Starting in 2004, Saudi Aramco started a series of dialogues with business and industrial leaders to create more jobs for young Saudis and more domestically made materials for use in its operations. It also created a New Business Development Organization that does several things from creating new opportunities for Saudi Aramco and local businesses and increasing local content in needed materials and services to commercializing company technologies through local firms and attracting foreign investment.
He also described a Saudi Aramco initiative launched in 2006 to build cogeneration plants that provide steam and electricity for producing activities that also feed excess electricity back to the Kingdom’s power grid.
Planned joint-venture refining projects with ConocoPhilips in Yanbu‘ and Total in Jubail will add 800,000 barrels of refined product for export. Meanwhile, the PetroRabigh joint venture with Sumitomo will produce 2.4 million tons annually of polyolefins, much of which will be converted into a variety of products at an adjoining industrial park.
Saudi Aramco is currently partnering with Dow Chemical to explore the feasibility of an integrated project at Ras Tanura. One of the most complex petrochemical projects ever envisioned, it also would integrate a massive petrochemical complex and downstream conversion park with Ras Tanura Refinery and Ju‘aymah Gas Plant.
In 2008, the company entered into a long-term agreement with several companies to create the STAR Fabrication Facility, which began operations in 2009. The facility makes offshore platforms and is capable of fabricating 14,000 tons of structures annually.
Saudi Aramco also is working with local firms to increase the Saudi content of the company’s megaprojects. Between 2008 and 2009, the local share of capital expenditure leapt from 56 percent to 75 percent and contractor work force Saudization increased by 8 percent.
In order to overcome fluctuations in the oil market, the company entered into long-term general engineering services contracts with 16 local companies so they can develop the needed expertise to expand this part of the construction sector.
Now, private-sector engineers get to enroll in Saudi Aramco engineering development programs so that high-level work previously done overseas will be completed in-Kingdom. Also, about 20 vital industrial products only available from foreign suppliers in the past now are being manufactured in Saudi Arabia by Saudi workers in Saudi companies.
Al-Aydh also told the audience about Saudi Aramco’s involvement with King Abdullah University of Science and Technology and King Fahd University of Petroleum and Minerals, where the engineers, researchers and scientists of tomorrow will acquire the knowledge needed for success.
“We must give our young people the best opportunities to grow and develop,” Al-Aydh said. “Innovation and technology nurtured, developed and grown right here in Saudi Arabia will create some of those opportunities. Let us move forward firmly to create a youthful, youth-filled and youth-fueled, knowledge-based economy. Young people are the energy reserves of our future.”
Source: Saudi Aramco
