Recently appointed Saudi Minister of Energy, and Chairman of the world’s largest oil company Saudi Aramco, Khalid Al-Falih gives his first interview to a European newspaper. Speaking openly with Klaus Stratmann and Mathias Brüggmann for German business broadsheet Handelsblatt, Mr. Al-Falih addresses key developments of global interest ranging from oil prices to the new compelling plans to revitalize the Saudi economy and society.

On the price of oil…

“It’s always dangerous to predict the price of oil, no matter who you are. The price is formed in the market and is influenced by many factors. Ultimately, market fundamentals, or supply and demand, are the primary determinant of the oil price, and at the moment we see healthy demand for oil.  That said, there are economic headwinds in some important markets and we hope this does not trigger a slowdown in global demand. On the supply side, the recent decrease in prices has led to reduced investment and a considerable drop of oil supplies from unconventional sources.”

“Oil prices at their current levels lead to insufficient revenues being generated by the oil industry, and consequently result in limited investment in future production. This means that in the future, higher levels of demand cannot be satisfied. As a result, we need a price higher than $50 to achieve a balance in oil markets in the long term.”

“Just as $50 is too low to sustain investment, prices in excess of $100 are too much. The optimum lies somewhere in between. We have to manage this issue ourselves. And that is one of the drivers of Saudi Vision 2030: a decoupling of our state budget from the oil market.”

On Saudi Aramco and economic transformation…

“The strong dependence of the Saudi Arabian state budget on Saudi Aramco has long given me worry. It is right that the government wants to gradually disengage from this dependence.”

“The size and complexity of an initial public offering of Saudi Aramco will require a great deal of internal preparation. The actual IPO (Initial Public Offering) timeframe will also be subject to a number of external factors including equity market conditions, oil price outlook, and domestic capital market readiness.”

“Western corporations do play a key part in this economic transformation.  There are a number of capable Saudi corporations. But we are convinced that we can achieve our goals much faster and at a lower cost if we partner with foreign corporations and leverage their technologies, expertise and global networks.  Saudi Aramco is an excellent proof point in this area, as it has become the most valuable corporation in the world, in large part because we have worked together with partners. World-class partners allow us to undertake large-scale complex projects and enhance our operations.”

“Siemens is a good example of mutually beneficial partnership with a leading German firm. They have just invested in the manufacturing of gas turbines in Saudi Arabia and we have an interest in repeating commitments like this.”

On the Public Investment Fund…

“The Public Investment Fund (PIF) is currently located at the Ministry of Finance and will be made into an autonomous fund. It will be the biggest sovereign wealth fund in the world.”

“We are targeting a size of 2 trillion dollars, but it could become even more. PIF will target new strategic investments, in order to realize Vision 2030, and will also be active in investments abroad with the aim of generating income and diversification. The introduction of taxes and duties also serves the goal of diversifying government revenue.”

On Saudi Arabia’s key energy goals…

“We have committed ourselves to ambitious carbon reductions during the Paris climate conference late last year. We are convinced that we can achieve these goals and will strive for further progressive reductions when we do.”

“Saudi Arabia is fully on board. The impression that Saudi Arabia is isolating itself from the climate protection goals is completely wrong. We are happy that a flexible agreement was achieved, that allows every country to contribute with its own program. We fully participate in this and have integrated our climate protection goals into our state reform plan, Vision 2030.”

“We will replace oil with natural gas, while simultaneously increasing the share of renewables in our energy supply. Wind and solar power are a priority in the first step, though in the medium term we may also rely on nuclear power.”

“The government’s Saudi Energy Efficiency Program has already implemented new energy efficiency standards to curb inefficient consumption of energy in the utilities and transportation sectors as well as in electrical appliances. Such standards will preserve precious resources for future generations and help us meet our commitments for carbon emissions reduction.”

On Vision 2030 and rebuilding Saudi society…

“Our society is very young. My generation is in the minority. Young people rely on knowledge and technology and are skeptical toward the ways of the past. They dream of a future where one will not have to look at the daily movement of the oil price. They want innovation, they want to become entrepreneurs, and they want a better future with an engaging career instead of a job as bureaucrat in the public sector. They want to be in control of their own destiny. Vision 2030 makes this possible and enjoys popularity especially among young people.”

“Vision 2030 is mainly about macro-economics, some of which involves the construction of railways, ports and industrial cities. All of this is important and necessary, particularly for private sector growth, enhanced productivity and economic diversification. But essentially it is about developing Saudi Arabia into a country worth living in for the young people and improving the quality of life.”

“We want talented young Saudis and young people from all over the world to live in the Kingdom, to enjoy a high quality of living, and to build bright futures for themselves and their families.”

The full original German interview appeared in Handelsblatt on 12^th July 2016