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2019-10-21
Saudi Arabia is trying to get rid of oil dependence
(Summary description)On April 5, international oil prices fell again. London Brent crude oil futures prices fell 28 cents to 38.39 US dollars / barrel; US crude oil prices fell 38 cents to 36.41 US dollars / barrel. Saudi Arabia’s “Life Newspaper” commented on this
On April 5, international oil prices fell again. London Brent crude oil futures prices fell 28 cents to 38.39 US dollars / barrel; US crude oil prices fell 38 cents to 36.41 US dollars / barrel. Saudi Arabia’s “Life Newspaper” commented on this: The current hopes of the oil market are “increasingly bleak”, and the low oil prices have caused the pressure on oil-producing countries such as Saudi Arabia to increase.
Even so, Saudi Arabia has not stopped expanding the oil fields. It is reported that Saudi Arabia recently reached an agreement with Kuwait to restart the offshore drilling project in the middle of the two countries for "minor mining." Ahmed Gandil, director of the Energy Research Program at the Egyptian Pyramid Strategy Research Center, said in an interview with this reporter: "This means that Saudi Arabia is still under tremendous financial pressure to support its oil market share." As the world's largest In oil exporting countries, energy exports contribute more than 80% to Saudi fiscal revenue. However, due to the oil price that has been low for more than a year, Saudi Arabia’s fiscal deficit has reached US$98 billion in 2015.
The continued decline in oil prices has forced the Saudi government to "open source and reduce expenditures" and accelerate the pace of economic reform. Recently, Saudi Arabia’s founder Muhammad said in an interview with the media that in order to cope with the negative impact of the current international oil price downturn on the Saudi economy, Saudi Arabia plans to launch a series of economic reform measures.
Since the beginning of this year, Saudi Arabia has carried out economic and social welfare reforms including raising domestic fuel, electricity and water prices to diversify its income sources and to control the fiscal deficit to 15% of GDP. . At present, Saudi Arabia is also considering other measures to increase fiscal revenue, such as taxation on energy, sugary drinks and luxury goods, and issuing US dollar bonds.
Among the many reform measures, "Saudi will build the world's largest sovereign wealth fund" is undoubtedly one of the most important measures to attract the attention of international media. According to Muhammad, the Saudi government will promote the transformation of Aramco from a petroleum giant into a large industrial group by creating a stake in the National Petroleum Corporation (Aramco), creating the world's largest sovereign wealth fund, the Saudi Public Investment Fund. Aramco will be publicly listed and its shares will be transferred to the Saudi public investment fund and become the Saudi government's income, after which a series of investments will be made in Saudi Arabia and abroad. It is expected that this fund project will start as soon as next year and will eventually manage $2 trillion in wealth. Muhammad said: "This will turn Saudi Arabia into an economy that no longer relies mainly on oil revenues in the next 20 years."
In the past few decades, Saudi Arabia has been trying to develop non-oil industries such as mining and light industry, and to encourage the development of agriculture, fisheries and animal husbandry in order to diversify the industry. The advent of the energy revolution and the "post-oil era" has once again prompted Saudi Arabia to make greater determination to adjust its national development strategy. For Saudi Arabia’s efforts, Paul Sullivan, a professor of security studies at Georgetown University in Washington, DC, commented: “It is clear that Saudi Arabia needs to reform, promote industrial diversification and inject new vitality into the economy, but not just strengthen it. Investment in the oil sector. Economic reforms are not as simple as a dinner."
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