One on One with Aramco CEO Khalid al-Falih
Monday, September 28, 2009
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SUSIE GHARIB: Oil prices rose today to $66.84 a barrel. In New York trading, November crude futures jumped $0.82. Now a lot of that oil comes from Saudi Arabia, specifically Aramco. That's the biggest oil company in the world. Recently I met with Aramco CEO Khalid al-Falih in Saudi Arabia and began by asking him whether worldwide demand for oil these days is up or down.
KHALID AL-FALIH, CEO, SAUDI ARAMCO: Oil demand continues to be very sluggish in the west, in the U.S. and North America and Europe. We see an uptick in China, but not significant to offset the demand loss that we saw with economic and financial crisis the last year or so. It will take time to make up for the millions of barrels of lost demand that we experienced, but ultimately it will come.
GHARIB: One of the biggest worries for American consumers and American businesses is that the world is going to run out of oil. What is your response to that?
AL-FALIH: The world has nine 10 trillion barrels of oil, both conventional and unconventional, that needs to be -- that are available for science and technology and industry and global society to exploit in a responsible way over a long period of time.
GHARIB: The fear is discoveries are not going to keep up with production. It's just a matter of time that the supplies are just going to --
AL-FALIH: If we only look at history, if we look at history, the industry has been able to replace all of the oil produced and more. The recoverable oil reserves of the world has been growing. Even recently we certainly at Saudi Aramco, has been, although we are the largest producer and exporter of oil, we have been more than replacing our production and our expectations from technology, both in discovery and recovery oil are very, very bullish.
GHARIB: As you know, President Obama is pushing really hard for the U.S. to become less dependent on oil and to come up with alternative energy solutions. If that happens, what does it mean for Saudi Arabia?
AL-FALIH: I think it will realistically it's going to take decades for the United States or any developed country for that matter, to shift its energy mix in a meaningful way, but the time to start is certainly now. I don't dispute the need to start responsibly putting resources -- especially science and technology to find technical solutions, but I believe political pronouncements about shifting oil from oil are counterproductive.
GHARIB: But we see American consumers are lining up to buy electric cars. They're becoming more -- they're cutting back on their energy use. What does that mean for Saudi Arabia?
AL-FALIH: But where is the electricity coming from? If the objective is (INAUDIBLE) electricity unfortunately is increasingly coming from coal. Coal is the highest polluter in terms of carbon emissions and I would advise people in general to look at the total picture of the energy mix, where it's coming from, what are the costs to society both environmentally as well as economically.
GHARIB: Any economist would tell you that the best way to make people fuel efficient is to raise prices, so are high oil prices good or bad for Saudi Arabia?
AL-FALIH: I think it's not a question of what's good for Saudi Arabia or not. We have the highest -- the largest resource base, the highest production capacity. We certainly can survive on much lower prices than others. But we look at it from a long-term responsible standpoint. The prices need to be high enough for long-term growth and supply base, for investors to invest not in Saudi Arabia but in the deep seas of the Gulf of Mexico, also Brazil and other places. So we believe prices -- there is a happy medium above the prices we have seen but certainly below the feverish prices we saw last year where consumers will not be hurt but producers and investors will invest for the capital investment that will be required to bring energy supplies up and to sustain the existing supplies as well.
GHARIB: Mr. Falih, thank you so much for your time. It's great talking to you.
AL-FALIH: Thank you.
GHARIB: And you can watch the entire interview with Saudi Aramco CEO Khalid Al-Falih on our website, NIGHTLY BUSINESS REPORT on pbs.org.
