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As the fracking revolution eases demand for the kingdom’s oil and gas, a billionaire prince warns his nation to find new income.
Billionaire Prince Alwaleed bin Talal said the Gulf Arab kingdom needed to reduce its reliance on crude oil and diversify its revenues.
His warning comes as rising shale energy supplies in the United States cut global demand for Saudi oil.
In an open letter to his country’s oil minister Ali al Naimi and other government heads, published on Sunday via his Twitter account, Prince Alwaleed said demand for oil from Organisation of the Petroleum Exporting Countries (Opec) member states was “in continuous decline”.
He said Saudi Arabia’s heavy dependence on oil was “a truth that has really become a source of worry for many”.
He added that the world’s biggest crude oil exporter should implement “swift measures” to diversify its economy.
Prince Alwaleed, owner of international investment firm Kingdom Holding, is unusually outspoken for a top Saudi businessman.
But his warning reflects growing concern in private among many Saudis about the long-term impact of shale technology.
It is allowing the US and Canada to tap unconventional oil deposits which they could not reach just a few years ago.
Mr Naimi said publicly in May that he was not concerned about rising US shale oil supplies.
Prince Alwaleed told Mr Naimi in his open letter, which was dated May 13 this year, that he disagreed with him.
The prince said: “Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil.
“It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately.”
The prince said Saudi Arabia should move ahead with plans for nuclear and solar energy production to cut local consumption of oil.
The shale oil threat means Saudi Arabia will not be able to raise its production capacity to 15 million barrels of oil per day (mbpd), Prince Alwaleed argued.
The fracking warning comes as Saudi Arabia announced three foreign consortiums – led by US, Spanish and Italian firms – have won a $22.5bn contract to build Riyadh’s 110-mile, six-line metro train network.
Full article: Saudi Prince: Fracking Is Threat To Kingdom (SKY)