HOUSTON, U.S.A. (May 16, 2005) - Saudi Aramco President & CEO Abdallah S. Jum’ah today delivered a speech at Rice University’s James Baker III Institute for Public Policy here on “Saudi Arabia and the United States: Partners in Prosperity – the Energy Dimension.”
Jum’ah was the first speaker of the Baker Institute Energy Forum Distinguished Leadership Lecture Series. He said the relationship between Saudi Arabia and the U.S. is one of mutually beneficial interdependence. “I am proud to say that Saudi Aramco has been at the center of this relationship, ever since the day in 1933 when the Kingdom of Saudi Arabia and Standard Oil of California – predecessor to Chevron – signed a concession agreement which paved the way for the discovery of oil in the Kingdom,” he added.
This relationship extends beyond oil into multidimensional areas of cooperation, Jum’ah noted. The presence of U.S. companies and professionals in Saudi Arabia is as pervasive as it is welcome, he said, and is set to grow in the years ahead as a wide range of profitable investment opportunities open up in the country over the next 20 years.
Jum’ah said an important dimension of the close relationship is higher education. “At Saudi Aramco alone, we have over 3,500 Saudi employees who hold at least one degree from an American university,” he said, “and many have been awarded both bachelor’s and postgraduate diplomas from American colleges.”
But just as Saudi Arabia relied on the expertise of professionals and companies from the U.S. to develop its oil sector, the U.S. has come to rely on Saudi Arabia for much of its energy, Jum’ah said. “There are some observers who have decried this dependence,” he added, “and questioned first the continued need for the strategic reliance on Saudi petroleum, and secondly the reliability of that supply.
“I don’t think it will surprise anyone in the room to learn that I wholeheartedly disagree with those views,” Jum’ah said. He pointed to Saudi Arabia’s unmatched reserves base of 260 billion barrels of crude oil and Saudi Aramco’s extensive production, processing and distribution infrastructure as factors that help to safeguard the U.S.’s energy future.
U.S. demand for oil is predicted to grow from 20.6 million barrels per day (bpd) to almost 28 million bpd by 2025, while U.S. domestic production is expected to drop by almost a million bpd during that period, Jum’ah said. U.S. forecasts say Saudi capacity will need to grow from its current 11 million bpd to over 23 million bpd to meet world demand. Jum’ah said it’s difficult to say whether this call on Saudi crude will materialize. “Nevertheless,” he added, “the Kingdom is uniquely positioned, because of its reserves and resources, to consider raising its production by such a margin.”
Jum’ah posed the rhetorical question: “Can Saudi Arabia and Saudi Aramco step up and deliver?” Answering an emphatic “yes,” he cited several supporting factors, including the Kingdom’s 260 billion barrels of reserves, with the prospect of adding another 200 billion barrels through an aggressive exploration program currently under way.
“We have adopted a long-range view in our reservoir management strategies in order to maximize the ultimate recovery from our fields,” he said.
Jum’ah pointed to Saudi Aramco’s extensive production, processing and transportation infrastructure, which the company is expanding to accommodate a 12 million bpd capacity. This includes the Saudi commitment to maintain 1.5 to 2 million bpd of spare production capacity.
“Our individual facilities are designed with numerous backup systems, and the network as a whole is also configured with multiple redundancies,” Jum’ah said.
Jum’ah pointed out that in seven decades of operation the company has never once failed to meet a supply commitment to one of its customers for operational reasons.
Jum’ah stressed that the interdependence of Saudi Arabia and the U.S. on energy matters is a unifying, positive influence, rather than a source of tension. “Far from being a source of vulnerability and dependence, our energy relationship represents a mutual opportunity based on shared interests, which is consistent with the long history of cooperation between the United States and Saudi Arabia,” he said.
Earlier in the day, in a step that symbolizes the multidimensional cooperation Jum’ah spoke of in his address, he toured the recently upgraded Wiess Energy Hall of the Houston Museum of Natural Science. Jum’ah was accompanied by several members of Saudi Aramco’s management, including Abdulaziz F. Al-Khayyal, Senior Vice President of Refining, Marketing and International; Khalid A. Al-Falih, Senior Vice President of Gas Operations; and Mazen I. Snobar, President & CEO of Aramco Services Company, based in Houston.
Among other leading energy companies, Saudi Aramco was a main sponsor for the upgrade of this important educational facility, visited annually by more than 2 million people – including some 400,000 school students. Jum’ah was briefed on the upgrade project and was impressed with the state-of-the-art interactive presentation technologies used in the museum to explain the science and engineering behind the oil and gas industry. The museum also highlights the diligent efforts made by the hydrocarbon industry to serve humanity.
Jum’ah expressed his satisfaction with the role Saudi Aramco is playing to increase energy awareness in local communities within the Kingdom and internationally. These efforts, he said, will have positive effects on the industry in the long term. “Like the Saudi Aramco Exhibit in Dhahran, the Wiess Energy Hall of the Houston Museum of Natural Science is a world-class facility that represents a valuable addition to society, and I hope it will help spread important knowledge, and further spark ingenuity among the young generation of visitors to improve energy efficiency and advance the industry’s environmental performance for the benefit of our planet.”