Khalid Al-Falih

American shale oil production is important for the world’s long-term energy future and Saudi Aramco has marked an additional $7 billion (SR26.25 billion) for its own shale projects, said its President and CEO Khalid Al-Falih.

Aramco has already invested $3 billion (SR11.25 billion) in developing its unconventional gas resources and has earmarked an additional $7 billion, he told the Global Competitiveness Forum in Riyadh.

“US shale is needed, is welcome, on the global scene, because the world will require more energy resources for a growing population,” Al-Falih said in remarks published in an AFP report. The economy is still going to be driven by oil and gas for generations, he said.

According to AFP, Al-Falih said that US shale innovation had led the way for Saudi Arabia to pursue similar techniques.

“Saudi Arabia will be the next frontier after the US where shale and unconventional will make a contribution to our energy mix, especially gas.”

Technological innovations have unlocked shale resources in North America and raised US oil output by more than 40 percent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil.

World oil prices have fallen too far, he added, stressing that it was for the market not OPEC producers to shore them up.

“It’s too low for everybody,” Al-Falih told the Global Competitiveness Forum in Riyadh.

“I think even consumers start to suffer in the long term.”

According to Reuters, the CEO indicated that Saudi Aramco will renegotiate some contracts and postpone some projects due to falling oil prices. He also stressed that the Kingdom will not single handedly balance the global oil market.

“We will have to adjust to the realities of today. We will push some projects into the future, we will stretch some of them, we will renegotiate some contracts,” Al-Falih said.

“I think we got spoiled with $100 oil and we were focused on building capacity and we lost focus on fiscal discipline.”

Al-Falih said the imbalance in the oil market had nothing to do with Saudi Arabia, and a fair price is what would ultimately balance supply and demand, a sign that Riyadh is sticking to its strategy of allowing the market to stabilize itself.

“Saudi Arabia has a policy, the policy is set by the government through the Ministry of Petroleum, and they have said that Saudi Arabia will not single handedly balance the market,” he said.

“The math will tell you that our exports… are gradually declining. So ˝the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia.”

Saudi Arabia pumped 9.61 million barrels per day of crude in November and exported 7.3 million bpd.

Asked what a fair price for oil is, he said: “It will be the price that ultimately balances supply and demand. I don’t think anybody, no single person, can dictate what that price is. I would be foolish if I did that.”

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