Saudi Arabia Says Peak Demand for Oil Is an 'Alarm'.
Saudi Arabia must be ?very serious? about any possible peak in oil demand, which is an ?alarm? for OPEC"s biggest exporter to diversify its economy, a Saudi Oil Ministry adviser said. Saudi Arabia is making a push into renewable energy and is starting its first carbon-capture project, Oil Ministry adviser Mohammad al-Sabban said today at the Jeddah Economic Forum. The country will start injecting carbon dioxide into Ghawar, the world"s largest oilfield, in 2012, he said.
?Talk of oil demand peaking is an alarm to speed up the economic diversification process,? al-Sabban said. ?The challenges facing Saudi Arabia are huge: we need to develop Saudis in order to be innovative, creative, to catch up with the rest of the world.?
The world"s largest oil producer is investing in new industries such as aluminum and steel and pushing for more science and technology in education as it seeks to diversify away from dependence on income from exporting crude oil. More than 25 percent of the kingdom"s youth are unemployed.
Oil demand in some developed industrialized nations is contracting, partly as a result of the economic slowdown. Those concerns are different from ?peak oil? theorists who say oil production has already reached maximum levels and will inevitably decline.
Oil Near $74
Crude oil for March delivery traded at $74.04 a barrel in electronic trading on the New York Mercantile Exchange at 4:22 p.m. London time. It reached $83.95 on Jan. 11, its highest level in 15 months.
Consumption of oil in developed nations of the Organization for Economic Cooperation and Development will decline by 0.02 percent this year, while non-OECD usage will grow 4 percent, allowing total world demand to expand 1.8 percent to 86.5 million barrels a day, according to the Paris-based International Energy Agency.
World demand may plateau at 100 million to 105 million barrels a day, Adnan Shihab-Eldin, a former acting secretary general of the Organization of Petroleum Exporting Countries, said today in Jeddah. Climate policies may further reduce oil demand in future years, he said.
?We can expect a 15 percent reduction of gross domestic product in OPEC nations from international climate-change policies,? Shihab-Eldin said.
Saudi Arabia produces about 8 million barrels a day of crude oil, and has excess capacity of about 4 million barrels a day, al-Sabban said. He also said that the U.S. is promoting nuclear power as a means of cutting oil imports by 1.4 million barrels a day, which is about the same volume the country brings in from Saudi Arabia.
Shihab-Eldin, a Kuwaiti, said nuclear energy makes sense for oil-producing nations as well, and is economic if crude costs more than $40 to $50 a barrel.
Saudi Arabia is the biggest oil producer in the 12-nation OPEC, which next meets on March 17 in Vienna.