Saudi Prince Alwaleed bin Talal told Oil Minister Ali Al-Naimi in an open letter that the kingdom won’t be able to raise production capacity to 15 million barrels of crude a day as planned, and that he disagrees with him over the impact of U.S. shale gas output.
The prince published the letter today on Twitter, saying there’s a “clear and increasing decline” in demand for crude from members of the Organization of Petroleum Exporting Countries, particularly Saudi Arabia. The kingdom is now pumping at less than its production capacity as consumers limit oil imports, Alwaleed said.
“We disagree with your excellency on what you said and we see that raising North American shale gas production is an inevitable threat,” the billionaire prince, founder of Kingdom Holding Co., said in the letter.
Al-Naimi said in Vienna on May 31 that he isn’t concerned about the increasing production of oil from shale formations in the U.S., nor does it represent the first time the OPEC has faced a surge in output from outside the group.
Alwaleed also said that Saudi Arabia’s reliance on oil to fund 92 percent of this year’s fiscal budget “is contradicting many of the state’s plans to diversify its income sources.”
“The world’s and the West’s dependence on oil is in continuous decline and this ‘reality’ is known by everyone,” he said in the letter. The prince urged the monarch, King Abdullah, and the government to reduce Saudi dependence on oil and increase the use of renewable energy sources to support local consumption.
Saudi Arabia intends to maintain its crude production capacity at 12.5 million barrels a day, and sees no need to build capacity beyond that, al-Naimi said in a speech on April 30 in Washington. Prince Turki Al Faisal, a former head of intelligence, said in an April 25 speech at Harvard University that the kingdom plans to raise capacity to 15 million barrels a day by 2020, allowing it to export as much as 10 million barrels.