Saudi Arabia sits on the world’s largest proven oil reserves, but the country’s climate negotiator insists the Saudis are in a “race against time” to wean dependence on that single resource. The FT reports:
“Inevitably, oil producers are going to face huge liabilities if the implementation of the convention is advocating a move away from fossil fuels,” [said Saudi Arabia’s lead climate negotiator Khalid Abuleif]. Saudi Arabia, he added, had long understood it needed to diversify its economy to make it less reliant on the resource that had led it to become the world’s leading crude oil exporter. […]“We know we’re in a race with time,” he told reporters at UN climate talks in Lima, where negotiators are doing the groundwork for a global climate deal to be sealed in Paris at the end of next year.
Abuleif isn’t wrong, but neither does he offer any specifics on how Saudi Arabia is working to diversify away from oil, its key to global relevance and economic prosperity. But with the price of oil plunging on oversupply and weak demand, the Saudis may have an economic reason to look outside the oil industry; Saudi Arabia reportedly needs an oil price near $93 per barrel to balance its budget, and with current prices hovering near $65, its running quite heavily in the red.For now, though, Saudi Arabia seem intent on copious amounts of crude, regardless of the effect this might have on prices or on international climate negotiations. OPEC’s decision not to cut production last month was led by the Saudis, and while some have seen it as a jab at American shale producers, there are certainly geopolitical motivations behind that decision. Iran’s breakeven price is extraordinarily high—near $140 per barrel—and the FT suggests that plunging prices are a kind of political weapon for the Saudis against their Sunni regional rivals.The Saudi climate negotiator can talk all he’d like about diversification, but now and for the foreseeable future, his country bleeds back.