Madrid, July 3, SPA -- Minister of Petroleum and Mineral Resources of the Kingdom of Saudi Arabia Ali bin Ibrahim Al-Naimi said today that the commemoration of the World Petroleum Congress of its 75th anniversary coincides with the jubilee celebration of the Kingdom's establishment of Saudi Aramco, noting that 75 years ago, upon directives of King Abdulaziz Al Saud the Kingdom of Saudi Arabia signed concession agreement with Standard Oil Company of California, allowing the company to explore for oil in Saudi Arabia.

Then oil industry began in Saudi Arabia un-checked by outside world who could not imagine that the agreement signed on May 29, 1933 could have triggered a series of developments that would dramatically change the future of the people in the Kingdom.

In a lecture on the sidelines of the World Petroleum Congress 2008, currently ongoing in Madrid, he said that the oil industry in Saudi Arabia has become an important means through which King Abdulaziz achieved his vision of turning the Kingdom into a modern country, providing a better life for its citizens and becoming what is sometimes referred to as the "economic miracle in the desert".

He added that the era of oil coincides with the period in history of the world different from earlier periods of the 20th century as it was a period of unprecedented achievements in science and technology. The human mind was the source of innovations that changed the world in ways that would have been unimaginable before.

He noted the role played by the oil industry in the renaissance of the 20th century in the field of transport and economy, which led to rapid improvements in living standards and personal freedom of movement.

He pointed out that oil markets and energy in the early years of the 20th century witnessed significant increases in demand, and said that this century experiences political instability, harsh climatic conditions, inadequate infrastructures, fears of catastrophic climate, changes in product specifications in the global markets, inflow of speculative funds in oil future contracts and pessimism on the availability of oil resources to meet future needs leading to the a absence of confidence in the future of energy and petroleum industry and its ability to continue to provide prosperity for future generations in a safe and reliable way.

He said that studies confirm that over one billion people around the world lack access to clean drinking water and 2.4 billion live without proper sanitation facilities. Experts say that 1.5 billion people still lack access to electricity and about 3 billion people live on less than two dollars a day per person.

The United Nations estimates that 80% of the total global financial resources devoted to health are currently spent in OECD countries, a fact only shows that scope of the problem will become more extensive with the increasing population of the world. Again, the United Nations estimates over the medium term that the world will increase by 2.6 billion people in 2050, raising the total current population of 6.6 billion people to about 9.2 billion people.

The Minister of Petroleum and Mineral Resources said that population growth and the needs of peoples in both developed and developing countries for greater prosperity and personal movement are the main engine of growth for the large expected demand for energy during the coming 20-30 years.

He pointed out that the issue of climate change has received considerable attention on a large scale around the world, and that a large part of the world is facing the problem of poverty. Poverty and its negative impact on the humanitarian situation constitute a real and immediate threat for large numbers of people in developing countries. However, climate change is just one of countless problems, the impact of which could not easily be visible in the developing world. The problem of climate change is often seen in the less developed world as one of man-made problems of the developed world, and is therefore responsible for them.

He said the challenge facing industries and markets of petroleum lies in how to get rid of carbon and how to do so safely.

He said there are no easy or quick fixes; it will take time and considerable financial resources. The fact is that fossil fuels based on carbon are still the cheapest source of energy and most effective and reliable for our societies.

He said people say nowadays that the so-called alternative fuels will be favorable because of their low carbon emissions. But they might not know that some types of bio-fuels are always subject to close scrutiny. While containing some non-carbon alternatives to the current ratio of less carbon compared to fossil fuels, we find danger with respect to cost and development which limit their contribution at the present time.

He stressed that increasing the economic prosperity in the coming decades will require the increase of production from all sources of fuel, including oil, gas and coal.

He said that no alternative currently competes with oil in terms of its ability to provide safe means of transport, and as effective and economical for the world's population.

He explained that scientific studies on the resources base indicate that there is an abundance of viable oil from the earth, estimated at 5-7 trillion barrels, including conventional and unconventional resources, pointing out that the oil industry proves once again that there are large quantities of oil still could be found.

He said he is confident that large quantities of oil are still undiscovered in the "mature and border regions" around the world. I am also confident that through the modern techniques of today the oil industry will find this oil and produce it.

He added that the limits for oil supplies are largely linked to politics rather than geology, citing the embargo imposed on oil companies to explore for oil in the flooded area, believed to be accommodating most of U.S. reserves of oil.

He pointed out that Saudi Aramco, using modern technology, has increased the production capacity to 75% in some fields.

He explained that oil industry is based on technical application to reduce environmental impacts of its work and products. Modern techniques being developed today and in the future aimed at the possibility of improving energy efficiency and reducing environmental impacts of global energy use.

He said carbon separation process is one that attaches great importance to the petroleum industry. For this reason, Saudi Arabia participated in the Leading Forum for Carbon Distillation, which includes a group of more than 20 nations.

He says large sums of investment in developing the technologies are required.

The Minister of Petroleum and Mineral Resources recalled that during the Summit of OPEC last year, the Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz Al Saud announced an initiative for protecting the environment, where the kingdom has allocated 300 million dollars for exploring the possibility of reducing environmental impacts of fossil fuels, an initiative attracted global appreciation, with the State of Kuwait, UAE and Qatar pouring in an additional $ 450 million.

He said that Saudi Arabia is currently working on building two scientific institutions aiming at promoting the know-how in the field of energy, environment and the training of scientists and technicians needed for future energy industry. The first of the two institutions is King Abdullah University of Science and Technology and the second is King Abdullah Centre for Petroleum Research and Studies, which will begin work before the end of this year.

© Saudi Press Agency 2008