Saudi Arabia names Khalid al-Falih energy minister to replace Naimi

Sat May 7, 2016 1:53pm EDT
 
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By Rania El Gamal and Reem Shamseddine

DUBAI/KHOBAR, Saudi Arabia (Reuters) - Saudi Arabia, the world's largest crude oil exporter, on Saturday appointed Khalid al-Falih, chairman of the state oil giant Saudi Aramco, as its new energy minister, replacing Ali al-Naimi, who had held the post since 1995.

The change is unlikely to mean a shift in Saudi oil policy, which is being crafted to a large degree by Deputy Crown Prince Mohammed bin Salman, who oversees the kingdom's energy and economic policies, and involves building consensus among top royals based on the advice of senior technocrats.

Since 2014, Saudi Arabia has led OPEC through a new survival-of-the-fittest strategy aimed at defending market share rather than reducing production to support oil prices. Riyadh believes that cheap crude alone can balance the market by stimulating demand and shutting down high-cost producers.

Falih's appointment, part of a major economic shakeup, is only likely to strengthen this strategy rather than lead to any change in thinking, analysts say.

"The oil policy is not Naimi's personal policy, it is the kingdom's policy," said Richard Mallinson, senior analyst at Energy Aspects.

"Falih appears very firmly of the view that the market needs to be balanced through low oil prices ... All the statements about the Saudis having the capacity and being able to wait for that recovery to come, it signals that he is comfortable with the current policy."

A royal decree quoted by state media said the Petroleum Ministry had been renamed the Ministry of Energy, Industry and Mineral Resources, and that Falih would give up his other post, that of health minister.

The Ministry of Electricity has been merged into the energy portfolio, the decree said.   Continued...

 
Saudi Arabia's Minister of Petroleum and Mineral Resources Ali al-Naimi smiles at Khartoum airport, Sudan May 4, 2016. REUTERS/Mohamed Nureldin Abdallah