Today we are pleased to share, for your consideration, the remarks of Mr. Abdullatif Al-Othman, Senior Vice President for Finance, Saudi Aramco. Mr. Othman, speaking in Washington, addressed developments in Saudi Aramco's quest to meet global energy needs and the changing landscape that makes all members of the international community more reliant on one other. 

Abdullatif A. Al-Othman
Museum of Natural History
Washington, DC
June 21, 2006

Ladies and gentlemen, it is a great pleasure to join you tonight as we recognize and celebrate our 2006 participants in the Saudi Aramco Management Development Seminar.  I would like to thank the Assistant Director, Jerry Sachs, and the staff here at the Museum of Natural History for helping to make this evening�s event possible.

As I strolled through the museum�s galleries earlier today, I was reminded of our ties to the natural world and the awesome geological processes that shape our planet. Not only have these processes given us the gems and fossils we see on display, they have also endowed the earth with vast resources upon which our modern way of life depends. 

Our economic prosperity is created from the raw materials nature provides. And we must be good stewards to ensure that future generations will continue to enjoy the benefits of the earth�s resources. What we see featured in this museum are products of the dynamic forces and the changes that have shaped the natural history of our planet. 

Even today the forces of change are actively transforming our world. The forces affecting us are not only natural, but also economic, social, and political. If we are to avoid sharing the dinosaurs� fate we must adapt to the changes that are happening around us.

Tonight, as I talk about the challenges posed by these changes, I would like to convey a few of my thoughts about our growing interdependence and the need for increased collaboration. Today we are witnessing the dawn of a truly global market place; one in which we are all participants. 

Globalization is drawing us closer together and increasing our interdependence. 

Traditional national borders are becoming meaningless for the transfer of capital and ideas. In this context we are no longer just Saudis, Americans, or any other nationality. Our fates and prosperities are tied to the global economy. This reality is not yet fully appreciated, which explains, in part, the continuing appeal of policies promoting self-reliance. 

In the oil industry we have witnessed firsthand the advent of a truly global market place where geographical borders are of diminishing relevance. The price of oil today is truly a world price determined transparently through the interaction of buyers and sellers in thousands of daily transactions. When it comes to the world oil markets and oil prices, interdependence is not just some vague academic concept to be studied in textbooks. It is real and its impact is reflected each day in world oil prices. 

The price impact of a hurricane in the Gulf of Mexico is felt in Hong Kong, Helsinki and in Houston. The point I would like to make is that today�s current high oil prices are the result of complex interactions of many different factors. 

Global oil demand and supply fundamentals are not the only factors determining current prices. Other factors include geopolitical risks, tight global refining capacity and infrastructure bottlenecks, and a multitude of boutique fuels. And add to that the increased role of oil's forward market as a financial vehicle for investment and speculation.

Globalization and growing interdependence are creating new challenges for business. For the oil industry, the biggest challenge is to provide significantly more energy at reasonable costs; in a manner that is both safe and environmentally friendly. 

Meeting this challenge has less to do with the resources under the ground than with factors on the surface. While talk of oil running out has been with us for decades, the reality is that today the world has more oil reserves than ever before.

Looking objectively at the numbers, there will be plenty of oil resources available for many more decades. As a matter of fact, since the inception of the oil industry some one hundred fifty years ago; the world has consumed only one-third of the total proven oil reserves. Only one-third over the last hundred and fifty years.

The �good news� is that the energy challenges we face today are largely of our own making; and as such, the solutions to overcoming these challenges are within our grasp. Allow me to elaborate.

Our success is the source of our greatest energy challenge. The great promise of globalization is not only to increase world economic activity, but also to spread prosperity to developing countries. More energy, particularly oil, will be required to fuel these growing economies.

The difficulty we face in meeting this expected increase in future demand is compounded by the current constraints on the oil industry�s ability to deliver energy to end-users. These constraints are the direct result of the low-price environment of the 1980s and 1990s which discouraged investment, thereby, setting the stage for the current tightness we see throughout the supply chain.

At Saudi Aramco, we are doing our part to meet these challenges. 

As you saw in our short video presentation, we are engaged in major initiatives all along the petroleum value chain. We take pride in our careful stewardship of approximately one-quarter of the world�s petroleum resources. Our sizable reserves enable us to make a major contribution to meeting global energy needs. 

Saudi Aramco currently has half a dozen mega oil production projects at various stages of development, with a combined production capacity of some three million barrels per day, which will increase production capacity to twelve million barrels per day by 2009. 

That, in turn, will enable us to maintain a surplus production capacity of one-and-a-half to two million barrels a day -- in keeping with Saudi Arabia�s commitment to promoting stable oil markets. Over the years, during times of market turmoil, this spare capacity has proven its worth to the world. At Saudi Aramco, we�re also taking the initiative to increase refining capacity by two million barrels per day. 

Here in the United States, we are expanding our joint venture refinery at Port Arthur, Texas by 325,000 barrels per-day. This would make it this country�s biggest refinery.

None of this would be possible without our dedicated and talented employees. 

Sustained business success comes through providing our employees with opportunities to realize their full potential. This is why Saudi Aramco maintains one of the world�s largest corporate training and career development programs. 

We�re in the presence tonight of men and women who are this year�s participants in the Management Development Seminar. It is the promise and potential of these future leaders that we celebrate this evening. The aim of this program is to broaden their horizons and to encourage them to think more deeply and critically about the strategic issues facing Saudi Aramco. 

One of the topics they are exploring during their stay in Washington is the impact of global interdependence on the petroleum industry. At Saudi Aramco, we fully recognize the interdependent relationships that characterize our business, whether it is with our customers, contractors or business partners. Cooperation and partnership are the keys to success in today�s global economy. 

We all stand to benefit from greater cooperation between producers and consumers; between national oil companies and multinational firms; and between policymakers and energy companies.

The US-Saudi energy relationship is a shining example of such mutually beneficial interdependence. The Kingdom is of course a major supplier of energy to this country, and over the last seven decades, thousands of Americans have played an important role in developing the Saudi oil industry. American firms are prominent among our engineering and construction contractors, and we rely heavily on American-made equipment and advanced technology in our operations. This represents an important economic aspect of the interdependent relationship our two great countries enjoy.

However, what many people may not realize is that the Kingdom�s oil industry also played a major role in bringing together our two cultures at the grassroots level. For instance, many Saudis and Americans came to know and appreciate each other�s cultures from working side-by-side in building a world-class energy company. Saudis also were exposed to American culture in company-built schools and outreach programs.

I, for one, was born and raised in the Eastern Province and saw this amazing transformation first hand. In fact, I studied in an elementary and middle school built by Saudi Aramco and can clearly remember the days when Americans who spoke Arabic, and appreciated our culture, came to offer training to our teachers and talked with us students about their career options.

Similarly, thousands of Americans call Saudi Arabia home. As a matter of fact, we are probably the only corporation outside the United States that can proudly say that it has employed three-generations of Americans from the same family.

But real interdependence is both broader and deeper, and transcends the bounds of the oil and gas industry. Certainly the exhibits in this museum remind us that the natural world is based on a complex web of interrelationships, and that changes in one part of an ecosystem have much wider repercussions. That dynamic can also be found within and among societies, cultures and, if you like, civilizations. 

Today, unfortunately, we find small but vocal and energetic minorities on all sides that dwell on differences, even as the vast majorities desire cooperation, mutual respect, and the acceptance of both our amazing diversity and our common humanity. 

I believe we�re at a crossroads, and that the decisions each of us make and the path we collectively choose are critical. We must recognize the debt we all owe our predecessors on the planet. 

But however rich our shared history, what matters most now is what we do with that legacy, and what sort of world we will leave to our children, and indeed to their children. Surely that world would be more prosperous and full of greater promise if we work for common goals rather than at cross purposes; if we opt for cooperation instead of conflict; and if we understand that our fates are intertwined, interdependent, and inseparable. 

Ladies and gentlemen, the choice -- and the future -- is in our hands.

Thank you, and have a good evening. 

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