In a opinion piece in the London-based Financial Times (paywall), veteran banker in Saudi Arabia Dr. John Sfakianakis writes that tough decisions loom for the Kingdom’s leaders with regard to oil and energy use.
“When your income is cut in half, it helps to have a few dollars on hand, but even then you will have to make changes. So it is in Saudi Arabia, whose main export — oil — fetches two-fifths less than it did a year ago. The choices now being made stand to alter the face of the Kingdom.”
John Sfakianakis.
Sfakianakis, a contributor to SUSTG.com and Regional Director, GCC, Ashmore Group, notes that despite Saudi’s amassing of substantial reserves, “something has to give:”
“The most important reforms centre on energy, which Saudi Arabia uses wastefully. Much of it comes from gas, a byproduct of drilling that was once impossible to export and was therefore, in Saudi eyes, not worth economising on. The rest comes from oil, which costs only $4 or $5 to pump out of the ground.
“True, each barrel burnt inside the kingdom is one that cannot be traded for hard currency, but that hardly mattered when the Saudis were earning more foreign exchange than they spent. It matters more now.”
[Click here to read the full article on the Financial Times (subscription required)]
