SAUDI OIL MINISTER OUTLINES KINGDOM'S INTEREST IN

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 001492

SIPDIS

DEPT FOR NEA/ARP AND S/CIEA DAVID GOLDWYN
DOE FOR AL HEGBURG

E.O. 12958: DECL: 11/19/2019
TAGS: EPET ENRG SENV PREL SA
SUBJECT: SAUDI OIL MINISTER OUTLINES KINGDOM'S INTEREST IN
RENEWABLE ENERGY AS PART OF A KNOWLEDGE ECONOMY

Classified By: Ambassador James B. Smith, reasons 1.4 (b and d).


1. (C) Summary: Petroleum Minister Ali Al-Naimi told the
Ambassador that Saudi Arabia greatly values a strong energy
relationship with the United States. He said Saudi Arabia
will continue to play a moderating role in international
energy markets. The Minister said he is looking forward to
the visit of Secretary Chu early next year and is excited
about showcasing Saudi Arabia's efforts to promote the growth
of a knowledge economy through the King Abdullah University
for Science and Technology (KAUST) in Jeddah. Al-Naimi said
his ministry is also very focused on the development of solar
energy and has set a goal of exporting 8 million barrels a
day worth of solar-generated electricity within ten years, to
match its current oil production level. Al-Naimi is very
interested in fostering greater partnerships with American
universities and DOE labs to pursue joint research projects
on solar and other forms of renewable energy. The Minister
also said the Kingdom is actively working on a civilian
nuclear plan
through a high-level committee, of which he is a member. End
summary.

Call for strong relations with U.S.
--------------


2. (C) On November 7, Saudi Minister of Petroleum and Mineral
Resources Ali Al-Naimi told the Ambassador that Saudi Arabia
shares the same outlook as the United States on a number of
areas on its energy policy. Al-Naimi said Saudi Arabia is
committed to maintaining significant spare oil production
capacity and will continue to intervene in international oil
markets if they look like they are overheating. Saudi Arabia
will also continue to work with the other members to moderate
more extreme OPEC views.


3. (C) Al-Naimi said Saudi Arabia places great value on a
continued strong relationship with the United States on
energy issues. In that regard, he said he was pleased to see
former Secretary Bodman at the inauguration of the King
Abdullah University for Science and Technology (KAUST) and
that he is looking forward to the visit of Secretary Chu,
which he hoped would take place in January. Al-Naimi told
the Ambassador that he is aware of the considerable
"rhetoric" in the United States and other areas of the
developed world calling for the immediate end of oil
dependence. This in turn sets off an important
"constituency" in Saudi Arabia, which Al-Naimi says complains
that "the world does not want Saudi oil," which casts in
doubt the Kingdom's plans to maintain expensive spare
production capacity. Nevertheless, Al-Naimi said he is not
himself bothered by what people say because he is confident
that the world will continue to need Saudi Arabia's energy
for some considerable time to come, a commitment Saudi Arabia
is determined to meet. In that regard, he said the Kingdom
will continue to look for ways to increase its reserves, and
he praised efforts like those of Chevron to apply new
technology to produce previously unavailable resources, like
heavy oil in the neutral zone (septel).

Focus on solar
--------------


4. (C) Al-Naimi said that he and his ministry were following
two big initiatives, the first is promoting solar energy, and
the second is promoting a knowledge economy in the Kingdom.
Al-Naimi described several initiatives the Kingdom is
pursuing on solar. The Ministry of Petroleum is working with
Saudi Aramco and its partner Shell in their joint venture in
China to stand up a 10 Megawatt solar powered electricity
plant. In addition, KAUST is also sponsoring significant
research on solar energy, focused on improving the efficiency
of solar panels and solving transmission problems that impede
the commercialization of solar, particularly through
improvements in nanotechnology. Al-Naimi said that he very
much wants to show Secretary Chu what Saudi Arabia and KAUST
are doing, particularly noting the strong research
partnerships they have in place with primarily American
universities, including Stanford, U.Cal-Berkeley, Texas A and
M, Cornell, and MIT. Al-Naimi is interested in discussing
the possibilities of joint DOE-Saudi research projects.

Fueling the knowledge economy
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5. (C) KAUST, with significant support from the Ministry of
Petroleum, is also working on three areas that will help

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advance the knowledge economy in Saudi Arabia: energy; food;
and climate. Besides its work on solar, KAUST is also
working on ethanol made by capturing CO2 and inserting it
into seawater to foster the growth of algae, which can
produce both food and energy. This research has two
practical goals. The first is to transform the wheat genome
to develop a strain that can grow in the brackish Red Sea.
The second is to generate sufficient solar energy in Saudi
Arabia to match the current level of oil exports (i.e., 8
million barrels a day worth of BTUs) within ten years. One
goal is to produce electricity for neighboring countries.
Al-Naimi said that Saudi Arabia had evaluated closely other
renewable forms of energy, such as wind, and determined that
solar had the greatest potential.


6. (C) Al-Naimi said that KAUST was already having an
important impact in transforming Saudi Arabia into a
knowledge economy by influencing other leading Saudi
universities such as King Saud University, which have been
forced to focus on research that can foster more practical
applications. He forecast that KAUST would continue to drive
this process of change, including through the deliberate link
up of technology and the creation of new industrial parks.
Al-Naimi will preside over the inauguration of KAUST's
industrial park on November 8. He noted with pride that
companies like Dow had already made significant commitments
to foster research, including Dow's decision to build its
biggest research lab in the Middle East at KAUST.

Nuclear energy
--------------


7. (C) Al-Naimi told the Ambassador that the Saudi Arabian
Government is "actively working" on evaluating options for
nuclear power in the Kingdom. Al-Naimi added that he is a
member of a committee that is studying it, although he does
not chair it.

Bio note
--------------


8. (C) Al-Naimi affably noted to the Ambassador that he has
come a long way from his humble beginnings. He spent the
first eight years of his life with his Bedouin mother in the
desert in Saudi Arabia's Eastern Province, who was divorced
by his father while she was pregnant with him. At eight, his
mother decided to send Al-Naimi to Dammam to get to know his
father. His older brother convinced him to attend his first
school, which was on the Aramco compound in English. By 12
(in 1947),he had become an office boy in Aramco, taking over
after his brother's sudden death. After progressing through
the ranks to become a star typist, he asked for training as a
geologist, which Aramco provided, first in the Kingdom, then
high school in Lebanon, and then for graduate school at
Lehigh and Stanford. Al-Naimi progressed steadily through
the Aramco ranks, becoming its first Saudi CEO. He quipped
that he found out he had been named Petroleum Minister while
fly fishing in Alaska. Al-Naimi speaks fluent English, and
is deeply committed to supporting the development of the
Kingdom's knowledge economy, particularly through his
position as chairman of the board of KAUST.
SMITH