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Saudi Arabia has replaced veteran oil minister Ali al-Naimi, who served office for the past 20 years, with Saudi Aramco chairman, Khalid al-Falih
The move is seen as a part of a broader government reshuffle as the country tries to reduce the reliance of its economy on oil. The country has also announced a restructuring of the oil ministry, which has been renamed the Ministry of Energy, Industry and Mineral Resources. The Ministry of Electricity has been merged into the energy portfolio. These announcements have come less than two weeks after Saudi Arabia unveiled its new economic reform programme aimed at reducing the Kingdom’s dependence on oil revenue.
Analysts see this as a move aimed to drive the diversification of the economy. Petroleum Policy Intelligence head Bill Farren-Price said, “With Riyadh no longer seeing oil as a growth business, they have decided now is the time to change the focus — the change in ministry name is telling.”
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 is expected to strengthen this strategy.
“Saudi Arabia will maintain its stable petroleum policies. We remain committed to maintaining our role in international energy markets and strengthening our position as the world’s most reliable supplier of energy,” Khalid al-Falih said, a day after his appointment.
One of Falih’s most important responsibilities after taking charge is preparing an initial public offering of Saudi Aramco. He is also in charge of plans to develop domestic refining, petrochemicals and other industries and to boost the production of renewable energy.