Saudi Arabia's Ambitious Economic Overhaul Hinges On Reducing Its Oil 'Addiction' The government has ambitious plans to diversify the oil kingdom — and that means revamping the world's biggest petroleum producer.
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Saudi Arabia's Ambitious Economic Overhaul Hinges On Reducing Its Oil 'Addiction'

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Saudi Arabia's Ambitious Economic Overhaul Hinges On Reducing Its Oil 'Addiction'

Saudi Arabia's Ambitious Economic Overhaul Hinges On Reducing Its Oil 'Addiction'

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Saudi Aramco - that's Saudi Arabia's state oil company - produces more oil than any other company in the world. No surprise, then, that its revenues make up more than 80 percent of the kingdom's budget. Now Saudi leaders want to use the company to overhaul their economy, even selling part of it off. NPR's Jackie Northam got a look inside the company's headquarters.

MOHAMMED AL-ABDULLATIF: This is the heart of Saudi Aramco, where we manage the overall hydrocarbon network from the beginning.

JACKIE NORTHAM, BYLINE: Mohammed Al-Abdullatif stands on a platform and surveys a cavernous control room filled with massive screens and charts. The engineers here at Saudi Aramco chart the journey of every drop of crude. 4.5 terabytes of data are received every second from wells all over Saudi Arabia.

AL-ABDULLATIF: Since the center is operating 24/7, it ensures sustained and reliable supply of energy to our customer.

NORTHAM: Aramco is often described as the crown jewel of Saudi Arabia. It was just up the road from Aramco where oil was first discovered in Saudi Arabia in 1938. Over the years, that oil has provided the kingdom and its royal family with seemingly unlimited wealth. But that's not a given anymore. With concerns about fossil fuels and oil prices dropping, the government is having to change the way Aramco does business.

SADAD AL-HUSSEINI: It's a sea change for Saudi Arabia - very much of a long-overdue change. And Aramco's a part of it.

NORTHAM: Sadad al-Husseini is a former executive vice president of Aramco and now heads up his own firm, Husseini Energy. He says Aramco is at the center of a plan to diversify the economy from oil and create new industries, a plan being spearheaded by Crown Prince Mohammed bin Salman.

AL-HUSSEINI: Aramco is a core element of both the Saudi economy and the long-term development of the kingdom's other sectors. So it was obvious he would look at it and see how he could leverage it more.

NORTHAM: Leverage it by putting a slice of it up for sale, just a 5 percent stake. But it's being touted as the biggest initial public offering in history, possibly worth hundreds of billions of dollars. The money would be invested in big non-oil projects and to create much-needed jobs as part of what could be a turbulent economic reform in the kingdom, says Mohammed al-Tuwaijri, the minister of economy and planning.

MOHAMMED AL-TUWAIJRI: It's going to be a very attractive proposition for local and global investors. We're very keen on opening our market. And it's a funding mechanism for doing other things to diversify the economy away from oil. So Aramco ticks all these boxes in a wonderful way.

NORTHAM: But the sale could make some members of the royal family nervous. Aramco has never opened up its books to the public before, divulged the size of its oil reserves or its massive profits, says Jim Krane, Middle East energy specialist at Rice University's Baker Institute.

JIM KRANE: Saudi Aramco answers to a royal family at the end of the day, and that royal family has thousands of members. And, you know, the amount of oil revenues that go to that family are a mystery. And I think the king would like to keep it that way.

NORTHAM: Crane says the IPO comes at a time Aramco is branching out in other ways. It's buying up refineries around the world, including Port Arthur, Texas, guaranteeing customers for its oil. It's also developing a new use for its crude.

There's a series of security measures you have to go through as you enter a restricted area of Sadara petrochemical plant. Beyond the gates, you can see camels wandering in the desert. Inside, the enormous $20 billion plant is a joint venture between Aramco and Dow Chemical. It opened last year. It converts Aramco's raw oil and gas into petrochemicals that are used to make everything from car seats to lipstick.

FAISAL AL-FAQEER: Sadara is unique and young, but reliable.

NORTHAM: Faisal al-Faqeer is the CEO of Sadara. He says the plant is being held up as a prime example of other valuable uses for Aramco's oil besides export. It's being embraced by Crown Prince Mohammed, often referred to as MbS.

AL-FAQEER: Now there is a focus. There is big support from the government. MbS is - this is his baby.

NORTHAM: Petrochemicals, selling some of its cherished private company, diversifying the economy - all sound necessary. But whether Saudi Arabia has the will to pull it off is another question. As a placard in an Aramco executive office says, keep calm. We still have oil. Jackie Northam, NPR News, Dhahran, Saudi Arabia.

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