Saudi Arabia seeks to lower oil dependence

Reduced dependence by Saudi Arabia on revenue from oil is among targets of sweeping economic reform outlined Apr. 25 by Deputy Crown Prince Mohammad bin Salman.

In an interview with the Al-Arabiya news channel, Mohammad said the plan, which the cabinet has approved, envisions an initial public offering of 5% of state-owned Saudi Arabian Oil Co. (Saudi Aramco).

Plans to sell part of Aramco had been reported earlier, but no indication had been made about the extent of privatization.

Mohammad said Aramco will become “a global industrial conglomerate,” owned by the Public Investment Fund, which he said will become “the world’s largest sovereign wealth fund.”

The crown prince repeated plans to reduce consumption subsidies but said effects would be limited for low and middle-income earners.

The plan calls for an increase in the share of nonoil revenue in Saudi gross domestic product to 50% in 2030 from 16% at present. It also pursues an increase in “localization of oil and gas sectors” to 75% from 40%.

Mohammad told the television station Saudi Arabia had developed “an oil addiction” that hampered development.

“I think by 2020, if oil stops we can survive,” he said, according to press reports. “We need it, we need it. But I think in 2020 we can live without oil.”    

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