Speculation that state-owned Saudi Aramco and the country’s oil ministry are to be “separated” is misleading. It stems from a 30 April news report on privately owned Saudi TV channel al-Arabiya, which is close to the new deputy Saudi crown prince Mohammad bin Salman, and it has been widely assumed that he or his office was the source of the story.
In fact, Aramco has always been run separately from the oil ministry. But the ministry has used Aramco resources for its work because, like some other Saudi government departments, its resources have not always been sufficient to accomplish the tasks that it undertakes. But change is afoot and a likely scenario is that the oil ministry, which is also in charge of minerals, will be restructured and expanded into a fully-fledged energy ministry that will oversee electricity, solar power, water desalination and, possibly, plans to enter the field of nuclear power generation. This would be a complex restructuring that would take time and require finding professionals with appropriate talents and skills. Despite the complications, such a move would make sense because the costs of electricity generation are partly carried by the upstream oil and gas sector. Putting the oil ministry in charge of the overall energy sector would allow the ministry to optimise control of how it is managed.
For now though, confusion surrounds changes at the very top of Aramco. A new supreme council for the company has been created that is above Aramco’s board of directors. Prince Mohammad bin Salman is chairman of the new supreme council, while former Aramco chief executive Khalid al-Falih chairs Aramco’s board of directors.
The full composition of the new supreme council of Aramco has still not been announced, but it is thought to include oil minister Ali Naimi, finance minister Ibrahim al-Assaf and al-Falih. Its formation is likely to have been prompted by King Salman bin Abdel-Aziz’s dissolution of the Supreme Petroleum Council, which had always been headed by the reigning monarch. The fact that prince Mohammad bin Salman — who, in addition to being deputy crown prince, second deputy prime minister and minister of defence, is also chairman of the economic and development council overseeing the country’s entire economy — is head of Aramco’s new supreme council means that he intends to play a more active role than any royal has played before in the management of the country’s hydrocarbons sector. His widely expected restructuring of the oil ministry and of the energy sector is part of a wider restructuring and overhaul of the machinery of the state. Some circles in Riyadh say that political reform, such as having some members of the Shura consultative council elected rather than appointed, may also be on the cards.
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