It is certainly convenient for Western leaders to let the past slip away as they scramble to fight runaway inflation and prepare to drastically reduce the use of Russian fuel supplies.
If ever there was any doubt, the energy crisis has shown just how dependent the world is on Saudi oil. With the second-highest levels of proven reserves, Riyadh’s place at the helm of OPEC – the cartel of oil-producing nations that manipulates prices by coordinating production – has given it a powerful position as a producer” swivel” which can actually dictate the price. of a barrel of crude.
In today’s market, where Russian oil is facing mounting sanctions and benchmark Brent crude has held above $100 a barrel for much of the year, analysts say only Saudi Arabia and its neighboring United Arab Emirates has the capacity to increase production. OPEC and its allies, including Russia, are due to meet on Wednesday.
The Saudi leader knows he may never have such an opportunity again. Last year the country produced nearly 11 million barrels of oil per day, the highest on record, and in 2020 Riyadh has commissioned state oil giant Aramco to undertake a multi-billion dollar plan to increase capacity at 13 million.
But it can go as far as possible. In a speech last month, Prince Mohammed revealed that a capacity of 13 million, which he expects to reach in 2027, could be the limit – despite previous Saudi claims it could reach 15 million.
In a speech in mid-July, he said “after this, the Kingdom will no longer have the capacity to increase production”, and called for new global investment in green technologies.
The figure represents a major warning that even the world’s top producer has its limits, and shows Riyadh’s waning desire to try to push capacity even higher as a global transition away from the fossil fuels can finally pick up speed.
The ‘peak production’ threatens to set off a doomsday clock for the Saudi petrostate – but Prince Mohammed is still in a position many other leaders would envy as they battle the global effort to cut carbon emissions.
The country has an incredible amount of cash on hand and the crown prince probably has decades in his head ahead of him – enough time to lay down ambitious plans. He also doesn’t have to worry about trivial things, like winning elections, that keep many leaders awake at night.
“It’s hard to imagine when he’s king where a significant challenge could come from,” Quilliam says. “So as we sit now, unless something extraordinary happens, he’s going to be king and he’s going to be there for quite a long time.”
It’s no wonder, then, that Prince Mohammed dreams big.
Britain’s leading role
While the Crown Prince released more details on the Mirror Line this week, he also offered crucial details on funding.
The first phase of the project is expected to cost 1.2 trillion riyals (£264 billion), half of which will come from the PIF.
Saudi Arabia will then look to other sovereign wealth funds in the region, as well as private sector investments and a stock market listing in 2024, to raise the rest of the money.
With the PIF’s deep pockets behind him, the Crown Prince can expect to generate plenty of interest in the project. Steve Schwarzman and Masayoshi Son, chief executives of Blackstone and SoftBank, are among the high-profile figures who have already endorsed the plans.
The Kingdom has also turned to British expertise. In 2020, the government chartered flights from London to Saudi Arabia to bring in personnel for Neom. The following summer British architects were invited to tender for the design phase.