Speaker 1: (01:50)
And now it’s time to bring on our guest, Fahad Nazer, who is the official spokesperson for the embassy of the kingdom of Saudi Arabia in Washington DC. But Fahad welcome to The In The Oil Patch Radio Show. Speaker 2: (02:02) Thank you very much for having me on, Speaker 1: (02:04) but this is the first time that we’ve had you as a guest on our radio show. I’d like to give an opportunity for our listeners to learn a little bit more about you. You are appointed as the official spokesperson for the embassy of Saudi Arabia to the United States. So tell me a little bit about your background and your role. Speaker 2: (02:27) Right. So people have a lot of questions about the duties of a spokesperson and in many ways their spokesperson has various hats, but I spend much of my time fielding inquiries from journalists about various developments in the kingdom. Uh, but I also do a fair amount of public speaking. I do a fair number of media interviews just like this one to shed light on the importance of the Saudi us, which in many ways is multidimensional. Uh, and to shed light on why it has continued to strengthened, uh, to deepen and to broaden over the past 75 years Speaker 1: (03:11) in interviewing you and preparing for the show. Um, I did hear a couple of interviews that, um, you gave with other media sources. It’s a very delicate time right now. There’s a lot of moving parts in oil and gas on a geopolitical global sense, if you will. And obviously Saudi Arabia, uh, is an ally to the United States. So the discussion that, you know, David and I want to get into is more of, you know, is there change coming? How has OPEC responded in the past versus is there going to be change in the future? Let’s start with the current situation at Saudi Arabia, the production capacity and the scale of its oil reserves. Can you, can we start there? Speaker 2: (03:59) Right. So a, B K then is the biggest exporter of crude, uh, globally. The two points that I really want to stress, I think at the outset for sure, is that that kingdom has always put a high premium on a stable international energy market. It has always also promoted moderate prices that are fair to go with producers and consumers. And it has always stressed the importance of burden sharing upon good producers for the long term stability of the markets. Now, obviously Saudi Arabia is a very important member of OPEC, but we don’t speak on behalf of the organization, uh, as a whole because obviously there’s a number of other member nations there. However we did play, I would say that may be an instrumental role in the fact or in orchestrating what was a historic opaque plus agreement back in, uh, April 12th, which reduced global oil production by about 12.5 million barrels a day. Uh, we have also secured commitments from, uh, G 20 nations for another 3 million barrels. Not only that, but we have actually gone well beyond our own commitments and just announced that we are reducing our production by an additional 1 million barrels a day, bringing our total cuts to 4.8 million barrels a day from April production levels. Speaker 1: (05:32) Some of the media coverage prior to some of these announcements have probably put you very much in the hot seat. And uh, so you know, understanding and hearing a lot of the oral reserves and what you guys are, uh, cutting, uh, is a, you know, probably a very good path forward. David, I’d like to bring you on, I know you had a couple of questions. Speaker 2: (05:56) Yes. And thank you very much Speaker 3: (05:58) for being, I really appreciate it. This is a rare opportunity for us. Um, I wanted to ask you, and I think it’s important for our audience to understand too, the role that all revenues to Saudi Arabia play, uh, in the funding of the government and, and the social services state, uh, that, that the kingdom operates for the population there. Can you talk about how the, the, this crash in oil prices is impacting, uh, the kingdom’s ability to actually finance, uh, its government operations? Speaker 2: (06:38) Right. So there’s no question that the Saudi economy, just like the US economy and every economy around the world has been negatively impacted by this. Um, and Damache that we are all dealing with as we speak. The, uh, finance minister of Saudi Arabia a couple of days ago gave a lengthy interview where he did say that the, uh, no global, lower prices have indeed decreased government revenues that have led to a budget deficit. At the same time non oil GDP has also gone down because of the fact of, uh, reduced economic activities. At the same time, we are trying to relaunch this stimulus package to help the sectors and the companies and the individuals that have been hard hit by this too, so that they can withstand and survive with has been a very uh, tough economic impact. So absolutely what I think what has then lost in the conversation. Speaker 2: (07:41) Yeah. A little as the fact that Saudi Arabia has not only been impacted by this adversity, but we have done everything we can to do two things. One, we have done everything we can to stabilize global markets and global prices and we have done that through the historic OPEC plus agreement that I mentioned earlier. At the same time we are, I think just as importantly, we are playing a very important role in doing everything we can to help and galvanize the international community and addressing the pandemic from a public health standpoint. So as it happens, we are actually the president of the group this year. And in that capacity we convened a special virtual summit in March to focus the world’s attention on the pandemic and to work towards a more coordinated international response. So after the needing the member nations, which include the United States by the way in China and the UK, and a number of other, uh, topics, economies and nations resolve to share critical information that will help us understand how this virus spreads and obviously it will help us understand it and help control how it is started, how it spreads, and that will enable us to stop it. Speaker 2: (09:03) They also resolve to spend more money on, uh, on vaccines and diagnostics and therapeutics. The kingdom itself alone has pledged $500 million to three different international organizations to help, uh, expedite and move forward the international community’s effort to not only treat it, but also to find a vaccine. So we’re doing everything we can from multiple angles to, uh, to try to mitigate the impact of this Speaker 1: (09:33) hot. When we come back from break, I want to revisit, uh, the kingdom of Saudi Arabia. The historical and current relationship we have with the United States. Because I think as a, you know, we saw this drop in price and for the first time in history we went into a negative in the United States on the price of a barrel of oil. I think we had a little bit of some emotional reactions from, from people in the energy sector and it really took a downward turn here in the United States. But I think, uh, the process of looking at the historical process that we’ve had with the kingdom in the past and current might give our listeners a little bit of an understanding of the history that’s there and how we are an Alliance are having an Alliance with Saudi Arabia. But we do have to take a quick break. Speaker 1: (10:25) You’re listening to the oil patch radio show and we’ll be right back and we’re back. You’re listening to the oil patch radio show. Our guest today is Fahad Nazer who is the official spokesperson for the embassy for Saudi Arabia in DC, Washington DC for had before the break we were talking about the kingdom, how what you guys have endured pertaining to the drop of oil prices. And your commitment, your government’s commitment, what you guys are trying to do. Uh, you know, we have COVID 19 that has changed the world in how we know it or how we have known it in the past. I want to back up a little bit and talk a little bit about the kingdom of Saudi Arabia, the historical relationship that you guys have with the United States as well as the current relationship with the United States. Can you tell me a little bit about that? Speaker 2: (11:15) Sure. So as it happens this year happens to be the 75th anniversary of the first meeting between delayed King Abdulaziz out suit, the founder of modern day Saudi Arabia and the late president Franklin Delano Roosevelt aboard the USS Quincy and the Suez canal. And in the 75 years since that meeting, the uh, relationship has, has continued to strengthen and to deepen and to broaden under both Republican and democratic administrations. I might add their relationship in many ways is multidimensional. It has political, military security, economic, and the people to people component. We have done quite a bit and accomplished quite a bit over the years. For one, we, Saudi Arabia and the United States worked very closely together to defeat global communism. Our troops fought side by side to expel the invading troops of Saddam Hussein from Kuwait in 1990 1991 more recently, our troops again fought side by side to expel the terrorist group, ISIS from Syria and Iraq. Speaker 2: (12:27) Um, at the same time there is as, as I said, there’s also a people to people component that I think unfortunately it gets a little lost and maybe, and you know, part of my job is to shed light on that element of their relationships. So as we speak, we have about 50,000 Saudi students studying in the United States. Now they’re all here obviously to attain an education, but at the same time they have also all taken part from their studies and to give back to their local community. So they are contributing by working in, uh, in soup kitchens. They are volunteering to work as senior citizens. So I’ve had to actually even take some time off from their studies to help American communities recover from natural disasters. For instance, that was the case a few years ago after hurricane Harvey. So, um, this, these, these students are in some ways on official ambassadors. Speaker 2: (13:25) They treat Americans as an extended part of their family and they treat the United States as a second home. Um, at the same time, there’s, I’m not sure, the actual numbers of how many Americans live in the kingdom, but that’s seen at least 20,000. And obviously, uh, they’ve been living there many of them for many years. They’re treated, uh, the kingdom as their second home and they’re treated, they’re always welcomed. We have a longstanding relationship between our two nations. But I think, as I said, also between our two people, that has been mutually beneficial to both countries. And I would say that not just through our two nations, but it’s been good to, for the, uh, for the middle East and for the international community overall. Speaker 1: (14:12) Very good. Well, here come the more in depth questions. I think David, you have some questions pertaining to OPEC plus. Speaker 3: (14:22) Yes, yes, definitely. Um, uh, I’ve probably written 50,000 words about this agreement over the last three years. Um, and, and we talk about it almost on a weekly basis, uh, on our radio program. So you can imagine we’re, we’re curious to hear the kingdom’s views of all of this. Um, so I, I think just as in order to set the stage and kind of review how we got to where we are, uh, talk about who the participating are in the OPEC plus agreement and, and why was this arrangement negotiated and formed up during 2017 to begin with. What was Saudi Arabia, OPEC and the non-OPEC companies? What market conditions were they responding to? Speaker 2: (15:10) Right. So as I said, I mean, if you look back at the history of our energy policy, going back really 40 years, it has been very, very consistent. We believe in free trade. We are fully, we realize that we embrace the fact that we live in a global economy. We understand that well it’s obviously a global, a global commodity and that we, there are producers and as consumers we always have a long term view to uh, to really all of our policies. This has been certainly when it comes to oil. So that’s why as I said at the outset, we have always favored the stability of markets and moderate prices because I think that is good for the, uh, for the long story long term stability. And it’s good for both producers and, and consumers. Um, in general, we obviously, contrary to what we have seen in the press recently, we certainly don’t engage in any policies to damage other economies or sectors of other economies and certainly not the United States. Speaker 2: (16:20) In fact, the United States is our most important strategic partner and ally in the world. That is also our second biggest trading partner. So in many ways what is good for the U S economy is good for Saudi Arabia and vice versa. And we, the kingdom has really played the leading role in, and not just brought me this historic agreement back in April, but we still had the initial agreement back in 2017 between this, this OPEC plus group. Uh, I mean they, obviously the main player in OPEC pluses, Russia, Russia is the second biggest producer of or around the world. And obviously it’s production makes a huge difference. And what we have seen, and that should be obvious to anyone who follows global energy markets, is that because of the fact that this is a globally traded commodity in a global marketplace. Every single nation, whether you are a member of OPEC or OPEC plus or even outside of both of those groups, every nation’s production matters. Speaker 2: (17:29) And that’s why, you know, as, as what we saw was you heard president Trump on a number of occasions, thank uh, Saudi Arabia and our leadership for this historic agreement because of the fact that we really went out of our way, not just in terms of the cuts that we have made. We have made, as I said at this point, 4.8 million barrels a day. That is those cuts that are actually more than the entire production of most countries around the world. So not only have we done that, but we have been, we have still had the best this and production and has, we have been the leader in bringing all these countries back to the table, especially Russia, which plays a very important role in international energy. Mark Speaker 1: (18:14) and for HOD, we have to go to break, but when we return, I want to get on the topic of Russia you’re listening to in the oil patch radio show and we’re back. You’re listening to the oil patch radio show. Our guest today is for Fahad Nazer who is the official spokesperson for the embassy of Saudi Arabia located in Washington D C. Thank you for giving us some historical background, the commitment that Saudi Arabia has to the United States. Let’s talk a little bit about what happened. The collapse, a temporary collapse in March a fourth and fifth. And then I also want to get caught up with the current relationship that you guys have, Saudi Arabia with Russia. And also, I know there’s a lot of questions in here, but this OPEC deal is really important I think to everyone. Do you continue to see this will be a long term type of commitment from Russia? Speaker 2: (19:12) Well, obviously I can’t speak on behalf of, uh, of the Russian government or what I can say is obviously Russia’s an important player globally in energy markets. It was an important player. Um, and disagreement. We, um, there was a phone call yesterday between our energy minister and his Russian counterpart where both nations committed, uh, to the cuts. So I think that’s a good sign. And what we have seen in, uh, energy markets lately, what we have seen has been a reflection in the actual oil prices going up fairly steadily over the past couple of weeks. And I think that’s certainly a good indication of, uh, of hopefully it’s a good indication of thanks for comment. I think, uh, that is a credit, I think in large part to the fact that, uh, you know, we, we did manage to conclude this historic agreement back in April, Speaker 3: (20:15) uh, over the first couple of years of the OPEC plus deal. It seemed to me that it was really, you talk about moderate all prices and it really seemed to us that, that the agreement was really extraordinarily effective for the first year and a half that it was in place and keeping the price for, for say Brent between 60 and $70 a barrel, less types of intermediate five day dollars lower than that. But it seemed to begin big stabilizing as us production ramped up very rapidly and, and that supply and demand curve began to separate again. So in your view, now we have a new agreement, uh, the first one lasted for about two years and three months before a kind of temporary Farrow fell apart. You think the conditions are now there for this current OPEC plus agreement and an Alliance between all these countries to hang together for a longer period of time before we see similar dynamics come about? Speaker 2: (21:26) I think so because I think the, um, Corona pandemic has really had a, an insert certainly certain cases, uh, at devastating impact on, um, on the global economy. Every single nation has, uh, has suffered because of that. Uh, certainly as I mentioned earlier, uh, that kingdom has had to make adjustments because of that, that has not been good for our economy at all. Obviously it has not been good for the United States economy and has not been good for the Russian economy from what I’m reading. So I think there’s an incentive for, uh, for all producers to cooperate and to work closely to keep, certainly to keep that, these commitments and possibly to increase them. Uh, incidentally, it wasn’t just Saudi Arabia that announced that we would be making more cuts, but both the and the United Arab Emirates have also committed to a moral cut beyond the commitments that they made on April 12th. So, um, I think these are all good signs. They said this is, this is really a global commodity, a global market and every sense of the word, every producer has to play a role. And, uh, it does seem that there was a realization among producers that every country has to stick to its commitment and that this agreement will be good for the long term stability of the market, which benefits not just consumers but obviously producers as well for the long term. Speaker 1: (23:06) Well, I had, when we got back from break, I wanted to switch gears and talk a little bit about exporting into the United States and get into that discussion. But we do have to take a quick break. You’re listening to the oil patch radio show and we’ll be right back. Speaker 3: (23:20) Well, welcome back to the In The Oil Patch radio show on David Blackmon with Kym Bolado. And our guest today is for Fahad Nazer, the official spokesperson for the embassy of the kingdom of Saudi Arabia and Washington. And before we went to the break, we were talking about the OPEC plus agreement and I wanted to uh, now transition over to imports into the United States. And we have had numerous reports here over the last two to three weeks of a large number of anchors who crude all tankers heading to the U S from Saudi Arabia carrying a load of somewhere. You know, the numbers vary between 43 to 50 million barrels of crude all come into the U S to be refined, which is quite a, quite a bit more than the kingdom imports into the U S normally. And that, that seems to have come from that period, uh, during March and April when both Saudi Arabia and Russia had significantly increased your production, uh, before the new Opec plus deal came together. And I, I wanted to get your view and the Cayman’s view on why when, when us producers today are struggling to find a refining home for their own crew production, why it’s appropriate for this really very large volume of crude coming into the United States now from Saudi Arabia. And I wanted to give you a chance to, to address that question. Speaker 2: (24:57) Sure. Sue, the shipments in question are actually in fulfillment, is contracts with long term us customers that were concluded long ago. Uh, they are not looking for new customers. The tankers will not be arriving to the U S market at the same time. Contrary to some what I’ve seen in uh, in the media, their journey to the United States takes anywhere between 45 and 60 days. So their shipments are actually for deliveries in may and June and will be taking place over an extended period of time. Uh, at the same time, these exports will not have an impact on, uh, storage levels in the United States, not crocheting or anywhere else. Um, perhaps most importantly, it is important to note that the grade is Sadie oil is different from, uh, us check shell oil for instance. So it is not competing with a shell producer. And I’m going back to your initial question. The Saudi oil accounts for a fairly small proportion of us consumption, um, just any, anywhere from 2.5 to a maximum of 5% of, uh, of consumption here. So, the oil that’s coming in, as I said, there’s fulfillment of, uh, contracts with long term US customers. This is, this is not, they’re not looking for a new customers Speaker 1: (26:28) for that. Let me ask you on messaging, what do you think the kingdom of Saudi Arabia, uh, would like to send if they would like to send a message to you as producers because things got a little tense, you know, a month back or on this goal about shared growth in the oil markets amongst all nations. Is there a message there from the kingdom? Speaker 2: (26:52) So the message is that we are all in this together. Uh, we are all facing an unprecedented and that makes, that is a pandemic in every sense of the word. Uh, we certainly have not experienced anything like it in almost a hundred years for it. Sport. Saudi Arabia is doing everything it can to stabilize energy markets to stabilize energy prices. And uh, as I said, we have, we have done that through the OPEC plus agreement and we’re continuing to do that through going beyond our commitments. And there just would be an announcement we made two days ago. And again, that brings our cuts to 4.8 million barrels a day. Uh, and at the same time I do have to emphasize what we are doing with the kingdom is doing through the presidency of , uh, with the convening of a number of meetings with the member States, with the pledging of and the commitment that we have made a 500 million million dollars towards, uh, you know, efforts that are working towards, uh, working on vaccines and therapeutics and testing. Speaker 2: (28:08) These are very, very important things. Um, you know, this is, this is really all weekend we can do at, uh, at the moment, this is our main challenge, uh, if we can learn to, to work together, not just the United States and Saudi Arabia, but the entire international community because it really has impacted all of us. If we get all our resources together to help stop, stop it from spreading, to help people who have it recover quickly and ultimately obviously to develop a vaccine that will go a long way towards not just helping shell producers. In the United States, they will obviously help global energy markets. It will help the global economy, uh, recover from this because it really has had a devastating impact on many, many sectors around the world. Whether it’s retail, tourism, travel, transportation, entertainment, obviously, uh, food, restaurants, you know, people, we are just not living life the way we have in the past. Speaker 2: (29:14) Uh, hopefully we’re beginning to turn a corner, but it will take every, each and every one of us to do our part, not just each and every nation, but on some level, each and every individual. Obviously, you know, we all have to, the gang then has put measures in place inside Saudi Arabia to stop growing up from spreading. And we’ve been very successful doing that because we’ve taken some very stringent and narrowly measures early on to make sure that the virus doesn’t spread. And so ultimately it is incumbent upon each and every one of us to follow the, uh, the guidance of, uh, health authorities related to social distancing and, uh, other imaginations to make sure that this thing, uh, stops and does a stride anymore. So we can all go back to life as we once knew it. Speaker 1: (30:11) Well hot. I’m sorry. We are running out of time. We’re going to go into break when we return. We’re going to get back on this subject you’re listening to and the oil patch radio show and we’ll be right back. Speaker 3: (30:20) Welcome back to the oil patch radio show. I’m David Blackmon with Kym Bolado and our guests this week is for Fahad Nazer from the embassy of Saudi Arabia for HOD. Uh, just one more question about, uh, the global reduction in pre production. You were referred to, uh, an anticipation among the  nations and OPEC plus of 19 million barrels of day reduction and I’m sure that you and the kingdom recognized that America’s antitrust laws literally prevent us producers from forming together and coordinating a strategy of reducing production. However, that having been said, it’s apparent to me that U S production has already dropped by at least 2 million barrels a day and is likely to fall by that much again by the end of 2020. But I just wonder in the context of that 19 billion million barrel per day reduction, what is the  view on how much of that is coming from the U S shell industry? Speaker 2: (31:27) Well, so our leadership has obviously spoken with, uh, with, uh, both president Trump as well as the leaders in Congress, uh, to speak to, to find a way to, uh, to stabilize energy markets. Uh, in terms of, you know, how much the U S uh, will produce and I mean reduces production. Obviously, um, you know, these conversations are happening at a high level between our leaders. I’m not privy to, um, to those conversations. But what I can say, really what I can say is that what I’ve said earlier is that, that the kingdom is not only sticking to its commitments, but it is going way beyond its commitments. And it is now for June, we’ll be reducing production by 4.8 million barrels a day, which is, uh, not only the steepest Scott of any of the OPEC plus members. Uh, it is also, I mean that 4.8 million barrels is more than most oil producing countries produce altogether. Speaker 2: (32:31) So it’s very significant that we are doing everything we can to uh, to stabilize markets and obviously the United States has an important player in this as well. It played an important role in uh, in concluding the open plus agreement, especially when it’s with its conversations with Mexico. So, um, as I said, I think every country has to, every old producing country has to play a role, uh, in order for us to, uh, to stabilize markets. But I think we are, we are turning a corner as is evidenced by the fact that prices have, uh, increased significantly or not significantly but appreciatively at least over the past couple of weeks. Speaker 1: (33:18) Very good. Well, Fahad, we know that we had you for longer than we should have. I’d like to thank you on behalf of David and myself for visiting us here on the show in the oil patch radio show and hopefully we can have you back soon again talking a little bit more about OPEC plus. Thank you again for being a guest on our show today. Speaker 2: (33:36) Thank you. It’s my pleasure. I really enjoyed talking to you and I hope that we can continue this conversation another time. Speaker 1: (33:43) Thank you. Well David, that was a great interview and kind of exciting to interview pertaining to being able to talk to, you know, someone officially representing Saudi Arabia, but I want to get your take because he had a lot of interesting things to say. My opinion, the Corona virus obviously has changed the whole global picture. Uh, and I think if anything, what I got a sense from him was we’re all in this together and this pandemic has brought, you know, what seems to be challenges globally into more an inner circle that uh, if we’re, you know, we don’t start figuring out that the Corona virus isn’t a very important thing we’ve got to deal with and come together as nations. There won’t be any of us left to worry about oil prices anyway. But some of the interesting things he was talking about, what was the most important discussion that you think you got from him today? Cause I have mine, but I want to see what yours is of his, some of his answers. Speaker 3: (34:40) Yeah. I, you know, I, I mean I, I understood what he was saying. Uh, I was a little disappointed in the answer about the 20 tankers that are currently headed to the U S with what is without doubt a, you know, a higher amount of crude than they normally ship over here to the United States. Uh, I do understand their long term contract agreements. Everybody has those. But at this point in time, uh, the other side of that is there’s no denying it’s, it’s a really bad look. Okay. I, again, it’s got, we’ve gotten a lot of media attention and it would have probably been good from a PR standpoint for the kingdom to, to decide to maybe turn some of those tankers around, but what’s done is done. But overall I thought I found it to be very forthcoming. I, you know, I know he’s limited on what he can say about certain things, but you know, it was very interesting to me too, to at least get the kingdoms and here’s assessment of the current situation and his viewpoint on the long term viability of the OPEC plus agreement I thought was also pretty interesting as well. Speaker 1: (35:57) Do you kind of feel that Saudi Arabia seems to be like the linchpin, if you will, between the United States and Russia? Obviously we’re enemies and without them there is nothing in between. And I, I just wonder your thoughts on moving forward in 2021 obviously we’ve seen a reduction of severe reduction twice in a matter of what, five years and both of them have been a flooding of the market, uh, coming out of other countries that we have. You know, we really don’t have any way of challenging that because they can do it. But do you think that there were any lessons learned that it doesn’t benefit any country and moving forward? You know, do you see that we’ll be back here again in the future? Speaker 3: (36:47) Well, yeah. And, and, and I’m not, and this is no assertion on Mr Nazer, but I believe it’s inevitable that the OPEC plus agreement will fall apart sometime in the future. Uh, but just because the whole nature of that agreement is Saudi Arabia, Russia and all these other countries agreeing to limit their own production and their own exports. And in the meantime, there is no limitation on the growth of the U S shale industry. Right. And that is a tension that creates tension between the U S not, not just shelving, Saudi Arabia and Russia, but all these other countries. And sooner or later you’re going to reach a point where some of the big players are tired of cutting their own production. And that’s why my view is that it’s incumbent on the U S industry and the regulators of the U S industry, including the Texas railroad commission, to take a long term view of whether it makes sense for them to act, to limit production in their States. Speaker 3: (37:54) It’s because when you look at where Sheryl production is, it’s in Texas, it’s in New Mexico, it’s in North Dakota, it’s in Wyoming, in Oklahoma. All these States have the ability to curtail production within their own stakes over long periods of time, and in order to stabilize that, that market over the long haul, and provide some discipline to the industry itself that the industry can’t. That’s why I asked the question about our antitrust laws. Uh, it’s up to the regulators to do that. And so I just think it’s inevitable. If nothing changes, it’s inevitable that we’ll have another crash three or four years from now. Speaker 1: (38:34) Very good. Well, and with that, another great show in the books. Thank you for joining us today.
In the Oil Patch Radio Show with Guest Fahad Nazer, from the Saudi Embassy
Speaker 1: (01:50)