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Saudi king ousts longtime oil minister

May 8, 2016

Saudi Arabia has announced the ouster of its longtime oil minister as part of a larger government shakeup. Outgoing minister Ali al-Naimi had been a pillar of Saudi oil policy since 1995.

Khalid A. Al-Falih
Image: picture-alliance/dpa/Rolex Dela Pena

Saudi King Salman replaced his long-serving oil minister on Saturday as part of a major government overhaul which comes as the kingdom grapples with a slump in energy revenues.

Al-Naimi had been one of the most powerful figures within the OPEC oil cartel.

He's now been replaced by Khaled al-Falih, the longtime chief of state oil giant Saudi Aramco, who was previously health minister. Falih takes on the enlarged portfolio of energy, industry and mineral resources, a royal decree announced Saturday by state media said.

"The appointment of Falih has been expected for some time," said Saddad al-Hosseini, a Saudi energy consultant. "He has the right industrial and executive experience to lead the reorganisation of the energy and electricity sectors."

From 2009, he was Aramco's president and chief executive officer, in charge of about 60,000 workers at the firm which produces roughly one in every eight barrels of the world's oil supply.

An old hand guiding Saudi oil policy

Ali al-Naimi
A royal decree replaced Ali al-Naimi (pictured) with former Health Minister and Saudi Aramco board chairman Khaled al-FalihImage: Picture-Alliance/dpa

Oil industry watchers had for years speculated on when the 80-year-old al-Naimi would step down. He was born in the kingdom's eastern oil heartland and studied geology in the United States in the 1960s.

He has presided over the controversial strategy of maintaining high production levels despite the steep drop in prices over the past two years in an effort to drive more expensive producers in the US and elsewhere out of the market. That has led to a glut of supply and a low price of around $45 a barrel.

But the arrival of al-Falih is unlikely to mean a shift in Saudi oil policy, which is being crafted to a large degree by Deputy Crown Prince Mohammed bin Salman, who oversees the kingdom's energy and economic policies.

According to an official biography, Falih - whose year of birth is not released - earned a mechanical engineering degree from Texas A&M University in 1982. He also completed an MBA from King Fahd University of Petroleum and Minerals in Saudi Arabia in 1991.

Other shake-ups

Former Commerce and Industry Minister Tawfiq al-Rabiah will replace Falih as health minister. Former Social Affairs Minister Majed al-Qasabi was named Minister of Commerce and Investment, one of the newly named ministries. The Social Affairs Ministry will be combined with the Labor Ministry under a new ministry called the Labor and Social Development Ministry.

Saudi Arabia, the largest economy in the Arab world, has long enjoyed a windfall from its massive and easily exploitable oil reserves. Flush with energy revenue, the kingdom built up enormous fiscal reserves and provided its 21 million citizens with a generous system of public employment, welfare benefits and subsidized utilities.

But the Saudi system, which depended on oil for 73 percent of state revenues last year, is deeply bureaucratic and inefficient.

jar/bw (AP, AFP, Reuters)