The GCC governments are weighing various alternatives to carryout radical transformation from the consumer-intensive economies into sustainable growth in line with the changing global trends, according to an expert.
This initiative aimed at reducing reliance on natural resources, such as oil and natural gas resources which have a significant share of the annual gross domestic product and have accounted for majority of government spending on various development and infrastructure projects.
The various researches and the results of the GCC joint studies as well as the associated activities, conferences, agreements and memorandums of understanding have all contributed to setting a number of forms to cushion the impacts of oil and gas reserve depletion and the resulting negative impacts on development and growth and the welfare of future generations.
Economic community in the Kingdom Saudi Arabia received with great interest the news of Aramco quality transformation from Oil and Gas Company to Energy and Petrochemicals Company following the accelerating transform programme launched recently, a move that was considered by economic observer as a first step towards an expected GCC scheme to redirect investment in line with the latest global changes and developments and the trend towards sustainability.
“Everyone is aware of the leading role played by Aramco in leading the Saudi national economy. It is a pioneering company in leading the national economy. We extend sincere thanks and gratitude to Khalid Al Falih and all the work team for this new vision which culminates 75 years of success, experience and financial stability of a company that is well positioned to enter a new era and face new challenges in energy and petrochemicals sector,” Omar Al Juraifani, Financial and Economic Analyst, said.
“The question becomes now: what is the expected impact of this transformation on the national economic landscape? And will this transformation drive Aramco to use the surplus oil revenues in development projects and search for alternative energy, such as the nuclear energy initiative or solar energy? How this will be feasible if the cost of producing 1 kilowatt is 10 halalas, and the cost of producing 1 kilowatt of solar energy is 16 halalas? Will Aramco be an energy producer and its role restricted to produce energy and deliver to end user? Will we witness worldwide expansion of the company same as Shell and Schlumberger?
Economic experts raise other questions about the petrochemicals manufacturing sector which Aramco intends to enter, the form of future relationship between Aramco and other leading companies in the sector such as Sabic, the possibility to achieve integration, the influence of competition on Sabic profit margins in addition to other questions about the gas quota distributed on companies in the future and what is the potential development in the petrochemicals market with the entry of such giant company as Aramco.
Economic experts welcomed this step, considering it as a future support to the private sector if Aramco transformation was ideally invested by such ways as the establishment of subsidiary companies, allowing the private sector to invest, creating new jobs for the Saudi young nationals and opening new markets for the small and medium enterprises (SMEs).