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Saudis Seek Payments for Any Drop in Oil Revenues[/color]]Saudis Seek Payments for Any Drop in Oil Revenues
Saudi Arabia is trying to enlist other oil-producing countries to support a
provocative idea: if wealthy countries reduce their oil consumption to combat
global warming, they should pay compensation to oil producers.
The oil-rich kingdom has pushed this position for years in earlier climate-treaty
negotiations. While it has not succeeded, its efforts have sometimes delayed or
disrupted discussions. The kingdom is once again gearing up to take a hard line
on the issue at international negotiations scheduled for Copenhagen in December.
The chief Saudi negotiator, Mohammad al-Sabban, described the position as
a “make or break” provision for the Saudis, as nations stake out their stance
before the global climate summit scheduled for the end of the year.
“Assisting us as oil-exporting countries in achieving economic diversification is
very crucial for us through foreign direct investments, technology transfer,
insurance and funding,” Mr. Sabban said in an e-mail message.
This Saudi position has emerged periodically as a source of dispute since the
earliest global climate talks, in Rio de Janeiro in 1992. It is surfacing again
as Saudi Arabia tries to build a coalition of producers to extract concessions
in Copenhagen.
Petroleum exporters have long used delaying tactics during climate talks. They
view any attempt to reduce carbon dioxide emissions by developed countries
as a menace to their economies. The original treaty meant to combat global
warming, the 1992 United Nations Framework Convention on Climate Change,
contains provisions that in Saudi Arabia’s view require such compensation.
Mr. Sabban outlined his stance at climate talks in Bangkok this month.
Environmental advocates denounced the idea, saying the Saudi stance hampered
progress to assist poor nations that are already suffering from the effect of
climate change, and that genuinely need financial assistance.
“It is like the tobacco industry asking for compensation for lost revenues as a
part of a settlement to address the health risks of smoking,” said Jake Schmidt,
the international climate policy director at the Natural Resources Defense
Council. “The worst of this racket is that they have held up progress on
supporting adaptation funding for the most vulnerable for years because of this
demand.”
Saudi Arabia is highly dependent on oil exports, which account for most of the
government’s budget. Last year, when prices peaked, the kingdom’s oil revenue
swelled by 37 percent, to $281 billion, according to Jadwa Investment, a Saudi
bank. That was more than four times the 2002 level. At one point in 2008, the
average gasoline price in the United States surpassed $4 a gallon. Saudi exports
are expected to drop to $115 billion this year, after oil prices fell. American
gasoline prices are hovering around $2.50 a gallon.
The one-year swing in the kingdom’s revenues shows that oil prices are likely
to be a bigger factor in Saudi Arabia’s future that any restrictions on greenhouse
gases, said David G. Victor, an energy expert at the University of California, San
Diego.
Mr. Victor dismissed the Saudi stance as a stunt, saying that the real threat for
petroleum exporters came from improvements in fuel economy and rising
mandates for alternative fuels in the transportation sector, both of which would
reduce the need for petroleum products. “Oil exporters have always, in my view,
far overblown the near-term effects of carbon limits on demand for their
products,” Mr. Victor said. “For the Saudis this may be a deal-breaker, but the
Saudis are not essential players. In some sense, one sign that a climate
agreement is effective is that big hydrocarbon exporters hate it.”
A recent study by the International Energy Agency, which advises industrialized
nations, found that the cumulative revenue of the Organization of the Petroleum
Exporting Countries would drop by 16 percent from 2008 to 2030 if the world
agreed to slash emissions, as opposed to the projection if there were no treaty.
But with oil projected to average $100 a barrel, the energy agency estimated
that OPEC members would still earn $23 trillion over that period.
Mr. Sabban, however, cited an older study by Charles River, a consulting firm,
which found that the losses in revenue for Saudi Arabia alone would be $19
billion a year starting in 2012.
The Copenhagen talks were a major point on the agenda of the last OPEC
conference. But not every oil-exporting country is falling in line with the Saudi
position. Some have been trying a different approach that has earned the
backing of environmental groups. For example, Ecuador, OPEC’s newest
member, said last year that it was willing to freeze oil exploration in the
Amazon forest if it got some financial rewards for doing so.
The Saudi negotiator said that the compensation mechanism was an integral
part of the global climate regime that has been in place since the 1990s and
that was not up for renegotiation.
“It is a very serious trend that we need to follow and influence if we want to
minimize its adverse impacts on our economies and our people,” Mr. Sabban
said in an e-mail message to other OPEC officials. “That does not mean we
would like to obstruct any progress or that we do not want to join any
international agreement. We will do that if the deal is fair and equitable and
does not transfer the burden to us.”
Well, then, can I get cash back when I use less electricity >
?
Saudi Arabia is trying to enlist other oil-producing countries to support a
provocative idea: if wealthy countries reduce their oil consumption to combat
global warming, they should pay compensation to oil producers.
The oil-rich kingdom has pushed this position for years in earlier climate-treaty
negotiations. While it has not succeeded, its efforts have sometimes delayed or
disrupted discussions. The kingdom is once again gearing up to take a hard line
on the issue at international negotiations scheduled for Copenhagen in December.
The chief Saudi negotiator, Mohammad al-Sabban, described the position as
a “make or break” provision for the Saudis, as nations stake out their stance
before the global climate summit scheduled for the end of the year.
“Assisting us as oil-exporting countries in achieving economic diversification is
very crucial for us through foreign direct investments, technology transfer,
insurance and funding,” Mr. Sabban said in an e-mail message.
This Saudi position has emerged periodically as a source of dispute since the
earliest global climate talks, in Rio de Janeiro in 1992. It is surfacing again
as Saudi Arabia tries to build a coalition of producers to extract concessions
in Copenhagen.
Petroleum exporters have long used delaying tactics during climate talks. They
view any attempt to reduce carbon dioxide emissions by developed countries
as a menace to their economies. The original treaty meant to combat global
warming, the 1992 United Nations Framework Convention on Climate Change,
contains provisions that in Saudi Arabia’s view require such compensation.
Mr. Sabban outlined his stance at climate talks in Bangkok this month.
Environmental advocates denounced the idea, saying the Saudi stance hampered
progress to assist poor nations that are already suffering from the effect of
climate change, and that genuinely need financial assistance.
“It is like the tobacco industry asking for compensation for lost revenues as a
part of a settlement to address the health risks of smoking,” said Jake Schmidt,
the international climate policy director at the Natural Resources Defense
Council. “The worst of this racket is that they have held up progress on
supporting adaptation funding for the most vulnerable for years because of this
demand.”
Saudi Arabia is highly dependent on oil exports, which account for most of the
government’s budget. Last year, when prices peaked, the kingdom’s oil revenue
swelled by 37 percent, to $281 billion, according to Jadwa Investment, a Saudi
bank. That was more than four times the 2002 level. At one point in 2008, the
average gasoline price in the United States surpassed $4 a gallon. Saudi exports
are expected to drop to $115 billion this year, after oil prices fell. American
gasoline prices are hovering around $2.50 a gallon.
The one-year swing in the kingdom’s revenues shows that oil prices are likely
to be a bigger factor in Saudi Arabia’s future that any restrictions on greenhouse
gases, said David G. Victor, an energy expert at the University of California, San
Diego.
Mr. Victor dismissed the Saudi stance as a stunt, saying that the real threat for
petroleum exporters came from improvements in fuel economy and rising
mandates for alternative fuels in the transportation sector, both of which would
reduce the need for petroleum products. “Oil exporters have always, in my view,
far overblown the near-term effects of carbon limits on demand for their
products,” Mr. Victor said. “For the Saudis this may be a deal-breaker, but the
Saudis are not essential players. In some sense, one sign that a climate
agreement is effective is that big hydrocarbon exporters hate it.”
A recent study by the International Energy Agency, which advises industrialized
nations, found that the cumulative revenue of the Organization of the Petroleum
Exporting Countries would drop by 16 percent from 2008 to 2030 if the world
agreed to slash emissions, as opposed to the projection if there were no treaty.
But with oil projected to average $100 a barrel, the energy agency estimated
that OPEC members would still earn $23 trillion over that period.
Mr. Sabban, however, cited an older study by Charles River, a consulting firm,
which found that the losses in revenue for Saudi Arabia alone would be $19
billion a year starting in 2012.
The Copenhagen talks were a major point on the agenda of the last OPEC
conference. But not every oil-exporting country is falling in line with the Saudi
position. Some have been trying a different approach that has earned the
backing of environmental groups. For example, Ecuador, OPEC’s newest
member, said last year that it was willing to freeze oil exploration in the
Amazon forest if it got some financial rewards for doing so.
The Saudi negotiator said that the compensation mechanism was an integral
part of the global climate regime that has been in place since the 1990s and
that was not up for renegotiation.
“It is a very serious trend that we need to follow and influence if we want to
minimize its adverse impacts on our economies and our people,” Mr. Sabban
said in an e-mail message to other OPEC officials. “That does not mean we
would like to obstruct any progress or that we do not want to join any
international agreement. We will do that if the deal is fair and equitable and
does not transfer the burden to us.”
Well, then, can I get cash back when I use less electricity >
?
