Saudi Arabia, Energy Security And Human Energy

Peter J. Robertson

By Peter J. Robertson, Vice Chairman
Chevron Corporation

Jeddah Economic Forum

Jeddah, Saudi Arabia, Feb. 25, 2007

On behalf of Chevron, I am delighted to be here to participate once again in the Jeddah Economic Forum. I'm also honored to join this distinguished panel. In my brief formal remarks this morning, I'd like to talk about two topics: energy security and human energy, and about an idea that links both of them – the idea of interdependence.

About a week ago, I attend the CERA Week conference in Houston, which is hosted by Dan Yergin's company [Cambridge Energy Research Associates]. It's one of the largest energy-focused conferences in the United States, and this year it drew about 2,000 people from approximately 55 countries and a wide variety of industries beyond energy. FedEx, Toyota and General Electric were just a few of the non-energy companies represented at the conference.

During the course of the conference it became clear that there is a growing recognition among the U.S. business community about the healthy interdependence of energy markets, despite some political rhetoric to the contrary.

Recognizing this interdependence is the first step toward building global energy security – a subject that will be discussed a great deal tomorrow. But interdependence is also a critical part of the human dimension of energy – the men and women who work in the industry and the men and women who are served by the industry.

How people in our industry are linked together, how they work together, and how they serve their stakeholders are critical components of energy security.

So I'd like to talk a little bit about the relationship between Chevron and the Kingdom as a prime example of how the interdependence of people – what Chevron calls "human energy" – can create real economic and technological value and form the basis of genuine energy security.

The number of young people has tripled in the Kingdom since 1980; more than half of the Saudi population is below age 21; and we believe all companies have a duty to expand the number of good, fulfilling jobs in this country.

Chevron takes pride in the fact that 90 percent of our employees here are Saudis – from the president to the engineers to the oil field operators of Saudi Arabian Chevron.

They pursue advanced education and training through literally dozens of Chevron programs inside and outside the Kingdom – and in growing numbers they are entering professional assignments in the United States and around the world.

This commitment to human energy extends well beyond our own employees. We provide university scholarships in equal numbers to promising Saudis who are not employed by us. We are proud to host mid-level professionals – over 75 in the last few years – from Saudi Aramco in our planning, upstream and downstream organizations.

Higher education and professional development are important, but vocational training can make an even greater contribution to creating new jobs for the Kingdom.

In the energy sector, Saudiization is relatively advanced in its core oil, gas and petrochemical components, but it has lagged behind in the service industry that builds and maintains its critical infrastructure. So we are pleased to partner with the Ministry of Petroleum and Mineral Resources to launch a new vocational training center next year in the Eastern Province to train young Saudis for jobs in this industry. Like similar training centers established recently for autos and plastics, we believe this center will create new and important opportunities for Saudi youth – and provide a platform for economic diversification.

These initiatives are based on partnerships with the public sector here in Saudi Arabia. But we also believe strongly in partnerships with the private sector, which now accounts for almost half the Kingdom's GDP. We are partnering with the Saudi Industrial Investment Group in three major petrochemical projects amounting to over $5 billion in investment in the Eastern Province. And here in Jeddah, we have launched the Chevron Al Bakri marketing joint venture for lubricants and other downstream products. This is in addition to our longstanding business and personal relationship with Xenel and the Au Reza family, one of whom, Khalid, was honored here last evening.

These projects are all 100 percent private-sector based – and are rooted in the recognition that energy, private sector development and diversification are the long-term drivers for economic growth in the Kingdom.

Human energy also extends to the important realm of technology. Today Chevron, on behalf of the Kingdom, is employing advanced steamflood technology in pilot tests in the onshore Partitioned Neutral Zone (PNZ). When proved out, we expect this technology to have a significant impact on the production of heavy oil reserves in the PNZ and, possibly in the future, in the Kingdom proper.

The Kingdom and Chevron also share a commitment to global energy security – that is, security of supply for consumers and security of demand for producers.

For the past quarter century, the Kingdom has proven to be a reliable supplier of oil to the global market. It has been unique in maintaining spare capacity of 1.5 million barrels of oil a day – crucial in periods of market shortage or disruption. It has been a leader in committing tens of billions of riyals to development and production of more oil – moving to 12 million barrels per day by the end of this decade and up to 14 or even 15 million barrels per day in the decade to follow. And it is examining major refinery joint ventures both domestically and internationally in order to meet growing needs for refined products in the global markets.

So clearly, Saudi Arabia is playing a key role in promoting global energy security – not just through production, but also through cross-border initiatives such as the International Energy Forum in Riyadh.

This forum is supporting expanded exchanges of data on energy resources and production and is promoting increased dialogue and cooperation between energy producers and energy consumers.

Looking ahead, we can expect this dialogue to address important emerging questions: How do we use energy to promote cooperation across borders – rather than tensions between nations? How do we ensure that the environment is protected as we meet the world's growing energy needs – that is, both energy and environmental security? How do we best develop the next generation of energy as we continue to produce the oil, gas and coal on which the world will continue to depend for 85 percent of its energy – at least for the lifetimes of all Economic Forum participants here today?

Tomorrow's energy panel will address these and other questions – but it should be clear to all of us that solutions are not possible without the leadership of the Kingdom, or without the continuing interdependence of producers and consumers through sustained partnerships.

Chevron is honored to support Saudi Arabia in this energy security leadership role. Whether we speak of human energy or energy security, the partnership between the Kingdom and Chevron is strong and it is bright. We will do all we can to keep it that way, so that all can share in the benefits. Thank you.

Updated: February 2007