IMPRESSIVE PROGRESS
Saudi oil reserves are the largest in the world, and Saudi Arabia is the world’s leading oil producer and exporter. Oil accounts for more than 90% of the country’s exports and nearly 75% of government revenues. Proven reserves are estimated to be 263 billion barrels, about one-quarter of world oil reserves.
More than 95% of all Saudi oil is produced on behalf of the Saudi Government by the giant Saudi ARAMCO. In June 1993, Saudi ARAMCO absorbed the state marketing and refining company (SAMAREC), becoming the worlds largest fully integrated Oil Company.
Oil wealth has made possible rapid economic development, which began in earnest in the 1960s and accelerated spectacularly in the 1970s, transforming the kingdom.
Due to a sharp rise in petroleum revenues in 1974, Saudi Arabia became one of the fastest-growing economies in the world.
Saudi Arabia was a key player in coordinating the successful 1999 campaign of OPEC and other oil-producing countries to raise the price of oil since the Gulf War by managing production and supply of petroleum. That same year, Saudi Arabia established the Supreme Economic Council to formulate and better coordinate economic development policies in order to accelerate institutional and industrial reform.
In response to increasing international demand for oil, Saudi ARAMCO is engaged in an expansion of its oil production capacity, and plans to raise its capacity from the current 11 million barrels/day (mb/d) to 12 mb/d by 2009. Saudi ARAMCO is also increasing production of associated and non-associated natural gas to feed the expanding petrochemical sector.
Saudi Arabia continues to pursue rapid industrial expansion, led by the petrochemical sector. The Saudi Basic Industries Corporation (SABIC), a petrochemical company, is now one of the world’s leading petrochemical producers, and the government promotes private sector involvement in petrochemicals. The government also plans new investments in the mining sector and in refining.
Through 5-year development plans, the government has sought to allocate its petroleum income to transform its relatively undeveloped, oil-based economy into that of a modern industrial state while maintaining the kingdom’s traditional Islamic values and customs. Although economic planners have not achieved all their goals, the economy has progressed rapidly. Heavy dependence on petroleum revenue continues, but industry and agriculture now account for a larger share of economic activity.
Saudi Arabia’s first two development plans, covering the 1970s, emphasised infrastructure with impressive results - the total length of paved highways tripled, power generation increased by a multiple of 28, and the capacity of the seaports grew tenfold. For the third plan (1980-85), the emphasis was markedly on education, health, and social services.
In the fourth plan (1985-90), private enterprise was encouraged and foreign investment in the form of joint ventures with Saudi public. The private sector became more important, rising to 70% of non-oil GDP by 1987. While still concentrated in trade and commerce, private investment increased in industry, agriculture, banking, and construction companies.
The fifth plan (1990-95) emphasised consolidation of the country’s defenses; improved and more efficient government social services; and most importantly, creating greater private-sector employment opportunities for Saudis by reducing the number of foreign workers.
The sixth plan (1996-2000) aimed at lowering the cost of government services and sought to expand educational training programmes.
The seventh plan (2000-2004) focused on a greater role of the private sector in the Saudi economy. For the period 2000-04, the Saudi Government has aimed at an average GDP growth rate of 3.16% each year, with projected growths of 5.04% for the private sector and 4.01% for the non-oil sector.
The eighth plan (2005-2010) focuses on economic diversification and inclusion of women in society. The plan calls for establishing new universities and new colleges with technical specializations and emphasis for a knowledge-based economy and tourism that will help in the goal of economic diversification.
