Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi said Tuesday that depending on oil production and exports as a basis for national income and sustainable economic development isn't appropriate, and said that oil revenues should be used to create other sources of economic growth. "One of the toughest and most important local challenges is the continuous dependence on oil for government revenues and for the national economy's components as a whole," Naimi said in a speech in Jubail. "In light of such unpredictable fluctuations (in the oil market)...we should depend on oil revenues, products and various usages to create other sources of economic growth and prosperity on sound commercial basis," he said. Saudi Arabia said in December that its anticipated revenues would fall 36 percent, from SR1.1 trillion ($293.27 billion) for 2011 to SR702 billion in 2012. The drop would make for a budget surplus of SR12 billion in 2012, down from the SR306 billion surplus. Refining more oil domestically will help diversify the Kingdom's income away from volatile prices, Naimi said. Saudi Arabian Oil Co. is expanding its refining capacity to meet domestic demand and increase exports of oil products that fetch higher prices than crude. Refining capacity will rise to 3.46m barrels a day in 2016 from 2.26 million barrels, according to a company presentation in October. Brent crude rose to $128.40 a barrel on March 1 and traded at as little as $98.74 on Aug. 9. Oil prices slid to near $106 a barrel Tuesday as concerns about global economic growth and crude demand outweighed the supply risks posed by the prolonged tensions over Iran's nuclear program. By early afternoon in Europe, benchmark oil for April delivery was down 69 cents to $106.03 in electronic trading on the New York Mercantile Exchange. The contract rose 2 cents to settle at $106.72 per barrel in New York on Monday. In London, Brent crude was down 68 cents at $123.12 per barrel on the ICE Futures Exchange.
