RIYADH: Saudi King Salman replaced his long-serving oil minister on Saturday as part of a major government overhaul which comes as the kingdom grapples with a slump in energy revenues.
The revamp follows last month’s announcement of an ambitious plan to transform SaudiArabia’s economy to reduce its dependence on oil.
Ali al-Naimi, who held the post of oil minister for more than two decades, was one of the most powerful figures within the OPEC oil cartel.
But recently his influence appeared to have been curbed by the growing power of Salman’s son Prince Mohammed who has taken charge of economic policy.
Naimi has been replaced by Khaled al-Falih, the longtime chief of state oil giant SaudiAramco, who was previously health minister.
Falih takes on the enlarged portfolio of energy, industry and mineral resources, according to a royal decree announced Saturday by state media.
From 2009, he was Aramco’s president and chief executive officer, in charge of about 60,000 employees at the firm which produces roughly one in every eight barrels of the world’s oil supply.
There was no immediate word on who will replace Falih as Aramco chairman, but Naimi has been made an adviser to the Royal Court.
The government restructuring comes after Saudi Arabia last week unveiled a long-term reform program dubbed “Vision 2030” to rehaul its economy that has been long-dependent on oil.
Among other changes announced Saturday, a new ministry of trade and investment was created while other ministries were merged and the electricity and water ministry was scrapped.
A new central bank governor, Ahmad al-Khalifi, was also appointed, and the king decreed the creation of a “general authority for entertainment” and another to promote culture.
Naimi, described by Forbes magazine in 2014 as “the world’s most powerful oilman,” oversaw a major change in policy towards the end of his tenure as OPEC refused to cut production despite a price plunge.
Instead the kingdom focused on protecting its market share and driving out less-competitive players, including US shale producers.
Major oil producers failed to reach an agreement on freezing output in Doha last month as Saudi Arabia insisted any deal must include all OPEC members, including rival Iran, which boycotted the talks.
Naimi was born in 1935, two years before the first commercial quantities of oil were discovered in the kingdom’s east.
He obtained a master’s degree in geology from Stanford University and then joined Aramco, according to an official biography.
He was a supervisor at an oilfield before rising through a series of management roles to become president of Saudi Aramco in 1983 and oil minister 12 years later.
He had kept his post despite two major cabinet shakeups last year under Salman, who acceded to the throne in January 2015 after the decade-long reign of King Abdullah ended.
According to an official biography, Falih, whose date of birth was not given, in 1982 earned a mechanical engineering degree from Texas A&M University in the United States.
In 1991 he graduated with an MBA from King Fahd University of Petroleum and Minerals in his homeland.
The ambitious plan to diversify the economy away from oil was announced late last month by Prince Mohammed bin Salman.
The deputy crown prince, who is also defense minister, has emerged as one of Saudi Arabia’s most influential figures since being named second-in-line to the throne last year.
At the root of the long-term reform program is the sale of less than five percent of Saudi Aramco in what officials say will be the largest-ever Initial Public Offering.
For decades, Saudi Arabia, the largest economy in the Arab world, enjoyed a windfall from its massive and easily exploitable oil reserves.
Flush with oil revenues, the nation built up enormous fiscal reserves and provided its 21 million citizens with a generous system of public employment, welfare benefits and subsidized utilities.
But analysts have long warned that the Saudi system, which counted on oil for 73 percent of state revenues last year, is deeply bureaucratic and inefficient.
Riyadh posted a record budget deficit in 2015 and a $87-billion shortfall is projected for this year. AFP