The man entrusted to explain the Saudi shift

As a young executive at Saudi Aramco, Khalid al-Falih was responsible for negotiating with some of the world’s biggest energy companies over joint ventures in the kingdom’s gas sector.

While those talks resulted in only limited foreign participation, Mr Falih — now Saudi Arabia’s energy minister — gained credit for juggling conflicting interests, and helping to break the public sector’s grip on vital industries.

His ability to deftly manage the process goes some way to explaining why he is now a trusted confidant and adviser to deputy crown prince Mohammed bin Salman, and the kingdom’s interlocutor with the world on energy policy. It also explains why the world took notice when, earlier this week, he called an end to the “considerable downturn” in the oil market.

“Khalid al-Falih has been invested with much broader economic responsibilities than any previous Saudi oil minister,” says Bob McNally, a former White House adviser and consultant at Rapidan Group. “This speaks not only to the confidence Prince Mohammed has placed in him, but also the central role that he envisages the energy sector will play in Saudi Arabia’s sweeping vision for national transformation.”

This week, Mr Falih told a packed room of industry executives that a deal between the big producer countries to trim output — the first since the depths of the financial crisis — would only accelerate the oil market’s recovery.

After letting market forces dictate supply and demand for the past two years, the kingdom has been pushed to change tack as the oil price slide has created a ballooning fiscal deficit and slowed economic growth.

And Mr Falih has been charged with communicating this shift in strategy. In doing so, his approach to Opec peers and rival producers has been more conciliatory than his predecessor, Ali al-Naimi, whose position he took over in May.

At the same time, as chairman of Saudi Aramco, he is also overseeing its part-privatisation through the largest IPO in history.

Tellingly, he has found a way to placate both those who value the slow and steady approach of decades past as well as others impatient for change. For example, as a key adviser on transactions such as the launch of a new $100bn technology fund with Japan’s SoftBank, he has proven himself able to manage not only the existing pillars of growth but also the ambitions of a radical prince.

In his upcoming autobiography, Mr Naimi described Mr Falih as “an exceptionally talented individual”.

Born in 1960 in the oil-rich eastern province, Mr Falih graduated from Texas A&M University and — like Mr Naimi before him — joined Saudi Aramco in his youth, before working his way up to chief executive.

He became a player on the international oil scene when King Abdullah, Saudi Arabia’s ruler at the time, sought his help in invigorating the Saudi economy. It was then that he first handled the gas discussions with Royal Dutch Shell, Total and Lukoil when the government decided to bring overseas expertise into the hydrocarbons sector.

At Saudi Aramco, he was regarded as creating an example of bureaucratic efficiency in a bloated state, and credited with undertaking infrastructure tasks the government could not deliver — from roads to hospitals and stadiums.

Today, he finds himself entrusted to deliver Saudi Arabia’s economic vision — a role that only “increases his ability to influence policy decisions, making him a more effective important leader in Opec”, says Gary Ross, executive chairman at New York-based consultancy Pira Energy.

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BDC 317 : Jun 2024