1. Oil, Power and Security in Saudi Arabia by Nawaf Obaid

2. 1 Overview Petroleum Policymaking in Saudi Arabia Petroleum Policymaking in Saudi Arabia The Struggle for the Saudi Soul The Struggle for the Saudi Soul National Security Imperatives National Security Imperatives Conclusion Conclusion Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

3. Petroleum Policymaking in Saudi Arabia

4. 3 Overview Worlds largest proven reserves Worlds largest proven reserves 260 billion barrels 260 billion barrels 25% of world total 25% of world total Largest spare production capacity Largest spare production capacity Sustainable capacity of 10.3 mbd in September 2004 Sustainable capacity of 10.3 mbd in September 2004 Arabian Super Light - 200,000 Arabian Super Light - 200,000 Arabian Extra Light - 1,400,000 Arabian Extra Light - 1,400,000 Arabian Light - 6,200,000 Arabian Light - 6,200,000 Arabian Medium - 1,300,000 Arabian Medium - 1,300,000 Arabian Heavy - 1,200,000 Arabian Heavy - 1,200,000 Historic role as swing producer Historic role as swing producer Saudi Arabia is only country with the will and capacity to manage global prices Saudi Arabia is only country with the will and capacity to manage global prices Played critical role attempting to curtail 2004 price spike Played critical role attempting to curtail 2004 price spike Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

5. 4 Petroleum Security Infrastructure Over $750 million allocated in past 2 years to increase security at all oil facilities Over $750 million allocated in past 2 years to increase security at all oil facilities 25 – 30,000 men protect Kingdom's petroleum infrastructure 25 – 30,000 men protect Kingdom's petroleum infrastructure These forces comprise nearly all branches of the military and security services These forces comprise nearly all branches of the military and security services Coast Guard and Navy protect from the sea Coast Guard and Navy protect from the sea Anti-aircraft batteries protect major installations Anti-aircraft batteries protect major installations Petroleum infrastructure has great redundancy Petroleum infrastructure has great redundancy Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

6. 5 Meeting Global Petroleum Demand Upgrades at Abu Safah and Qatif fields recently went online, adding 550,000 b/d by Nov. 2004 Upgrades at Abu Safah and Qatif fields recently went online, adding 550,000 b/d by Nov. 2004 More drilling and technological advances slowing decline of mature fields such as Shaybah More drilling and technological advances slowing decline of mature fields such as Shaybah Dormant fields, such as Khoreis and Maneefa, will slowly be brought back online Dormant fields, such as Khoreis and Maneefa, will slowly be brought back online Natural gas projects coming online will free up more oil for export Natural gas projects coming online will free up more oil for export Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

7. Struggle for the Saudi Soul

8. 7 Challenges Facing Saudi Arabia In 2003, King Fahd outlined challenges confronting the Kingdom in 4 main spheres: In 2003, King Fahd outlined challenges confronting the Kingdom in 4 main spheres: Economic Economic Social Social Educational Educational Religious Religious Leadership realizes that reform is necessary for the Kingdom to thrive in the modern world Leadership realizes that reform is necessary for the Kingdom to thrive in the modern world Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

9. 8 Economic Reform Preparation for WTO accession Preparation for WTO accession Privatization Privatization Opening to foreign investment Opening to foreign investment Confronting unemployment Confronting unemployment Diversification Diversification Increasing transparency & accountability Increasing transparency & accountability Saudization of workforce Saudization of workforce Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

10. 9 Political Reform National Dialogues instituted National Dialogues instituted Petitions accepted Petitions accepted Press criticism of government officials allowed Press criticism of government officials allowed Municipal elections scheduled for Feb. 2005 Municipal elections scheduled for Feb. 2005 Shura Council elections to be considered Shura Council elections to be considered Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

11. 10 Social Reform Empowerment of women Empowerment of women Increased opportunities / tolerance for religious minorities Increased opportunities / tolerance for religious minorities Human rights commissions formed Human rights commissions formed Educational reform Educational reform Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

12. 11 Reducing Extremism Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified) National dialogues address controversial religious challenges National dialogues address controversial religious challenges Increased oversight of clerics and sermons Increased oversight of clerics and sermons Extremist teaching removed from curriculum Extremist teaching removed from curriculum More control over charitable activities More control over charitable activities National Commission for Charitable Works Abroad established National Commission for Charitable Works Abroad established

13. National Security Imperatives

14. 13 Saudi Intelligence & Security Community Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

15. 14 Counter-Terrorism Forces Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

16. 15 Failures Several major successful terrorists attacks Several major successful terrorists attacks Over 90 killed and several hundred injured since May 2003 Over 90 killed and several hundred injured since May 2003 Full confidence not restored in ability to protect compounds and foreign workers Full confidence not restored in ability to protect compounds and foreign workers Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

17. 16 Successes 11 major terrorist attacks foiled since May 2003 11 major terrorist attacks foiled since May 2003 12 leading al-Qaeda operatives captured or killed (inside and outside Saudi Arabia) 12 leading al-Qaeda operatives captured or killed (inside and outside Saudi Arabia) All 5 known domestic and 2 international al- Qaeda cells infiltrated and all but 1 eradicated All 5 known domestic and 2 international al- Qaeda cells infiltrated and all but 1 eradicated More than 700 arrests in counter-terrorism operations since May 2003 More than 700 arrests in counter-terrorism operations since May 2003 Huge amounts of explosives captured; in July 2003, over 20 tons found in Qassim province alone Huge amounts of explosives captured; in July 2003, over 20 tons found in Qassim province alone Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)

18. 17 The Future Saudi Arabia will remain the worlds sole oil superpower Saudi Arabia will remain the worlds sole oil superpower Stability and progress can only be assured through a vigorous reform program Stability and progress can only be assured through a vigorous reform program Terrorism does not pose an existential threat to the monarchy, but will remain a challenge for the foreseeable future Terrorism does not pose an existential threat to the monarchy, but will remain a challenge for the foreseeable future Deutsche Bank Global Oil & Gas Conference, New York, September 27 - 28 - Obaid (Unclassified)