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1 ​Job One for Saudis’ New Energy Chief: Picking Up the Pieces – |

​Job One for Saudis’ New Energy Chief: Picking Up the Pieces

A little over a week ago, Prince Abdulaziz bin Salman finally attained the job for which he had long prepared: energy minister of Saudi Arabia, one of the most crucial positions in the country.

Any sense of accomplishment probably did not last long. A daring aerial attack on the kingdom’s oil industry over the weekend forced the shutdown of infrastructure that processes most of the crude oil produced by Saudi Arabia. In an instant, the country’s oil output was halved, a move that has rattled energy markets and forced up the price of oil.

Now the new energy minister, who for many years served as a kind of understudy and royal family observer to the country’s top oil leadership, must oversee the recovery of Saudi Arabia’s most important industry.

People who know Prince Abdulaziz say that although he may be little known to the general public, he does not suffer from a lack of experience.

“He has heard every question and knows how to answer,” said Gary Ross, a New York-based oil investor, who has known the prince since the 1980s. Mr. Ross, who now runs his own firm called Black Gold Investors, added, “He is very smart and very capable.”

At a news conference on Tuesday, the prince and other officials said that the country’s national oil company, Saudi Aramco, would restore oil production fully by the end September. The officials said that the company was also ready to proceed with a long-delayed but recently revived initial public offering, and that it would meet all of its export commitments.

A restoration of output to normal levels would be a pleasant surprise for commodity markets, where investors had feared repairs could take months to complete.

Before the attacks, Aramco was producing about 10 million barrels of oil a day. Prince Abdulaziz had said the attacks had interrupted more than 5.7 million barrels of production.

“It seems that there was a big shock to the Saudi system, but they have been able to absorb it,” said Bhushan Bahree, an analyst at IHS Markit.

The prince was in Britain when the attacks occurred, an associate said, but quickly flew back to Saudi Arabia, visiting the damaged site at Abqaiq on Saturday before leading two days of meetings there and at the headquarters of Aramco in Dhahran.

But the challenges facing Prince Abdulaziz go beyond the reconstruction efforts. He is taking over from a predecessor, Khalid al-Falih, who was widely respected in the industry and by the markets.

The surprise announcement of the job change left traders and investors, who had grown comfortable with the former minister, understandably shocked. Mr. Falih was a success in oil diplomacy, persuading the Russians to agree to production cuts that have helped prop up prices over the last two years. Prices were under pressure in recent months up to the attacks, and those doldrums may have contributed to Mr. Falih’s sudden ouster.

Adding to the surprise: A member of the royal family had never held the post before.

The prince is a son of King Salman, and an older half brother of Crown Prince Mohammed bin Salman, the kingdom’s key policymaker. That could bring both advantages and complications, analysts say.

Being a senior royal carries a certain clout and may put the prince in the inner circle of power brokers, a group Mr. Falih, a technocrat, struggled to break into despite being responsible for much of the Saudi economy.

But whether the prince is tough and ambitious enough to carve out his own turf in what has become a political and economic environment dominated by his younger half brother is another question.

“Is he going to be able to do his own thing?” asked Paul Stevens, analyst at Chatham House, a research organization, or has he been installed “to just do as he is told?”

The prince has long seemed a person who preferred to stay in the background, calling himself a “kitchen and basement” man in a recent talk with reporters, according to Reuters. When called on, though, he has played significant roles, such as in 2008, when he helped organize a conference of political figures and oil chief executives in Jeddah, Saudi Arabia, that helped calm markets after prices had hit record levels. Recently, he has been trying to resolve a dispute with Kuwait that has halted production by Chevron in the so-called partition zone between the two countries.

Cordial to other delegates from the Organization of the Petroleum Exporting Countries and friendly if cautious with journalists, the prince mostly stayed out of the limelight in deference to oil ministers like Ali al-Naimi and Mr. Falih, who were nominally his superiors. Over the years, he has often been present at OPEC meetings or at the minister’s side in parlays with oil company chief executives. In the past, he has rarely spoken for quotation but has directed reporters to the occasional uncontroversial speech he made at oil conferences.

Bassam Fattouh, director of the Oxford Institute for Energy Studies, a research organization, said that the prince was likely to bring a different approach to areas like OPEC, where Mr. Falih alienated some members by his focus on Russia, a major oil producer but not a member of OPEC.

“He will try to move away from this idea that the big boys make the decisions, and try to involve others,” Mr. Fattouh said. (The prince serves on the institute’s board.)

The prince inherits from Mr. Falih the chairmanship of the powerful committee set up by OPEC and Russia to monitor the markets between biannual OPEC meetings. But unlike Mr. Falih, he has not been made chairman of Saudi Aramco, the world’s largest oil producer.

In the recent carve-up of top jobs in the Saudi oil industry, that role went to Yasir al-Rumayyan, a banker said to be close to the crown prince. Mr. al-Rumayyan, who now heads one of the country’s sovereign wealth funds, is widely thought to have been placed in that job in an effort to expedite the initial public offering of stock of Aramco.

Aramco’s infrastructure was attacked at an inconvenient time for those plans. International bankers have been working away on preparations for the offering in recent weeks, but the ability of attackers to shut more than half of Saudi production raises questions about the financial prospects of what has been the world’s most profitable company.

Making a prince the oil minister is a move the royal family previously avoided, apparently preferring to keep a distance between itself and the kingdom’s main industry. Despite the crown prince’s efforts to diversify the country’s finances, oil prices largely call the tune in the Saudi economy. Now the risk is that the House of Saud may take a larger share of the blame for market movements that the government cannot control.

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