November 22, 2006 Saudi Aramco

JBIC Dubai Symposium
The symposium, entitled "Towards a New Business Partnership Between Japan and the GCC," was sponsored by the Japan Bank for International Cooperation (JBIC) to commemorate the opening of JBIC's Representative Office in Dubai.

GCC/Japan Partnerships: A Model of Four Dimensions
  Abdulaziz F. Al-Khayyal
  Senior Vice President, Refining, Marketing & International, Saudi Aramco

As the world's third-largest consumer of oil,
Japan relies heavily on Gulf producers.

It is also
the world's largest importer of liquefied natural gas, buying some 58 million tons from abroad last year alone. We believe Japan will be looking with more interest to the Middle East for gas, in addition to oil, as changes occur in the international market.

Further, proximity to the Gulf and established relationships certainly bode well for continued energy trade between Japan and the GCC. Even more positive are opportunities to
substantially boost joint economic growth through cooperative ventures. By these I mean "leading by example" into a future that not only offers good prospects for people but real energy security for Japan.

We can observe this in a
four-dimensional model, each dimension with distinct advantages. The model is energy-intensive but provides a broad horizon for new developments. In total, it represents an aggressive, achievable outlook for Japan and its Gulf Cooperative-member partners.

The first dimension of the model is
oil and gas development. Petroleum is a traditional driver of progress in this region, and the bedrock of our economies. Yet oil and gas development alone is not an end-all, but rather leverage from which associated growth occurs. Our ability to diversify is enhanced as production capacity increases - which helps meet the call for energy and opportunity.

A second dimension of our model is also energy-related but distinct in application. That is the dimension of
value-added opportunity. Gulf state producers are increasingly pursuing ways to add value to their existing oil and gas streams. By so doing, they are launching new industries, expanding product lines, reaching new markets and creating more jobs.

These downstream opportunities are rapidly changing the industrial landscape in the Gulf. Simple topping refineries are becoming full-conversion, high-throughput complexes. Raw gas and NGLs are becoming finished petrochemicals. Petrochemical products that meet world-class quality specs now arrive from - not just to - our GCC ports. And the examples go on and on.

Japan is certainly playing a key role in our plans. One of the crown jewels of Saudi Aramco's value-added vision is
Rabigh - once a basic crude-topping facility but now destined to anchor an entirely new industrial city - with our partner Sumitomo Chemical of Japan.

Further, a key role in the financing of our joint venture with Sumitomo Chemical has been played by JBIC. The $2.5 billion loan from JBIC was the cornerstone in our total financing program of $5.8 billion. The excellent support and proactive participation from JBIC during the development of the financing package was instrumental in achieving the aggressive timeline and successfully completing this milestone financial transaction.

PetroRabigh, as it's now known, will upgrade its crude oil capacity to 400 thousand barrels per day and 2.2 million tons per year of olefins-based petrochemicals. From that will arise a cluster of industries that produce plastics, paints, insulation, waterproofing materials, auto parts and many other products.

A third dimension to our model holds equal promise for the future. We call it "
energy intensive industries." Like petroleum and petrochemicals, these require substantial power sources. Among them are metals and minerals processing, glass, fertilizers and wood product manufacture. What's attractive to Saudi Arabia is the inherent low-cost synergy between minerals and the Kingdom's large hydrocarbon base.

Dubai and Bahrain already have world-class aluminum smelters that benefit from reasonably priced, local energy supplies. By contrast, Japan's natural endowment of energy and mineral resources is small, yet that nation possesses skills and technologies that make it an ideal partner in the Gulf's energy-intensive sector. So, cooperation means opportunity.

The fourth dimension is
economic diversification. There is little question that single-source revenues limit any nation's ability to grow. Over the past three decades the member countries of GCC have witnessed phenomenal economic and social transformations. Much of this lies in diversifying their economies to enable competitive roles in the world marketplace. Change has come slowly but steadily in the non-oil sector, and there obviously remains plenty of room to grow.

Opportunities exist especially in services like finance, banking, trade, travel, transportation, insurance, and government work. The ripple effect from such massive projects as PetroRabigh will create many small-to-medium sized firms that yield products and services for both local and export markets.

Japan has been one of Saudi Aramco's oldest and most important customers. While the whole of Asia is poised for rapid growth in energy demand, Japan holds a special place for us. We remain fully committed to your market needs and your future energy security. Likewise, through our
Sumitomo Chemicals partnership at Rabigh, and such earlier joint ventures as our 15 percent stake in Showa Shell, we have a lasting legacy to protect.

So, our four-dimension model is really a blueprint for building business. I believe we have seen how each dimension has some unique, yet some common attributes. The overriding theme is cooperation - a theme no less important to the Japan Bank for International Cooperation and, indeed, to all of us in the GCC. As Saudi Aramco carries through its immense expansion plans, we see genuine value added from our Japanese partners there.