Robin Hood Investors conference

[M045-02] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:00:24 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Hello all I am Christian Malek, head of oil and gas research, JP Morgan fitting perfectly between discussions on the fed and commodities markets. I am thrilled to be joined by Carl Hernandez, executive chair of investment and corporate bank of JP Morgan for a fireside chat with our dear friend, His Royal Highness prince Abdulaziz bin Salman Al Saud, Minister of Energy for Saudi Arabia. Your Royal Highness, I appreciate we have known each other for some time, but maybe not quite as far as the relationship between the kingdom and JP Morgan, which dates back to the first barrels in the 1930s. I believe this interview is the first for the Robin Hood investors conference, and on behalf of JP Morgan, we really appreciate your support, what is truly an amazing cause to fight poverty, and I want to thank you personally for your precious time to be with us. Well His Royal Highness certainly needs no introduction.

[M045-03] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:01:14 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

I am going to make one anyway. Son of king Salman, Prince Abdulaziz bin Salman began his career as a lecturer at the king Fahad university of petroleum and minerals, both before moving to work directly for the ministry of energy, he was an assistant old minister of Saudi Arabia between 2005 and 2017, in April 2017, he was made state minister for energy affairs. After this in September 2019, a Royal decree was issued to appoint him as Minister of Energy. Without further ado, Carlos Hernandez will now host the panel, Carlos is a member of JP Morgan’s operating committee and the corporate Investment bank management team. He spent his entire career at JP Morgan, most of which is an investment banker and has extensive experience leading teams that serve the world's top corporations and institutions. I must also say he is a fantastic mentor, to the next generation of bankers, and I certainly look up to him as one of the greats. I am going to shut up now, and hand you over to Carlos.

[M045-05] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:03:21 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Well, thank you very much Carlos for the opportunity. First, I need to, if you do not mind, say a few words; I am very grateful for JP Morgan, Jimmy himself for encouraging me, to participate and for the set up that the Robin Hood organization and the organizers of Robin Hood, this is a very noble cause, It is nobility, it is not new for a city like New York. I had a great deal of pleasure being part of, I could call myself, part of the clan of New York. I have been going there for the last 40 some years. I have lots of good friends, solid friends, and good memories, and because of that and because of the nobility of the cause. And I also, we have a message in Saudi Arabia that we do also have a bigger concern when it comes to energy poverty, and it is an issue that we would like to take a proactive role, and hopefully with everybody in the world, we can attend to this issue.

[M045-06] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:04:39 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

As Christian was saying, I come with my package or baggage, I have had a lengthy history of attending either in my academic career which started 1982. Unfortunately, I am not as young as I would like to be, but I have seen it all, if you could call it, I have seen what price fixing did in the past, in the 70s, when it comes to US or as the attempt was made in OPEC, I have seen the so-called aspiration for creating price ranges, price fixing targeting or price of targeting. None of these things had worked, in fact, it brought its own demise. So, the most natural thing when we need to attend to is to look for another model.

[M045-07] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:05:42 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

And to me, the right model is the central bankers models, that you are to regulate supply as bankers or as the fed and other central bankers try to manage money supply, how you do it? you do it by focusing on the notion of sustainable stability, and if you do not, which means that you are much more interested in sustainable price regimes, which allow for growth of to happen, but more fundamentally also allow for growth and of the economies to not to be hindered, that intricate balance can not be attended to by targeting prices or working on so-called preconceived price sets or ranges, and it should be a continuous activity like what central bankers do. They look at inventory as opposed to in our case inventory to see how that balance can be attended to.

[M045-08] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:06:57 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

More important, they have to make sure that they are ambivalent, if you could call it, or work on the so-called expectation side by making sure they have their own mechanism as we have established in OPEC, which is the monthly meeting, which is the tweaking element. I must say that I have not been innovative about it I was mainly copying and pasting what I have heard and what I have seen central bankers are doing, one of which, I have to say, my great model, which is Alan greenspan. It is just so happened that I have spent so many years following him, I like what he did, and I would like to ameliorate, if you could or, what he has done in this and by the way, in doing so, we will help the world economy.

[M045-09] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:08:05 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

We will help the industry energy, we will help the industry energy in general, we will help everybody who is worried about what we do to avoid the so-called extreme cycles that commodities go through, moderating commodity cycles is a must, has been a must, should have been a must before, but for the future, I think it is important, to work hard on that endeavor. Is it OPEC Plus alone? I think if we set the model and we obviate any concerns with others who would probably are reluctant to engage, we have seen the G20 got engaged in April last because of the severity of the situation. The more we create a better model that would obviate any concern of antitrust and what have you, and the more we set an exemplary record for what we do, our attitude, and our aspirations, I believe more people would be interested in joining.

[M045-11] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:09:49 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Well, you know, the media called it a war, I do not call it a war; I call it that we had a disagreement on the 6th of March, and because of that, we do not had an agreement. So, we went for the normal thing, which is people start producing, but they can produce it led to a price, severe price and market reaction, but that market reaction primarily happened as a result of the lack of comprehension by many, I still remain that we have as Saudi Arabia, a record of alerting people ever since the 26th of January about this, the potential severity of COVID 19, and what it may have to do.

[M045-12] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:10:48 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

But I have to confess that we ourselves, although we were the first to talk about the severity, but we ourselves even have not get it right, because nobody, I think, would have predicted that by April demand would drop by some, well, the jury is still out, is it 25, 23 or 27 million barrels, even if we did what we were supposed to do in March 6th, I do not think it would have been change the situation a lot, but in retrospect, an export factor, I would have argued that not working with an agreement on March 6th has probably helped a lot to showcase what a free market would do if it was not for some responsible producer, including, I must argue that it is also the US, Canada, and many other, Norway who participated in bringing the solution.

[M045-13] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:11:55 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

So, it is a good example for what the free market may do, if this commodity market is not to be attended to. I claim also that going through that episode in April, helped foster comprehensive acceptance of the idea that this market needs to be attended to like what central bankers had done, like finance ministers would have done in terms of big spending programs in terms of making sure that the banking system is well lubricated with money flaws, all of these things were done to attend to that situation. And therefore, I would claim, that what happened in April is helping us today to make sure that we work comprehensively, that the notion of consensus building is a must and people need to go with the consensus because this is healthier for all.

[M045-14] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:13:15 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

And more important, we should be creative in creating ways and means of managing expectations. I keep saying people to people, management of expectations is more fundamental than anything else. The cause I think is no bit, the achievement I think you could see it, the challenges in the future I think they are coming, I think with that solid set up we can still achieve more and can be attentive more to what may come in the future. We still are not out of the woods yet, I keep telling people, I, fortunately, or unfortunately, but it is proven to be yet as good as I am hoping, that being too cautious as some may would claim that I am excessively cautious. well, It is paying off.

[M045-16] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:15:05 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

No, I think it is my job and others job to make sure that the Super cycle does not happen, because if we are interested in sustainable stability, it should be our work to avoid super cycles. Now, I believe also that Super cycle could happen, if people turn around their heads and faces and not to see the future problems that may come, which is lack of investment, I have spoken about it, and I will continue speaking about it. I have spoken about it a lot in the 90s, I did, and I have a record to show that I kept seeing that, you know, low investment would be the right environment for super-cycles on the high end, and the inverse is true to over investment can bring about another super cycle, but in the reverse order, which is a lower and more volatile market.

[M045-17] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:16:15 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

The only way to mitigate these super cycles, be it both ways, and this is what has been inherently, the industry is going through, which is going through eeps and flows, and you will see the trigger for this eeps and flows, such as lack of investment or over-investment. And it is also unfortunately the price signals that do that, and sometimes ignorance attend also as contributes to that, what we need to do is to bring about more certainty and less uncertainty. Now, I can assure you that with this uncertainty that we are going through and more of these uncertainties that are coming through various, you know, scenarios here, impediments there, prevention of the industry to expand, putting curbs and avoiding of investment that will certainly bring super cycles.

[M045-18] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:17:29 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

But then it takes a long while to attend to that super cycle. Like what we did in the 90s, there was no investment; look at what happened to the markets, then we had excessive investment; look at what happened to the markets, and I believe the best thing that we collectively should do is to, again, attend to this notion of sustainable stability, if we can achieve that, we will prevent and avoid super cycles of all sorts.

[M045-20] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:18:34 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Well, and part of it is energy, you know we are stand here to prove and will continue to stand to try to prove that we are no longer going to be an oil country, we are going to be an energy country and responsible energy producing country. We have a holistic approach, whereby we know that we are also incentivized to strike a good balance between attending to climate change, attending to a perfect economic model, for us what we will be doing in terms of our comprehensive energy outlook is too many things to attend to too many objectives, but the net effect of it, will be more commitment and more records to show that we are also combating climate change, In fact, in a better bigger percentages than many countries, if not all countries,. For example, we are, we see a serious economic case of avoiding burning liquids to convert it to, in our power sector in action sector, to convert it to more gas and renewable.

[M045-21] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:20:03 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

And that is why in our power sector will go 50 /50 avoiding a medium barrel that is currently being burned. We know that we have enough hydrogen gas to produce from our discoveries and shale gas, and we know for a fact that we will be the least cost producer of blue hydrogen. We also know based on the fact that we have secured and we are aspiring to continue securing a record when it comes to producing electricity from renewable. And we have a history with desalination probably super exceed any country on planet earth. So the amalgam of the two, we can be the most efficient cost effective green hydrogen producers. We also have a record to show amongst many countries over the last 10 years, we have been engaged in a very serious efficiency program.

[M045-22] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:21:09 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

We also are engaged in many of these activities under the tag of circular carbon economy. We have a record to show that we are doing lots of work on recycling or reusing, and last of which and that is why because of that, we promoted the circular carbon economy as a way forward to attend to the very issue of climate change, which is emission reductions. You know, we have had a very proactive role in sign in, not only in developing the Paris Agreement, and we were the first, or if not one of the most, the first ratifies of the Paris Agreement, because we see a good balance of that. So, in terms of energy, we have our diversification program, because we will be reaching out to everything that we can do, we believe we have the strongest ambition because we have the right economics that can support us to do all of the above and in doing so we will be supportive and helpful to a common cause.

[M045-23] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:22:29 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

In terms of the other activities, we are empowered now, this society has been transformed, talking about transformations, Saudi Arabia, over the last 3- 4 years had gone through a transformation, a serious transformation, and I would speak a lot about how much 50% of this population has been empowered and enabled, which are in the form of women being enabled and empowered to play and proactive role in every activity that there is. I am honored to see so many young ladies working for us in the energy ecosystem, it would be my pleasure to showcase some of them for all of you, those who are attending us. in fact, they are striking, they are putting a good serious challenge amongst the youngs to come close to even their aspiration to their well to be an achievers.

[M045-24] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:23:34 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

We are not sitting also when it comes to the idea of doing something non-energy, tourism will take off, technology development will take off, telecommunication will take off and Many of these programs will take ff. why? because we have the right first ingredient, an ambitious youth in the form of women and men that will do wonders for these countries. Talks about harnessing everything to achieve that emission neutrality, it talked about all gases, it talked about all resource sources of emissions, It talks about different and differentiated responsibilities, it talks about national circumstances, it spells out seriously that annexing one country or industrial country should take the lead, it talks about others to be allowed to go to that carbon neutrality somewhere within the second half of this century.

[M045-25] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:25:00 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

We, as I said, were one of the authors as a country of the Paris Agreement. We like that agreement. we would love to continue working with the terms and conditions of that Agreement. The problem with this net zero emission scenario, remained it is scenario, they did talk seriously, and I have to give to them that they said, this is what you need to do if you are not willing to take anything else, now which is what we could do about mitigation, which we could do about carbon capture of all sorts carbon sequestration, reduction of emissions in all types, reducing and efficiency. It talks about one-way street, which is, has nothing to do with how the world will evolve in trying to mitigate or how the world would try to adapt, and if you look at it solidly like this, the ambition is so big, but it is so scary because it is not allowing people to think that inclusivity will be there and this is the most scary and risky part about it.

[M045-26] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:26:09 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

As others would wonder, is this a real ambition, are the masquerade and are out, and this is truly what is intended of the Paris Agreement, which is actually to get rid of hydrocarbon. So, the mask and masquerades are out, and it is the real intent, if it is, I think it will be not a way to invite people to be participating, and I think it ditches completely the notion and of comprehensiveness of the solutions, it ditches the idea of being inclusive.

[M045-27] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:26:54 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Keep in mind that this is for a country like us, whom I have a list of so many activities, international activities that we are plugged with. We are plugged, just to give you a few, mission innovations, clean energy ministerial, carbon sequestration leadership forum, global methane initiative, world bank zero flaring initiative, international renewable energy agency, sustainable energy for all, net zero producer forum, the international energy forum, all of these forums talks about proactively bringing a solution to mitigate this concern. We stand ready to go with the letter of the Paris Agreement, which this unintentionally, this scenario had brought. It really brought serious concern about the true intention and the true deliverables that is to be achieved from the Paris Agreement. I hope somebody serious enough objective enough, responsible enough to do something to mitigate these concerns.

[M045-29] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:28:25 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Well, first of all, as I said, circular carbon economy, we have a national program and we were so fortunate, and I must say that I must confess that we were very appreciative of the G20, that it was approved and accepted as a means to try to achieve, again, our common goal, which is emission reduction. So we stand ready, we believe also in comprehensiveness and the engagement of everybody. That is why we got engaged in the recently formulated net-zero forum, we agreed with the US and others to participate in this forum, whereby flexibility when it comes to strategies to get there is to be endorsed that all technology, including circular carbon economy and carbon sequestration is to be accepted and more important that the notion of national circumstances to be looked after and for a country like Saudi Arabia, who had spent ages relying on one source of income. So, as many other countries that have done the same, they should be given support and help in diversifying their economy and subsequently diversifying their income.

[M045-31] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:30:20 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

We have, one of the programs that we have, and I am very proud of that program, we kick started about a year and a half, and I think we are play much more emphasis on it today, we call it sustainability program which is how you try to create demand for hydrocarbons in the so-called non-conventional paths or conventional markets, in one way it plays as a hedge for if the conventional markets got disrupted, you will have another meaningful way in using it, but we are talking about the conversion of oil to chemicals using polymers, and many things you will start using as building materials.

[M045-32] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:31:07 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

And many, we have identified so far 45 different opportunities, and again I respectfully ask our good audience to understand the fact, we are not going to sit on our hands, we believe in taking a protective role in attending to all of the above, is our only own rescuer and we do have the human energy to achieve that and the human competence that to deliver us that well.

[M045-34] · سمو وزير الطاقة (HRH the Minister of Energy) · التوقيت 00:32:07 · Robin Hood Investors conference · 2021-06-16 · مشاهدة عند هذا التوقيت

Always a pleasure.