This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L RIYADH 009488 
 
SIPDIS 
 
SIPDIS 
 
DHAHRAN SENDS 
ENERGY FOR DAS BRODMAN AND MIDEAST OFFICE DIRECTOR PERSON 
 
E.O. 12958: DECL: 12/21/2015 
TAGS: EPET EINV ECON PREL SA OIL
SUBJECT: FORMER ARAMCO EXECUTIVE OFFERS HIS VIEWS ON OIL 
SUPPLY AND DEMAND 
 
REF: RIYADH 7473 (NOTAL) 
 
Classified by Consul General John Kincannon for reasons 1.4 
(b) and (d). 
 
¶1.  (C) Over lunch at the CG's residence on December 21, 
2005, Sadad Al-Husseini, who retired from Aramco in 2004 
after serving twelve years as Executive President for 
Exploration & Producing, shared his views on global oil 
supply and demand with CG, EconOff, and PAO.  Al-Husseini, 
who is now a consultant, sees constraints on the growth of 
refining capacity as the limiting factor on oil supply in the 
short term, citing a study he reviewed for Morgan Stanley 
that showed refining capacity expanding by about 600,000 
barrels/day (b/d) over the next three to four years.  "If 
demand is expected to grow at 1.5 percent, refining capacity 
won't keep up." 
 
¶2.  (C) Asked by the CG whether Aramco would reach its target 
of a sustainable capacity of 12.5 million b/d by the end of 
2009, Al-Husseini said it would not.  "That is Minister 
Naimi's number, not Aramco's," he continued, "but so what? 
Maybe they will get to 12.2 by 2009; maybe they will get to 
12.5 a year or so later."  He said that Naimi generally 
tended to exaggerate, causing problems for Aramco executives 
in explaining his estimates (reftel).  Agreeing with the CG 
that better transparency was needed from oil-producing 
countries, Al-Husseini noted that Saudi Arabia had little to 
lose from greater transparency as "we have a great record." 
According to Al-Husseini it is countries like Iran, which 
claimed two to three times more reserves than it has, and 
Russia, which "claims there are huge basins in Siberia but 
then no one can ever get to them," that are acting 
irresponsibly. 
 
¶3.  (C) Al-Husseini also discussed the evolution of Aramco 
joint partnerships in refineries in Asia.  Most of these 
projects began in the early and mid 1990s, he said, when the 
oil market had substantial excess oil in search of buyers, as 
a way of ensuring a purchaser for Saudi oil.  Al-Husseini 
said that Aramco was pleased with the current operations of 
its refinery in South Korea.  In the Philippines, on the 
other hand, the government, which owns 40 percent of a joint 
venture refinery with Aramco, would not allow Aramco to 
increase the price of various products as international 
prices increased, causing Aramco to reduce its production to 
minimize losses.  Turning to China, Al-Husseini said that 
Aramco's Executive Committee had recently delayed again a 
major project that had been planned 11 years ago but never 
begun.  "The Chinese government guaranteed to Aramco verbally 
that they would buy a certain amount of product, but they 
refused to put it in writing, so the Aramco board was unable 
to approve it."  Al-Husseini pointed to differences in 
regional and local government structures and to the influence 
of the Chinese military as additional obstacles to Aramco 
investments in China. 
 
¶4.  (C) Bio note:  Sadad Al-Husseini retired from Aramco in 
2004 after serving twelve years as Executive President for 
Exploration & Producing.  Since retiring from Aramco, he has 
been an active writer and consultant on oil issues.  He holds 
a PhD in Geological Sciences from Brown University. 
Al-Husseini is married to Souad Al-Bassam, who also attended 
the December 21 lunch and who holds a film degree from NYU. 
End bio note. 
 
(APPROVED:  SPEIDEL) 
GFOELLER