Wednesday, June 21, 2006

Bush "addiction" speech no longer rankles: Saudi

Bush "addiction" speech no longer rankles: Saudi
By Chris Baltimore

WASHINGTON (Reuters) - President George W. Bush has reassured Saudi Arabia's king that he will continue to cooperate with the kingdom on energy issues even after his pledge to wean America off Middle East oil, Saudi Arabia's ambassador to the United States said on Tuesday.

Bush's pledge in January to cut U.S. oil imports from the Middle East rankled some kingdom officials, because Saudi Arabia had announced plans to spend $50 billion expanding oil production to meet rising global demand.

"When that statement came out we got in touch with the White House," Saudi Ambassador Prince Turki Al-Faisal told reporters at a news conference hosted by the United States Energy Association.

Bush later sent a letter to Saudi King Abdullah pledging to honor a 2005 agreement the two reached at Bush's ranch in Crawford, Texas, Al-Faisal said. His remarks provided new details on how the White House smoothed relations with the Saudis after Bush's speech.

Saudi Arabia is the world's largest crude oil exporter and the leading voice within the OPEC cartel, and the United States is the world's biggest oil guzzler.

In his State of the Union speech in January, Bush said the United States should cut its oil imports from the Middle East by 75 percent by 2025. House political advisors added the remarks hours before Bush spoke, and Al-Faisal was "totally blindsided" as he listened to the speech in Congress' visitors gallery, an industry official later said.

After the speech, Saudi officials contacted the White House seeking an explanation, Al-Faisal said. Bush later sent a letter to Saudi King Abdullah pledging to honor the agreement, he said.

"I can tell you that the President ... sent a letter to King Abdullah affirming his commitment to the agreement that they had reached in the April 2005 meeting in Crawford," he said.

In that Crawford meeting, Abdullah, then the Saudi Crown Prince, walked arm-in-arm with Bush and both pledged to cooperate on future energy issues.

Saudi Arabia detailed plans to boost its production capacity and build new refineries, and Bush pledged to find ways to boost U.S. refining capacity, Al-Faisal said.

Saudi Arabia, de facto leader of the Organization of Petroleum Exporting Countries, plans to boost production capacity from 11 million barrels per day to 12.5 million bpd by 2009.

Expansion plans beyond 2009 are murky. Saudi Arabia has called for consumer nations to offer a "roadmap" to ensure that OPEC and other producers do not unleash so much capacity that crude oil prices spiral downward as they did in the 1980s.

"By the time 2009 comes along we will have a clearer picture as to where everybody stands," Al-Faisal said. "It will be then that when we will make decisions on where to go."