Why Samoa gets nervous when Saudi Arabia is attacked

Samoa is not immune from what happens in far away places.

Even a recent attack on Saudi Arabian oil fields, one of the world's largest oil processing plants, is being cautiously followed on these shores.

Weekend strikes, reported to have involved up to 20 drones and cruise missiles, forced Saudi Arabia to shut down half its oil production capacity. That accounts for five per cent of the world's daily production. 

In Apia where the Pacific's Energy Ministers have been meeting, the Minister of Finance, Sili Epa Tuioti, told the Samoa Observer they are following the events closely.

"I think, ultimately it is going to flow through [in] the price of oil from Saudi Arabia: it’s one of the major oil suppliers," he told the Samoa Observer.

"I think eventually it depends on how soon and how quickly they can sort of rebuild and restore but I’ll take a caution and say let’s keep an eye on that, it may flow though. 

"Obviously from what we have learnt from is the Saudis think they can restore the production because a lot of the oil is stored in huge [reserves] so anything that they can [do to] compensate [will offset the effects] but still, it’s just anymore sort of things like terror threats it will always [destabilise] confidence."

Abqaiq, Saudi Arabia which handles two-thirds of Saudi oil production, has a crude oil processing capacity of over seven million barrels a day, according to the US Energy Information Administration.  

The Minister reiterated that it is better to remain cautious for any effects to flow through Samoa.

"But then I think it is better to be cautious and to ensure that we don’t become overly optimistic because if we do then when something happens everybody gets panicked," said Sili.

"But I think if we sort of factor into our strategy that we need to make sure that we can provide for a compensatory sort of reactions to the fuel."

Sili said Samoa may be looking into additional production to offset the losses from the impacts of the Saudi strike. 

"And of course Iran one of the major producers have been alienated by the US and other countries and then again if its Iran and Saudi Arabia, it’s really looking at where do we pick up additional production to offset the losses from what happens in Saudi Arabia," he said.

"But then we also have countries like Argentina and other who produce oil, but then again there are political problems and issues going on so, you never know."

The Minister said such cases are why Samoa is very keen to move on to a renewable energy world, leaving fossil fuels behind.

"And that’s why we are very keen for when we can move away from fossil fuels and bring in electric cars, which is what we want, it’s part of the strategies using wind mills and solar but it’s just looking at the regulations," said Sili.

"Because currently I think solar is the most expensive now, because of the partnership agreements that we signed with the first companies; so then we’re probably paying them more than what we should be doing.

"But I guess we were only experimenting but I think there will come a time when we will have to look at how we can better regulated the pricing, whether it is to do with the pricing of oil, solar, but the best source will be our water – dams – and so the new hydro at Alaoa that’s been built, that’s going to also contribute a lot moving towards our renewable energy target."

Currently, petroleum prices stand at $2.74 for petrol, $2.82 for diesel and $2.45 for dual purpose kerosene.

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