[PHOTO AT LEFT - President Arroyo is welcomed by Saudi King Abdullah before the start of a state dinner at the royal palace in Riyadh.]

RIYADH, May 9, 2006 (STAR) By Paolo Romero - President Arroyo arrived in Saudi Arabia Sunday for talks on oil supplies and prices, as well as to ask its monarch to recycle some of the kingdom’s petrodollars into equity investments and long-term loans to poor oil-importing countries, particularly the Philippines.

These Saudi-backed equity investments and long-term, low-interest loans would give the Philippines more resources to finance joint explorations for oil and other energy sources and reduce the country’s dependence on imported oil.

With oil prices at a record high, Mrs. Arroyo said she wanted to discuss with Saudi officials "what we can do together with other energy-producing nations to keep the supply of oil high and the price of oil down as much as possible."

The Philippines is "hit hard by the high price of oil, and I look to our Saudi friends to help us pioneer new and innovative ways to become energy-independent," she added.

Riyadh supplies about 40 percent of Manila’s crude oil.

Filipino imports from Saudi Arabia were worth $2.18 billion last year, of which 98 percent were petroleum products, according to Manila’s embassy in Riyadh.

An embassy official said the two sides were discussing technical cooperation in the field of energy, but did not give details about how Manila wanted Riyadh to help it become "energy-independent."

Mrs. Arroyo — who was accompanied by First Gentleman Jose Miguel Arroyo, some Cabinet members and business leaders — was greeted by Saudi King Abdullah, Crown Prince Sultan bin Abd Al-Aziz and Riyadh Governor Prince Salman after she flew into Riyadh air base from Macau for the four-day visit, officials said.

Her visit "aims to secure our energy supplies at a time of necessity, serve the welfare of our overseas workers, and forge the prospects of peace in Mindanao," Mrs. Arroyo said in a statement before arrival, referring to the southern Philippines torn by a decades-old Muslim separatist rebellion.

After inspecting the honor guard with Abdullah, she and her party were escorted to the Riyadh Conference Palace, where they are billeted.

The First Couple and some members of the Philippine delegation then proceeded to the royal palace for the customary state dinner.

Abdullah conferred upon Mrs. Arroyo the King Abdulaziz medallion, Saudi Arabia’s highest award for a head of state. Mrs. Arroyo, in turn, conferred upon Abdullah the Sikatuna Award, Grand Collar.

The ceremonies were followed by a bilateral meeting, where some agreements were to be signed.

In a meeting with Abdullah at the Royal Palace here at 10 p.m. Sunday (5 p.m. Manila time), she noted the economic battering that middle-income oil-importing countries have been receiving due to the record-breaking increases in prices of crude oil in the world market.

She also proposed various areas where the two countries can improve their collaboration.

"I have come here to acknowledge the years that Saudi Arabia and the Philippines have spent in partnership for development and to reinforce the commitment we have made to continue that partnership," she told Abdullah.

One of the proposed areas of collaboration is energy security, which Mrs. Arroyo said is a very important concern for both countries.

"I know that the Saudi Arabian government is very committed to ensuring a stable world market for oil. The Philippines shares that commitment," she said.

Mrs. Arroyo invited Abdullah to explore opportunities for Saudi equity investments in the areas of energy exploration, power development and power transmission.

Officials said the Department of Trade and Industry will soon provide a framework to facilitate the entry of Saudi investments into the country.

Saudi Minister of Oil and Mineral Resources Ali Ibrahim Al-Naimi said the country currently produces 11 million barrels of oil per day and plans to expand the capacity from this year to 2009 to 12.5 million bpd.

An information sheet said Saudi Arabia has given priority to its expansion in Asia, which currently takes up 4.6 million bpd or 60 percent of the country’s oil exports.

The Philippines imports 90 percent of its oil from the Middle East, of which 44 percent come from Saudi Arabia. In 2005, the country imported 37,165 million barrels of crude oil and 629,000 barrels of petroleum products.

Saudi Arabia in the last 15 years has invested in oil refining and marketing in some Asian countries. Its investment in local oil player Petron Corp. is reportedly one of its more successful ventures in the region.

Mrs. Arroyo is also due to hold talks with members of the near million-strong Filipino community during the trip which will include stops in the Red Sea city of Jeddah and the oil-rich Eastern Province.

She is due to discuss with community leaders the concerns of Filipinos living and working in Saudi Arabia, mostly in low-paid jobs.

An embassy official said last month Mrs. Arroyo was expected to appeal to Saudi leaders for clemency for six Filipinos facing the death penalty on murder charges in the Gulf country.

She is also due to tour the headquarters of state oil giant Saudi Aramco in the eastern oil hub of Dhahran on Wednesday.

Philippine officials had earlier said that Mrs. Arroyo would seek to negotiate "affordable" oil deals with Saudi Arabia, the world’s top crude exporter.

She said in her departure statement she would also seek Saudi support for her government’s negotiating efforts with the separatist Moro Islamic Liberation Front, which has been waging a guerrilla campaign in Mindanao.

Mrs. Arroyo said she would ask Abdullah to back Manila’s bid for observer status in the Organization of Islamic Conference, to help the mainly Christian nation bring its Filipino Muslim minority into the mainstream.

"If the Muslim world, led by Saudi Arabia and other Muslim nations, can help to peacefully resolve the long-drawn enmity between Muslims and Christians in the southern Philippines, a great milestone will be reached," the Saudi Gazette daily quoted her as saying.

‘Privileged companion’

Saying the Philippines would want to be "a privileged companion" in Saudi Arabia’s economic growth, Mrs. Arroyo urged Saudi business leaders here to increase their investments, particularly in Mindanao, in the fields of energy, infrastructure and information technology as well as mining.

In her speech before the Council of Saudi Chambers of Commerce and Industry here, the President cited the close involvement of the Philippines in the oil-rich kingdom’s economic growth, beginning with the deployment in 1973 of the first batch of engineers to Saudi Arabia, which is now home to more than a million Filipino workers.

She noted that Saudi Arabia’s growth has created "a modern economic infrastructure" that allowed the development of "a large stock of human capital" that allowed for sustainable private sector growth that now require the country to diversify its economy and invest in other industries and businesses in overseas markets.

"The Philippines is poised to absorb Saudi investments into our energy, petrochemicals, tourism, mining, telecommunications, information technology and agricultural sectors," Mrs. Arroyo said at the chamber’s building here after lunch.

She added that the government is "promoting fast-growing industries where high-value jobs are most plentiful and which can use our most competitive resource — the great Filipino worker."

Mrs. Arroyo pointed out that Saudi Arabia is the largest economy in the Gulf region with a gross domestic product of more than $273 billion.

The President said the Philippines is an ideal outsourcing partner for engineering and information technology-enabled services, with 40,000 new graduates of IT and engineering every year.

Opportunities also lie in the energy and petrochemicals sector with the government being able to refinance the assets of the National Power Corp. amounting to $250 million and 500 million euros to help it become more attractive for privatization, she said.

"The mining sector is open for business," Mrs. Arroyo said, adding the Philippines is the fifth most mineralized country in the world and fifth biggest gold producer.

She said "increased investment and assistance to develop the economy of Muslim Mindanao play a critical role in promoting peace in the region."

Mrs. Arroyo asked them to set up oil refining facilities in Mindanao, noting that the Philippine government has formally invited giant oil firm Aramco in December last year to put up one to serve the American west coast market.

She said Abdullah has given his support for the project.

Mrs. Arroyo also urged business leaders to undertake build-operate-transfer projects in Mindanao that would raise the production, processing and logistical capacities of the island’s agricultural industries.

She encouraged the Saudi business community to establish training centers in Mindanao, such as for nurses and other professions "to assure a steady supply of trained and skilled workers especially for your holy cities of Makkah and Madina."

Mrs. Arroyo also sought financial and technical assistance to develop the Halal Accreditation body in the Philippines as well as investments in the Autonomous Region in Muslim Mindanao’s export processing zone in Maguindanao, which may also be a take-off point for access in the Brunei-Indonesia-Malaysia-Philippines East Asia Growth Triangle. — With AFP

Chief News Editor: Sol Jose Vanzi

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