Saudi Arabia prince unveils plans to end oil "addiction"

Saudi Arabia has unveiled ambitious plans to eventually end the nation's historic reliance on oil production and exports to the rest of the world.

Deputy Crown Prince Mohammed bin Salman - second in line to the Saudi throne - has described the oil reliance as "an addiction" as he announced major plans to overhaul the economy.

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Part of the "Vision 2030" blueprint would see just under five percent of the state-owned oil company Saudi Aramco sold through an initial public offering which values the company at more than US$2 trillion.

The action comes as Middle East oil producers including Saudi Arabia reel from record low oil prices would could cut revenues by US$500 billion this year.

"Today, our constitution is based upon the Holy Book and on oil. This is very dangerous. We have a kind of oil addiction in the kingdom," Prince Mohammed told his first ever news conference with international journalists in Riyadh.

"We will not allow our country ever to be at the mercy of commodity price volatility or external markets.

"Our ambition is how we develop the economy more than nowadays, and how we can create an attractive and great environment in our country in order to be proud of our nation and to be part of development on economic, environmental, cultural, and intellectual levels."

The International Monetary Fund says oil producing nations in the Middle East - or OPEC - lost US$390 billion in oil revenue last year alone.

With US shale oil producers pumping more than ever before and Iran production coming back on line with US sanctions lifted, the planned Saudi reforms underscore the damage from falling revenues.

"There's no question that the Iranian deal has hurt them (Saudi Arabia) than anyone else. But this is fundamentally about the end of OPEC," Ian Bremmer from the Eurasia Group told CNBC.

"New technology is taking power away from the traditional oil producers who thought they had a grab hold on it since the 70s.

"Well sorry guys over the course of literally two years the US has gone from a high priced producer to a medium priced producer and you guys don't have a model.

"You've had 40 years to try to figure out what to do. They've wasted that time."

Among the reforms being considered to counter falling oil revenue, Prince Mohammed is looking at big structural changes in Saudi Arabia's ultra conservative economy - dealing with unemployment, creating more infrastructure projects, boosting home ownership and opening up the real estate sector to foreign ownership.

In a bid to boost the Saudi treasury coffers, the Prince is also planning to overhaul the Saudi military to prepare for what he is calling "the post oil era".

The prince wants more domestic production of arms, give that much of Saudi Arabia's US$46 billion military hardware budget is spent on deals with foreign arms manufacturers.