Former Saudi Minister of Oil and Mineral Resources Ali al-Naimi during a press conference in Doha, Qatar, 16 February 2016. (EPA)

Saudi Arabia's King Salman on Saturday replaced his veteran oil minister as part of a major cabinet reshuffle, apparently as part of a wide-ranging economic reform package which was unveiled last week.

The king has established a Energy, Industry and Natural Resources Ministry to replace the Oil Ministry. The new body will be headed by Khaled al-Falih, the chairman of state oil company Aramco. Falih replaces 80-year-old Ali al-Naimi, who served as the oil minister for 20 years.

Saudi Arabia is the biggest exporter of crude oil in the world, which its economy depends heavily on. The petroleum sector accounts for about 75 percent of its budget.

But faced with plummeting oil prices, Saudi Arabia is seeking to revamp its economy and consider a future that is less reliant on petroleum sales. Oil prices fell to $30 a barrel in January — a 12 year-low. Prices have since recovered to around $45, but that's still a far cry from the peak $145 which they hit eight years ago.

There were also changes within the economic leadership. Majed al-Qusaibi, who previously headed the Ministry of Social Affairs, was named head of the newly created Commerce and Investment Ministry. Ahmed al-Kholifey has been named the governor of the Saudi Arabian Monetary Agency (SAMA) — the Saudi central bank.

The changes, which were announced through a series of royal decrees, show Salman flexing his muscle since he became king in January last year.

His son, Deputy Crown Prince Mohammed bin Salman, reportedly authored the economic reform package. Prince Mohammed's programme has been presented as a sweeping rethink of the entire way that Saudi Arabia's government and economy will function to prepare for a future that is less dependent on oil income. Mohammed's dizzying rise since his father became king has astonished Saudis. He is second in line to the throne, behind his cousin.

Some of the most important elements of the plan, which will be fleshed out in coming weeks, involve creating a massive sovereign wealth fund, privatizing state oil company Aramco, cutting energy subsidies, expanding investment and streamlining government.

The plan also seeks to boost revenues by increasing the number of foreign pilgrims outside the main annual Hajj, and encouraging Saudis to spend money at home by creating more entertainment opportunities.

The former oil minister, Naimi, has for two decades been the most influential man in world energy, able to move oil markets with a mere word. However, his influence appears to have waned under Salman. He will now serve as an adviser to the royal court.

Falih has long been seen as a leading contender to replace him. Like Naimi, Falih is a career Aramco man, where he served as chief executive of the oil giant from 2009 until last year, when he was made company chairman and health minister.

Whether he will play the same role as Naimi did in the Organisation for Petroleum Exporting Countries (OPEC), or in crafting Saudi oil policy, remains unclear, however.

Saturday's decrees broke up the Water and Electricity Ministry, with the water portfolio added to a new Environment, Water and Agriculture Ministry, and electricity added to the new energy ministry.

Those changes may help Saudi Arabia to cut subsidies, reduce domestic power and water consumption, make sure that energy pricing meshes clearly with industrial development goals, and that nuclear and solar policy are more carefully integrated.

"The merging of ministries is opening the door to efficiency gains that the government is keen to enforce," said John Sfakianakis, a former adviser to the government and head of economy at the Jeddah and Geneva-based Gulf Research Centre.

Two other senior economic figures, royal court adviser Yasir al-Rumayyan and former SAMA governor Mohammed al-Jasser, were appointed advisers to the Secretariat General of the Cabinet.

Tawfiq al-Rabeeah, formerly commerce minister, was appointed health minister in place of Falih, Suleiman al-Hamdan was appointed transport minister, and the Pilgrimage Ministry was renamed the Haj and Umrah Ministry.