Prince Alwaleed bin Talal, a Saudi billionaire who is one of the world's richest men, has warned that demand for the kingdom's oil is dropping and new sources of revenue are needed.

Prince Alwaleed has written to officials, including Saudi Arabia's oil minister, saying the world's reliance on oil from the Organisation of the Petroleum Exporting Countries (OPEC) is in a "clear and continuous drop".

Oil and its related products make up roughly half of Saudi Arabia's gross domestic product and about 90 per cent of government income.

Saudi Arabia does not tax its citizens and Saudi companies enjoy low taxes and charges.

Prince Alwaleed said oil produced in Saudi Arabia - an OPEC founding member - faced increased competition from shale gas, particularly that produced by North America and Australia.

He said the kingdom needed to diversify and plan immediately for the drop in demand for its oil.

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Professor Amin Saikal told the ABC's PM program that Prince Alwaleed had both a personal and professional interest in Saudi Arabia's economic fortunes, as a business owner with "huge" investments linked to Saudi Arabia, and also one of the kingdom's younger generation of political aspirants.

"Alwaleed bin Talal is one of the few people who has got important insight into what's really going on in Saudi Arabia, particularly with the country's economy and oil production," he said.

"There's no question that he is an influential player in Saudi Arabia. And of course he would love to really have a bigger role in that process, and particularly now that there is a leadership generational change underway.

"And he belongs to sort of a younger generation, I mean he's in his 50s, and therefore he would love to really be in a position to be able to play a bigger role."

Professor Saikal's colleague, former government official Mathew Graham, who is writing a book on Saudi Arabia, said Saudi concerns over their dependence on oil dated back to the 1970s.

Of most concern was the lack of jobs being created for Saudi citizens, along with fluctuations in revenue from oil.

"I think that's a critical issue here for Saudi security that whilst they might have a lot of money from oil revenue, the amount they get fluctuates, there's not a lot of jobs created through this sort of stuff, and you get all sorts of problems in an artificially high exchange rate and the economy being skewed towards oil," Mr Graham said.

"So the prince is reflecting, I think, a deeper concern that the royal family's got in Saudi Arabia. They've been struggling with this now for 25, 30 years and it's proving incredibly difficult.

"They do have some quality employment opportunities in areas related to oil. So they've got a world class petrochemicals sector, they've got a national airline, they've got quite sophisticated construction sector, and increasingly good education sector.

"But a lot of Saudis have an expectation that the government will look after them with this oil wealth; that they don't need to be pursuing some of these tougher or less-prestigious jobs. And that sort of is hobbling this attempt to generate more employment opportunities for people and get people working in other productive parts of the economy."