By Rania El Gamal and Reem Shamseddine

DUBAI/KHOBAR, Saudi Arabia May 7 (Reuters) - Saudi Arabia, the world's largest crude oil exporter, on Saturday appointed Khalid al-Falih, chairman of the state oil giant Saudi Aramco, as its new energy minister, replacing Ali al-Naimi, who had held the post since 1995.

The change is unlikely to mean a shift in Saudi oil policy, which is being crafted to a large degree by Deputy Crown Prince Mohammed bin Salman, who oversees the kingdom's energy and economic policies, and involves building consensus among top royals based on the advice of senior technocrats.

Since 2014, Saudi Arabia has led OPEC through a new survival-of-the-fittest strategy aimed at defending market share rather than reducing production to support oil prices. Riyadh believes that cheap crude alone can balance the market by stimulating demand and shutting down high-cost producers.

Falih's appointment, part of a major economic shakeup, is only likely to strengthen this strategy rather than lead to any change in thinking, analysts say.

"The oil policy is not Naimi's personal policy, it is the kingdom's policy," said Richard Mallinson, senior analyst at Energy Aspects.

"Falih appears very firmly of the view that the market needs to be balanced through low oil prices ... All the statements about the Saudis having the capacity and being able to wait for that recovery to come, it signals that he is comfortable with the current policy."

A royal decree quoted by state media said the Petroleum Ministry had been renamed the Ministry of Energy, Industry and Mineral Resources, and that Falih would give up his other post, that of health minister.

The Ministry of Electricity has been merged into the energy portfolio, the decree said.

"The appointment of Falih has been expected for some time," said Saddad al-Hosseini, a Saudi energy consultant.

"He has the right industrial and executive experience to lead the reorganisation of the energy and electricity sectors."

WAITING IT OUT

Falih has for years been considered a possible successor to Naimi, who also stepped up to the post of oil minister after heading Aramco.

He is one of a handful of Saudi figures whose views are closely watched by traders and analysts for any insight into the kingdom's energy policies.

"We see the market balancing sometime in 2016, we see demand ultimately exceeding supply and soaking up a lot of the excess inventory, and prices in due course will respond, regardless of when and by how much," Falih told a news conference in Riyadh in late December.

"Saudi Arabia more than anyone else has the capacity to wait out the market until this balancing takes place," he said.

After graduating in 1982 with a degree in mechanical engineering from Texas A&M University, Falih has spent more than 30 years in Aramco, where he was chief executive from 2009 until he was named chairman last year.

Naimi took the reins at the oil ministry after a long career at Aramco, following a path by which the Saudi ruling family keeps highly experienced technical experts involved in wider energy strategy.

Naimi, 80, began his career in oil at the age of 12 as an office boy at Aramco, and ends it as one of the country's highest-ranking non-royals. He becomes an adviser at the Royal Court, the decree said.

Naimi has always tried to use Saudi financial muscle and oil supply scale to drive out higher-cost producers or rivals during oil market downturns.

He did so while helping to steer OPEC through a minefield of instability provided by the political travails of several member countries - including wars involving Iraq and Libya, and sanctions on Riyadh's main strategic rival, Iran.

PODCAST: Saudi Arabia's decision to replace oil Minister


(Reporting by Rania El Gamal and Reem Shamseddine; Editing by Angus McDowall and Digby Lidstone) ((rania.elgamal@thomsonreuters.com; +971 562 160 434; Reuters Messaging: rania.elgamal.reuters.com@reuters.net))