OAPEC study unveils Gulf oil is set to dominate world market

Jul 03, 2002 02:00 AM

The UAE and other Gulf oil giants are producing below 20 % of the world's total crude supplies but the level could surge above 30 % in the long term as other supply sources are either depleting or financially unfeasible, according to an official report. At an annual average production growth rate of between 1.2 and 2.5 % for oil and natural gas respectively, global resources will sustain demand until 2032, said the study by the Kuwait-based Organisation of Arab Petroleum Exporting Countries (OAPEC).
But the availability of hydrocarbon supplies is assured well beyond that date because of the application of new technologies that will make available additional supplies of conventional and unconventional hydrocarbon sources. "Evidence suggests, with high probability, that supplies from the Middle East region will likely satisfy most of the incremental increase in demand," the report said. "The region that includes OAPEC producers such as Saudi Arabia, UAE, Kuwait and Iraq is endowed with very largehydrocarbon reserves and enjoys a cost advantage vis-a-vis other region... it is almost certain that these producers will be the dominant players in the international oil market in the medium and long terms."

The four Gulf countries currently produce around 14 mm bpd but their output capacity is nearly 4 mm bpd above that level as their actual production is governed by an agreement between OPEC and other producers to curb supplies and support prices. A recent official Kuwaiti study estimated regional producers will have to pump nearly $ 106 bn into capacity expansion until 2020 to face growing world demand.
As the four Gulf nations are currently producing just above 50 % OPEC¹s supplies, their production could climb well above 30 mm bpd in 2020 when the 11-nation cartel is expected to supply nearly 57 % of the world¹s oil demand of 107 mm bpd.

The Kuwaiti paper estimated the Gulf¹s total output capacity could reach around 42 mm bpd in 2020 and regional states could pump at near capacity given the expected decline in the production capacities in other OPEC members. OAPEC, which groups those four Gulf oil producers with six other Arab states, ruled out a future supply crisis on the grounds technological advancements will increase reserves.
"Historically, the adequacy of conventional hydrocarbon resources did not become a major issue until the early 1970s... at present, it is generally accepted that technological developments will continue to increase ultimate recoverable resources," it said. "However, there is some concern that additions to reserves are not keeping pace with increased production. This concern is particularly acute among those who do not share the more optimistic forecasts pertaining to the availability of oil and gas in the long run."

A breakdown in the Kuwaiti study showed expansion could boost the UAE's output capacity from 2.5 mm in 2000 to 5.1 mm in 2020. Capacity could climb from 9.4 mm bpd to 22.1 mm bpd in Saudi Arabia, from 2.6 mm bpd to 5.5 mm bpd in Iraq and from around2.5 mm bpd to 4.8 mm bpd in Kuwait.
According to OAPEC estimates, the UAE’s proven oil reserves stood at 97.8 bn barrels at the end of 2001 while they were estimated at 262.8 bn barrels in Saudi Arabia, 112.5 bn barrels in Iraq and around 96.5 bn barrels in Kuwait. Their combined reserves of 569.6 bn barrels accounted for 55 % of the world¹s total recoverable crude wealth.

Source: Gulf News
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