Saudi Arabia endeavours to fulfil oil responsibilities

by Syed Rashid Husain

With the global crude spare capacity cushion dwindling rapidly -- as only Saudi Arabia could currently boast to have any significant spare capacity still available -- the focus on generating additional spare capacity, so as to be ready to absorb any supplies disruption is gaining momentum, especially in the oil-rich Arabian Gulf.
Securing oil supplies to the energy thirsty world is an ominous responsibility for this energy rich region and the region is definitely endeavouring to fulfil its responsibilities in this regard.

Oil and gas are non-renewable resources and the rate of discovery of the so called "elephants" has been on the decline for decades, especially in the Western world, since the untroubled days of Alaska’s Prudhoe Bay and the North Sea. Some of the recent discoveries, have been made in the world’s most remote and politically unstable regions -- among them, Nigeria, Sudan, Russia, Indonesia and the former Soviet republics of Central Asia.
Thus the only bright spot currently on the global oil scene is this region, energy analysts in Dhahran, the virtual global energy capital strongly believe. They are definitely on target.

OPEC President Purnomo Yusgiantoro says the OPEC members are investing billions of dollars to boost their production capacity.
"To help calm a nervous and sensitive market, OPEC members are investing in their oil fields and facilities to add between 2.5 mm to 3 mm bpd of production capacity by the end of 2005," he told.
The Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi told that Saudi Arabia could increase its daily oil production "in the medium term."
"We have enough resources to raise our production in the medium term to 12 mm or 16 mm. In the north of the country, in the Red Sea and the ‘Empty Quarter’ there are areas which we have not yet intensively explored", he added.

Earlier, the Aramco CEO while addressing a gathering in Japan said, "Aramco holds some 260 bn barrels of proven crude oil reserves -- a quarter of the world’s total. Those reserves are spread across 85 fields and 320 different reservoirs, and represent a conservative accounting of our total reserve base."
"We continue to identify new reserves through additional discoveries, enhanced recovery techniques, and more accurate characterization of our reservoirs. For many years, we have been able to make healthy additions to our reserves, or at the very least to replace our production, meaning that despite our prolific output, we have not had to draw down our total reserves. We are confident that we can extend that success well into the future given continued advances in exploration and production technologies, and the fact that more than half of the Kingdom’s potential hydrocarbon-bearing areas are still relatively unexplored.”

“The US Geological Survey has projected new crude reserve discoveries worldwide over the next 25 years, and in Saudi Arabia they expect that an additional 80 to 100 bn barrels of recoverable reserves will be found in those unexplored areas, plus additional recoveries coming from our known fields," he told the August gathering.
He went on to say that "even though the 10 mm barrel production capacity currently includes a surplus capacity of more than a million barrels, we have developed a range of long-term crude development scenarios that would raise our production capacity to 12 or even 15 mm bpd. This will enhance our ability to deliver extra production capacity should the need arise," he emphasized.

On the other hand, Iran, which currently holds a production capacity of 4.2 mm bpd, intends to enhance its crude production capacity to 8 mm bpd over the next two decades. In order to achieve this target, Iran is trying to attract an investment of roughly $ 6 bn per annum in the energy sector. With investments from the US oil majors still a faraway proposition, Iran is positioning itself to attract investment from "energy hungry" Asia. It is trying to build up long-term relationship with the upcoming Asian economies, so as to achieve its objective.
Addressing the Boao Energy Forum for Asia earlier this month, Hoseyn Kazempur Ardebili said that the absence of the US oil majors in the Iranian energy sector offers a unique opportunity to Asian countries. The required investment in the Iranian energy sector calls for serious regional cooperation to guarantee the security of supply and stability of oil market in the interest of the present and future demand centres of Asia, Ardebili stressed.

It has also been reported that the UAE and Kuwait are also contemplating projects to increase their production capacities.
Close to world’s 50 % proven oil reserves are situated in Saudi Arabia, Iraq and Iran. The total proven reserves of these three important countries of the region stands at a staggering figure of around 507 bn barrels. It is thus natural that the region would continue to be the focus of the activities aimed at ensuring security of energy supplies for many more decades to come, one could say without any sense of exaggeration.