Just one quick clarification, the presentation will be on the Aramco web site as was mentioned Wednesday morning Washington time. There is a little bit of a time difference between Dhahran time and Washington time.

When you go to the web side, Saudi Aramco is one word, not two words as on this slide here.

What we are going to address in our presentation today are three main principles or themes. We're going to talk about the volume and the reliability of the Saudi Aramco reserves. We're going to address the sustainability of the crude oil production at Dhahran, and potentially higher levels in the future. And then we are going to address the issue, of course, that seems to be on everybody's mind.

This is how we are going to do this. I'm going to start with just a couple of slides on the global outlook just to set the stage, make sure we're all together. Then I'll give you an overview of Saudi Aramco's upstream operations. Then I'll focus on exploration which is my area of expertise.

At that point I will turn it over to Dr. Saleri. He will discuss reserves and how we manage them, and then review several 50-year outlook scenarios, and then conclude with a synopsis.

This chart shows a projection, source from OPEC, for world oil demand. We're not hung up on the numbers. I know there are other forecasts that can be a little bit higher, a little bit lower. The only thing we want to agree on here before we move on is that the world needs a lot more oil in the future. The question I want to pose is where is that oil going to come from?

This map from British Petroleum Annual Statistical Review shows that at year-end 2002 the conventional oil reserves of the world were slightly more than one thousand billion barrels of oil. Two-thirds of it are in the Middle East. So again, it's safe to assume that the Middle East is going to play a key role in meeting this demand that we were talking about.

What makes it even more interesting is that in spite of having two-thirds of the reserves, the production is only one-third. So that positions the Middle East in a better position than any other area in the world.

Moving on from the Middle East to Saudi Arabia and then Saudi Aramco.

It's expected with the central role for the Middle East that Saudi Arabia will play the major role. Not only because Saudi Arabia has the biggest reserves base among all of the countries of the Middle East which accounts to about one quarter of the whole world, but also because Saudi Arabia has an operating oil company that has a proven track record over 70 years of delivering, of overcoming any operational, any technological, any organizational, or any financial challenges. The track record is there. I'm not going to go through the history. But just quickly I want to say that the history starts in 1933 when the Kingdom signed the first concession agreement with So-Cal at the time, Chevron now. When the industry realized that they are dealing with the world's largest reservoirs and largest fields, Exxon, Mobil, Texaco all bought in. That's how the history started.

Now Saudi Aramco in 1982, in the early '80s, started a center called the Exploration and Petroleum Engineering Center. We call it EXPEC for short. This center is one of the largest in the oil industry addressing the exploration and petroleum engineering technology and operations.

The center is supported by a computer system that processes and stores about four times as much data as NASA does, and it is very well justified because we are dealing with the largest reservoirs on earth.

The center is manned by the best that the country, Saudi Arabia, talent has to offer. Yet on the other hand the company employs people from 52 different nationalities. The fact that I am from Saudi Arabia and my partner in this presentation is from Texas is an example of us hunting for talent all over the world.

This success story is not something that came by chance. It's a strategic commitment by the company to five different principles. The most important of them is an excellent sustained performance over the years. We are maximizing hydrocarbon recovery, but taking into consideration the life cycle economics. Our reservoir management practices, I will not be shy, they are the best in the industry. Dr. Saleri will expand on that.

Mr. Ebel: Thank you, Mahmoud. This was a paid advertisement. [Laughter]

Mr. Abdul-Baqi: Of course I have to say at the end that our excellent safety and environmental record is just the fifth principle that we are talking about here.

Let's look at our current operations. Our operation is large and diversified. It includes production from mature on-shore giant fields, but it also includes production from very remote new developments. It does include off-shore production and deep gas production.

The company has a policy of maintaining a healthy cushion between its current production and its maximum sustained capacity. This cushion has served us in the past extremely well and continues to serve us extremely well in the future.

I don't want to go back all the way to the first Gulf War and remind everybody what did happen when the supply was disrupted. I'll just refer to the most recent few months where this healthy cushion is what stabilized the market --when disruptions happened in Nigeria, when disruptions happened in Venezuela and when disruptions happened in Iraq.

The company policy also addressed replacing on an annual basis all of its oil production which is estimated at about three billion barrels per year.

On the gas side, though, because we're not number one, we're number four, we are not only replacing our production but we're also adding an average of about five trillion cubic feet of gas per day to our reserves based to improve our standing.

Let's talk about maturity and exploration business. I've been in that business for 33 years. When we talk about a mature area we basically talk about the number of exploratory wells that were drilled in that area to find oil or gas. Let's concentrate on oil. There are many ways. We can do seismic, we can do studies, but eventually oil is not discovered until that bit meets the reservoir and the oil comes to the surface.

This map here shows all of the exploratory wells that were drilled by our company since 1933 in Saudi Arabia. You can notice that the wells are really clustered around the oil and the gas fields and there are large areas that are relatively unexplored. This area here, a significant part of the Rub' Al-Khali Basin known to you as the Empty Quarter --I'm sure anybody who has read about the Middle East --a large part of it is relatively, we haven't drilled in it yet. In the basins of the northern area along the border with Iraq, one of the areas that is now being advertised as lucrative by many international oil companies.  Again, very, well, I don't know how to describe it. Ten wells? In an area so large if you put the state of California on its side you can fit it in that area here.

So conclusion I want to come up with from here is that we have a lot of acreage to explore and a potential to find a lot more oil and gas, in addition to our current position which is number one in the world.

This is not only our opinion but the opinion of many respected entities around the world. The United States Geological Survey published the results of work that they have done in the year 2000 about the undiscovered recoverable --I want you to note the word recoverable --oil resources in the world. They place us as the number one country. By the way the volumes that they are talking about is to be found by the year --this is not ultimate, by the year 2025. The mean numbers that are shown here -- 87 for Saudi Arabia. Mean is a statistical term. The statistical or probabilistic range that goes with that mean goes all the way down from 29 to 161. But this is for the future. This uncertainty is for the future and it should be uncertain. This is not for the current reserves.

Although I'm talking only about oil, I thought of throwing this, it's interesting to throw in this about gas because that same study by the United States Geological Survey places us second only to Russia in gas potential.

So not only we have the number one position in oil in the world, but we also are well positioned to meet future gas demands when that scenario would be on the table.

I'll just flash these quickly to remind everybody of this.

Now we come to our current oil initially in place. Let me redefine the term for the benefit of people. The Society of Petroleum Engineers, a very well respected society, defines the oil initially in place as the volume or the amount of oil that is present in the subsurface, underground. We're not talking about oil that comes to the surface.

In the last 20 years, as this graph shows, there has been a significant growth of oil initially in place in our area, approximately 100 billion barrels of oil. Currently we have 700 billion barrels of oil in place. Keep that number in mind because we're going to look at it one more time here.

Here it is, the 700 of discovered oil initially in place.

Now we looked at what the USGS were projecting. Our studies indicates that a combination of undiscovered resources --this is exploration in new areas --plus the growth of oil in place that we have already discovered. If we combine these two together we're going to add 200 billion barrels by the year 2025, giving us a total of 900 billion barrels of oil at that time.

At what cost? It's good to have the oil, it's good to have the potential to add to the oil, but you can deliver it at a reasonable cost or not? This is a very important question.

This graph shows year end 2002 average finding and development costs from facts and figures published by British Petroleum on their major competitors. The bars here, the bar chart, shows five major oil and gas companies. Their cost of finding in red and developing in blue, compared to Saudi Aramco's costs. Not only we are positioned better than anybody else to deliver that oil that we have and the oil that we are going to have, but we can do it at a very reasonable cost which makes it extremely feasible.

We heard a lot about success rates and what happened in the last ten years and all of that.

Well, here are the numbers. In the last ten years we drilled a total of 64 exploratory wells with a success rate of 52 percent. People that are in the business will agree with me that's very high by industry standards. This applies not only to gas, not only to oil, we were equally successful in doing both the oil and the gas.

The message I want to leave with you before I ask my colleague to continue the discussion. We have plenty of oil, number one in the world. We have the potential to add more oil than anybody else. We can do that at extremely successfully at a very reasonable cost.

Our track record shows that we delivered for 70 years and we're going to continue delivering for another 70 years at least.

With that I would like to ask Dr. Saleri to come to the podium and continue the discussion of reserves and reservoir management.

[Applause]