21st Century World Still Needs Saudi Oil
By Martin Sieff

"The continued safety and stability of Saudi Arabia will remain a priority goal for major industrial nations dependent upon continued supplies of high-grade, easily-accessible petroleum for decades to come."

Washington, DC, May. 5 (UPI) -- Saudi Arabia is likely to become even more critical to the world's oil needs in the coming decades, and its reserves may be big enough to meet global demands for the next century, says a new report from a prestigious Washington think tank.

"Saudi Arabia is a key petroleum exporter and central to a steadily more interdependent global economy ... This situation will not change in the foreseeable future," says the new report from Washington's Center for Strategic and International Studies.

"Most estimates indicate that Saudi Arabia holds roughly one-quarter of the world's proven oil reserves, with a nominal figure of 261.90 billion barrels," says the report, "Global Energy Demand and Capacity Building in Saudi Arabia's Petroleum Sector," by analysts Anthony H. Cordesman, Nawaf Obaid and Khalid al-Rodhan.

According to the Energy Information Agency of the U.S. Department of Energy, the Desert Kingdom "may contain up to 1 trillion barrels of ultimately recoverable oil," the report continues.

And it further notes, "Saudi sources have recently gone much higher. On Dec. 27, 2004, Saudi Oil Minister Ali al-Naimi stated that the country's proven reserves can go up to 461 billion barrels in the next few years."

In a further statement on April 8 this year, al-Naimi spelled out this projection in more detail.

"There is a possibility that the kingdom will increase its reserves by around 200 billion barrels, either through new finds or by increasing what it produces from existing fields," he said. "... These reserves enable the Kingdom to remain a major oil producer for between 70 and 100 years, even if it raises its production capacity to 15 million bpd (barrels per day.), which may well happen during the next 15 years."

The report goes on to warn, "The costs of new production in the MENA (Middle East and North Africa) area are generally assumed to be extraordinarily low, and there is no explicit analysis of the capability of Saudi Arabia or any other major exporter and supplier to actually produce the amount of oil estimated in the model."

Nevertheless, the report leaves almost no doubt Saudi Arabia will remain the world's largest and -- given peace and stability -- most cost-effective supplier of high grade petroleum for decades to come and that global dependence on it is likely to increase rather decrease over the next generation at least.

"The International Energy Agency estimates that total conventional and non-conventional oil production will increase from 77 bpd in 2002 to 121.3 million bpd in 2030. This is a total increase of 44.3 bpd worldwide," the report says. "The Middle East will account or 30.7 bpd or 69 percent of this total."

"The IEA also estimates that the rate of dependence on the Middle East will increase steadily after 2010 as other fields are depleted in areas where new resources cannot be brought on line," the report continues. "It estimates that 29 million bpd, or 94 percent of the total 31 million bpd increase in OPEC (Organization of Petroleum Exporting Countries) production between 2010 and 2030 will come from Middle Eastern members of OPEC."

The report concludes Saudi Arabia retains the production capacity, technological resources and the will to remain the world's crucial "swing" producer of oil: The nation has sufficient surplus capacity to meet unexpected spikes in international demand and to be able to most influence global oil prices by restricting or expanding its production. "Saudi Arabia is also the only oil producer that has consistently sought to maintain surplus, with a nominal goal of 2 million bpd," it says "The Energy Information Agency and the U.S. Geological Survey estimate that Saudi Arabia now has the capacity to produce a maximum of 11.2 million bpd (with a sustained capacity of 10.6-10.8 bpd). The EIA estimates that these high oil reserves, and low incremental production costs, will ensure that Saudi Arabia and the Gulf region will dominate increase in oil production through at least 2015," the report says.

The authors of the report restrict themselves to the facts and figures both established and projected, from respected authorities. But the strategic implications to be drawn from their conclusions appear clear: The continued safety and stability of Saudi Arabia will remain a priority goal for major industrial nations dependent upon continued supplies of high-grade, easily-accessible petroleum for decades to come.

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Reprinted with permission.