It is tough at the top. Questions are constantly, indeed increasingly, being asked about Saudi Arabia's ability to meet the world's energy requirements, despite Riyadh's regular assurances that it can deliver what is required.
Last November the International Energy Agency (IEA) said Saudi production will need to reach 20 million barrels a day, from the current 8 million, by the year 2020. Fatih Birol, the chief economist at the IEA, thinks Saudi Arabia will not be able to increase production enough for future needs without large scale foreign investments.
The US Department of Energy estimates Saudi Arabia will need to produce13.6 million barrels a day by 2010 and 19.5 million barrels a day by 2020. According to USEA Energy Policy Bulletin, by 2020 the global oil demand will go up by 36 million barrels per day and of this increased demand, almost 60 percent will be in developing countries. The US primary energy consumption is projected to grow from 97.3 quadrillion BTU's in 2001 to 130.1 quadrillion BTU's in 2020. Estimates project that 63 percent of the new demand will have to be met by OPEC of which 44 percent will come from the Gulf states. Some industry experts seem skeptical about the Saudi ability. Edward Price Jr., a leading US government adviser, says Saudi Arabia can pump up to 12 million barrels a day, "for a few years." The world should not expect more from the Saudis; he argued and predicts a short supply in global oil markets by 2015.
The five super giant oil fields in Saudi Arabia were discovered between 1940 and 1965. Ghawar, the world's largest oil field, was discovered between 1948 and 1952 and Shaybah, the other giant oil field, was discovered in 1967. Experts caution that these giant fields may have already peaked. And the next generation of Saudi oil will be harder and costlier to extract. Currently, the Saudi extraction cost is one of the lowest in the world. Saudi Aramco says it can meet global requirements easily beyond the middle of the century and that by 2025, it expects to add at least 150 billion barrels to the current proven oil reserves of 260 billion. "We have plenty of oil. We have the potential to add more oil than anyone else," said Mahmoud Abdul Baqi, vice president of exploration at Saudi Aramco. "We are going to continue to deliver for another 70 years at least," he added. "We have a lot of acreage to explore and the potential to find a lot more oil." Saudi Aramco now has crude production capacity of 10 million bpd and according to Aramco officials it could increase production to 15 million bpd by 2014 and maintain it for a half-century. Nansen Saleri, Saudi Aramco's manager of reservoir management, was "confident" that such high production levels could be reached.
In order to ensure security, cooperation among oil producers and consumers is imperative. Many say the $25 billion Saudi gas initiative was a casualty of political considerations. Security is not the sole objective of consumers; it is also in the best interest of producers. Like most major oil producers the Saudi economy is largely dependent on cash flows from oil and wants oil to keep flowing from its wells in sufficient quantities for a long time to come.