IN an exclusive response to questions from Arab News, Saudi Aramco, the giant responsible for managing the Kingdom’s oil resources, says: “It is our strategy to maintain a spare capacity of 1.5-2 million barrels per day (bpd) over and above the actual or the forecasted production. This strategy provides (the Kingdom) with the flexibility to adequately respond to fluctuations and disruptions in the oil market, as it has been doing in the recent past.”
In response to the question about the projects in hand to meet the galloping global energy demand, Saudi Aramco said: “We are currently either developing or are in the advance stage of planning additional production capacity from several fields. This is in addition to increased spending to maintain the potential of the current fields. The timing of any field development would depend on near to medium-term oil demand forecast.”
In the written response, Saudi Aramco maintained, “it has prepared several development scenarios, updated on a regular basis to reflect medium to long-term production forecasts.” The company once again emphasized “it has the reserves and means to develop a higher capacity, if the need arises.”
According to reports, Saudi Aramco is already pressing ahead with plans to develop the onshore Abu Hadriyah oil field. This 500,000 bpd field development is expected to be developed at a cost of somewhere between $1,000 and $1,500 million.
The current development of the Abu Safah/Qatif oil field is expected to be completed by the year-end. The Qatif oil field, once developed will add 800,000 bpd to the existing capacity.
The last major development undertaken by Saudi Aramco was the Shaybah oil field, in the deserts of the Empty Quarters bordering Abu Dhabi — in one of the world’s largest stretch of inhospitable terrain. This came on stream in 1998. Proven oil reserves in Shaybah stand at about 14.3 million barrels and the production capacity of the field is 500,000 bpd.
Hence the Saudi Aramco President and CEO Abdallah S. Jum’ah, while addressing the Oxford Energy Seminar, earlier this month reiterated before a global audience: “We continue to say with 100 percent confidence that we are able to put 10 million barrels, day in day out, for at least the coming 50 years. We have also worked out scenarios where we are able to increase our production to 11, 12 and even 15 million barrels per day. We know which fields we are going to develop and in what time frames. When there is a call on us (and indeed who can deny that), to produce those amounts, we will be able (to respond to the call) and our reserves base will support it.”
In 2003, the Gulf producers were meeting about 27 percent of the global oil needs. This could go up to 33 percent by 2020, the EIA projected. The Gulf has proven oil reserves of 715 billion barrels, representing 57 percent of the global estimates. The region also boasts of 2,462 tcf of natural gas reserves — almost 45 percent of the global total.
Interestingly virtually the entire spare capacity of crude today is available in this region, mainly Saudi Arabia. As of early September, excess global oil production capacity was estimated at about 0.5 to 1.0 million bpd, all of which was located in Saudi Arabia.
Despite pressures and a tight market, all doesn’t seem to be lost, at least for another many decades, as far as the energy supplies from this region is concerned. Despite the wishes of many, the region would continue to dominate the fossil fuel markets for many more decades to come. The fossil fuel era is still far from over!