The issue of security of oil supplies in the near future is no more the sole domain of the informed energy fraternity. It has been transformed into an issue of common interest and has assumed the form of a public debate — open to all. With some experts especially of Matthew Simmons mould constantly arguing that the global petroleum production is somewhere near its peak, the issue has now been dragged into our living rooms too. “Oil Storm” has entered into the realms of silver screen too. As is the case with such public debates, it no more borders on sanity and realism rather emotions and common perception over shadow the realities. This is exactly what is happening today to the crude issue.
Despite assurances from Riyadh, that Saudi Arabia, the world’s top oil exporter could increase its capacity to 15 million barrels a day and even beyond, without much difficulty and that another 200 billion barrels would be added into the Saudi proven reserves over the next few years, the doomsday pundits have succeeded in taking the issue of oil supplies in future to the living rooms of most of the homes in the energy thirst United States - courtesy a movie. The issue of oil scarcity and consequently its prices at the gasoline station has indeed been transformed into a major issue.
“Everything is so interconnected that anything that happens in Saudi Arabia or China will have an impact on oil, and therefore an impact on you or me in terms of what happens at the pump,” said Caroline Levy, the movie’s British producer and co-writer.
The oil fraternity is too aware the consequences of such an impression. It has been striving to negate the perception that oil has almost reached its peak production level - according to the Hubbert formula. Saudi Arabia, the key player on whom the eyes of the world are focused currently has been on the forefront of the campaign to negate all such perceptions. It has been insisting forcefully that it could increase its production from the current 11 million barrels per day to 23 million bpd. The Kingdom is currently expanding its production, processing and transport infra-structure to meet its global responsibilities and maintain a spare cushion of at least 1.5 to 2 million bpd, the Saudi Aramco CEO Abdallah S. Jum’ah argued during a recent speech delivered at the Rice University in Houston.
According to BP’s latest annual statistical survey, Saudi Arabia currently holds 27.62 percent of the global proven oil reserves. About 130 billion barrels of this is developed and mostly in production. Saudi Aramco has now plans in place to replace 15 billion barrels of reserves from 2005 to 2009 at a rate of about 3 billion barrels a year.
Saudi Aramco considers that the huge acreage in Saudi Arabia’s Rub al-Khali (Empty Quarters) in the southeast of the Kingdom offers big potential for new oil fields as well as the northern basin toward the northern border as well as the off-shore Red Sea basin. Then besides Saudi Arabia, there are indeed other frontiers too. Other Gulf States and Iran are also pursuing development strategy on an aggressive basis. Some estimates there could be investments as large as $50 billion in the region until the turn of the decade in the energy sector. In The Caspian belt, still more work needs to be done to ascertain its true potential. There is a great amount of debate and variance about the projection made by different pundits about the reserves of the Caspian. A number of states in Africa, from Angola to Congo and Sudan also present interesting potential.
Indeed the era of oil is far from over. Yet the problem seems to be emanating from politics. Despite what some — the Cheneys and Halliburtons of the oil fraternity — may wish and aspire, the fact remains that most of the future potential are also present either in the Middle East or in parts of the world that are not too attractive for them — from a political point of view. That appears to be the crux of the problem — other than anything else.