DHAHRAN, 17 May 2004 — A leading oil expert whose comments in 2003 helped spark the current debate over reserves said yesterday he is convinced that Saudi Aramco has extensive reserves and predicted “the last drop of oil” ever produced would come from Saudi Arabia.
Oliver Appert, chairman and CEO of Institut Francais du Petrol (IFP) made the remarks after a ceremony marking a memorandum of understanding between IFP and Saudi Aramco. The agreement links the world’s largest oil producer with one of the world’s most sophisticated petroleum research and engineering organizations.
Appert made headlines in 2003 when he declared that there are no more significant reserves to be discovered globally and the world oil depletion rate was between 5 percent and 10 percent per year. He said he still stands by those observations.
“For the last five years, new discoveries have covered only 40 percent of consumption,” Appert said. “So there have been no really big discoveries for the last 10 years. That’s the first concern. The second issue is the depletion rate.”
He said that oil industry analysts may be getting it wrong. “I think the oil industry does not pay enough attention to this issue. We discuss the increase in demand, but we don’t discuss the natural decrease of production through the depletion factor,” Appert said. “This depletion is the hidden part of the iceberg, and it’s more important to have a clear view on the depletion ratio in Saudi Arabia or Venezuela rather than discussing the increase in demand by 1 percent or 2 percent.”
Saudi Aramco’s exploration efforts have consistently replenished its reserves by equaling or exceeding production levels. The company recently reported that further exploration in untouched parts of the Kingdom and the Red Sea Basin could add hundreds of billions of barrels to reserves in the future.
Appert said Saudi Aramco’s recent release of reserve data was both interesting and worthy of further study, noting the global concern.
“There’s a huge debate, mostly in consuming countries, on this issue,” Appert said. “The debate on the reserves of Saudi Aramco also has been quite important as has the debate on the reserves of Shell. That’s not an easy issue, and even SEC regulations are not very precise. I am convinced that there are a lot of reserves in Saudi Aramco, and the last drop of oil will come from Saudi Arabia.”
