Are there enough oil and other energy resources available underneath to sustain the current life style — and in fact the modern civilization? This is the question that every one is mulling around in the energy fraternity.
Saudi Arabia seems to be the focus of attention. Many in the OECD are already blaming the Organization of Petroleum Exporting Countries (OPEC) for the current woes in the crude market. An impression seems to be emerging that the oil producers are not interested in doing enough to bail out the energy thirsty world.
As per the Monthly Oil Report of the London-based Center for Global Energy Studies (CGES), the global oil demand for the month of April averaged at 82.8 million barrels a day. However, out of this total requirement the non-OPEC supply was estimated at 54.5 million, whereas, the total OPEC production was estimated at 29.5 million barrels a day. This indeed included the increased production form Saudi Arabia. Riyadh is believed to be producing something around 9.5 million bpd currently.
Looking closely at the supply-demand equation, OPEC is thus a minority player in the overall supply chain. One can thus safely deduce that its role in satiating the global thirst has to be in direct relation to its overall contribution to the total global supplies.
However, too much is apparently being expected of Saudi Arabia and its partners in the OPEC at this juncture. That is perhaps why Saudi Arabia has been insisting that there is a limit to what it could do and that it is almost doing the maximum it can in the present circumstances.
This scenario also has to be looked from another angle too. The US being the largest energy consumer requires about 20 million barrels of a day - almost 25 percent of the global demand.
The above leads us to the ongoing debate about the sustainability of oil supplies in the foreseeable future. President Bush says that oil supplies are not growing fast enough to meet the growing demand in the United States and other countries. Harnessing nuclear energy has been proposed as one option. America has not ordered a new nuclear power plant since the 1970s. Bush says that France has built 58 plants over the same period and today it obtains more than 78 percent of its electricity from nuclear power.
However, the Saudis insist that crude supplies are not an issue in real sense. “Get me a customer and I will provide crude to him,” the Saudi oil minister Ali Al-Naimi has been arguing for past several weeks. “We are ready to sell crude to any one who needs it, we have plenty of it,” he and other Saudi officials have been boasting off to counter the theory that oil supplies are dwindling, as various peak models are being propounded and taken seriously.
Realizing lack of refining capacity in the US as a potential bottleneck, last May Saudi Arabia offered to build two new refineries in the US to help ease gasoline production and marketing bottlenecks. The offer has largely been ignored by US energy companies and investors.
US investment banker, Matthew Simmons, one of the major proponents of the dooms day theory as far as energy supplies are concerned, have lately been speaking about greater transparency in the data offered by both producers and the oil companies. Some others like Jeremy Legget of Solar Century feel that the oil topping point will be reached somewhere between 2006-2010, whereas, David Spaven of Transform thinks that the era of cheap fuel is coming to an end.
However, Saudi Aramco feels strongly the other way.
In a presentation during the 5th International Oil Summit on April 29, Amin H. Nasser and Nansen G. Saleri argued forcefully that it could meet global requirements for many more decades to come, even if required to pump at the unprecedented level of 15 million bpd. A big commitment indeed though based on solid footings itself.
