Wikileaks Cables: Saudi Arabia cannot pump enough oil to keep a lid on prices
The US fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show….
However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached…..
Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.
US embassy cables: Saudi oil company oversold ability to increase production, embassy told
According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.
Graph from: PFC Energy’s Global Crude Oil and Natural Gas Liquids Supply Forecast, September 2004
updated with data from: http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?
“Key oil figures were distorted by US pressure, says whistleblower”
Reserves are inflated by 300 Gb of “resources”
From: Sadad-Al-Husseini (ex-Saudi Aramco), presentation at the Oil &Money Conference in 2007, London, organised by Energy Intelligence http://www.energyintel.com/om/program.asp?year=2007
IEA WEO 1998
“ Total OPEC official oil reserves increased by almost 300 billion barrels between 1985 and 1989. Following the fall in the oil price in 1986, OPEC’s oil production quotas became an important issue to its member governments. Since reserves were an important potential factor in determining quota allocations, every OPEC country had an incentive to increase its published reserve estimate. In the space of just four years, total OPEC oil reserves increased by 62%. Since then, OPEC’s total oil reserves have remained virtually unchanged year after year. ”