Saudi dismisses fears of dwindling oil reserves

Saudi Arabia has again scoffed at fears that oil has reached its peak and is gradually dwindling, saying the world has much more crude than is thought.

The government-owned Saudi Aramco, the world’s largest oil producing company, estimated global oil and gas liquids reserves at close to eight trillion barrels but said pumping all of them out requires new technology.

Addressing an energy conference in London last week, Saudi Aramco President and CEO Khalid Al Falih called for a dialogue between oil producers and consumers and criticised unilateral moves by some nations to cut oil consumption and find alternative sources of energy.

“Off-and-on fears that the world’s oil resources are about to be exhausted are baseless. Geological evidence shows that the world has a plentiful endowment of oil and gas, with a vast quantity of known reserves yet to be tapped and additional resources still to be discovered,” he told the Oxford Energy Forum in an address carried by Saudi Aramco on its website on Tuesday.

“The most comprehensive analyses estimate 6-8 trillion barrels of conventional oil and natural gas liquids and about seven trillion barrels of unconventional oil in place….the ability to produce those resources hinges on a complex interplay of technology, economic, environmental and regulatory factors.”

Al Falih shrugged off what he described as negative public perceptions of the industry and doubts about its ability to supply energy responsibly and reliably.

“In some countries, security, the environment and economic growth are being mixed together in a bid to turn away from petroleum. And, of course, the industry is in the headlines because of the Macondo well incident in the Gulf of Mexico.”

Al Falih’s comments are the latest in a series of statements by Saudi Arabia and other oil producers, dismissing theories about the oil peak.

Some US experts have also doubted the real size of Saudi Arabia’s proven oil resources.

Saudi official estimates put the Gulf Kingdom’s recoverable crude deposits at around 266 billion barrels, well above a fifth of the world’s total oil wealth. But Aramco has often affirmed that actual deposits in place are much larger.

In a recent study, a senior Saudi Aramco official said the Kingdom’s oil in place are estimated at nearly 722 billion barrels, of which around 109 billion barrels have been produced since Aramco began pumping crude 77 years ago.

But Mohammed Saggaf, Manager of Saudi Aramco’s Advanced Research Centre, noted that the total amount of oil that can be produced with present technology is around 260 billion barrels.

“Saudi Aramco’s long-term  goal is two-fold…we want to increase total oil in place to 900 billion barrels by 2020 and to push the limits of recovery from around 50 per cent to 70 per cent in our major producing fields, using both improved conventional recovery and enhanced oil recovery,” he said.

“Globally, the average ratio of recoverable reserves to oil in place is mostly 30 to 40 per cent…. with a level of 50 per cent, I believe Saudi Aramco is already doing much better than the average……however we intend to go further and push the limit to achieve recovery rates as high as 70 per cent…these are not dreams but are hard and fast targets.”

In his speech, Al Falih repeated calls by Riyadh for a serious dialogue between oil producing and consuming countries about preserving the environment.

“Some countries are taking unilateral steps to provide alternatives to oil and implement strict controls and that will only make it more difficult to develop long-term strategies for oil infrastructure and producing facilities,” he said.

“In my view, the perspectives of all stakeholders have a place in the discussion — and that includes a well-articulated case for petroleum as a fundamental enabler of economic prosperity and social development. Of course, to be successful in that effort we need to address not only global concerns like greenhouse gas emissions, safety and security of supply, but also market-specific issues like taxes and import tariffs, and the wisdom of subsidies and other incentives for alternative energy sources.”

Al Falih said Saudi Aramco and other players in the oil market cannot determine with any degree of certainty what future demand will look like.

“But we are required to make multi-billion-dollar investment decisions now, given the long lead times involved for oil and gas projects.”

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