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Saudi Arabia has pumped more than $100 billion (about Dh367bn) into its oil sector over the last 40 years but the investments have largely been offset by crude sales which have fetched the Gulf Kingdom more than $1.6trn, official figures showed.
The sales involved a total 79 billion barrels pumped out of the country’s giant oilfields since it began full crude exports in 1967, according to the Saudi Arabian Monetary Agency (Sama), which cited Saudi Aramco figures.
Theoretically, such a massive output could have depleted the Kingdom’s oil resources as it exceeded its proven oil reserves of 68bn barrels in 1967.
But the reserves have more than tripled to a record 264bn barrels at the beginning of 2007, and experts attributed this surge to new major discoveries as well as the introduction of advanced drilling and production technology.
“Saudi Arabia controls more than a quarter of the world’s oil deposits and officials believe there are lot more oil in deep layers and other unexplored areas in the Kingdom,” said Ihsan bu Hulaiga, a Saudi economist.
Sama figures showed the Kingdom has remained one of the world’s heaviest investors in the oil sector as such investments are needed to maintain its fields, expand output capacity and sustain the present capacity, hunt for more oil in unexplored areas, and develop its oil infrastructure.
Between 1967 and 2007, the Kingdom’s oil investments totalled around SR382.7bn ($102bn). But experts said the capital does not include exploration activities, downstream projects and other sectors associated with production.
Experts added that the bulk of those investments covered development of the oil fields to maintain and increase the production capacity.
Investments in Saudi Arabia’s oil sector have sharply fluctuated over the past four decades as the country’s production has remained sharply volatile because of its role as a residual producer, mainly during the 1980s and 1990s. From only 2.6 million barrels per day in 1967, Saudi Arabia’s oil output shot up to 9.9 million bpd in 1980 before it dived to 3.17 million bpd in 1985. It then rose and fell again in the following years before it recovered to an average nine million bpd in 2007.
In 1967, Riyadh injected only SR2bn into its oil sector but the investments rocketed to nearly SR12bn ($3.2bn) six years later and to SR14bn ($3.7bn) in 1995. They fluctuated in the following years before they climbed to a record SR26.4bn ($7bn) in 2006. They are believed to have surpassed SR30bn ($8bn) in 2007.
But such investments have largely paid off as Saudi Arabia has maintained its position as the world’s top oil exporter. It had also been the largest producer for many years but it was overtaken by Russia over the past year.
The Kingdom’s sustainable output capacity of around 11 million bpd, however, is far higher than that of Russia, which has a negligible spare capacity.
Sama’s figures showed Saudi Arabia’s income from its oil exports has also been largely unstable over the past decades because of changing output and prices.
It stood at only around SR39bn ($10.4bn) in 1967 but jumped to SR114bn ($30.4bn) 10 years later. It continued its rise to reach as high as SR328bn ($87.4bn) during the oil boom of 1981.
After sharp fluctuations in the following years, the Kingdom’s oil income soared to its highest ever nominal level of
SR604bn ($161bn) in 2006 and was projected to exceed SR640bn ($170bn) in 2007.
Sama put the cumulative Saudi oil export revenues during 1967-2007 at around SR6.25trn ($1.66trn), an average $41.5bn a year, $3.45bn a month and around $115 million a day.
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