2.33 PM Tuesday, 23 July 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:15 05:38 12:28 15:52 19:12 20:35
23 July 2024

Saudi King halts oil exploration to save wealth

By Nadim Kawach

Saudi Arabia’s King Abdullah has ordered a halt to oil exploration operations to save the Gulf country’s massive hydrocarbon wealth for the future generations, the official Saudi media reported yesterday.

Addressing Saudi students sent for studies in the United States, the Monarch said his instructions were part of an ongoing strategy to save the country’s natural resources and ensure part of them are left for the future.

“I will reveal to you something that will make you laugh…..I was heading a cabinet meeting and told them (Ministers) to pray to God the Almighty to give it a long life,” King Abdullah told the surprised students.

“They asked me what that was but I again asked them to pray to God…then I told them it was oil…I told them that I have ordered a halt to all oil explorations so part of this wealth is left for our sons and successors God willing.”

Saudi Arabia already controls around 265 billion barrels in extractable crude deposits, more than a fifth of the world’s total proven oil reserves.

But officials believe the real oil deposits in place are far larger than those that can be recovered by present drilling and production technology.

According to state-owned Saudi Aramco, which controls the Kingdom’s hydrocarbon sector, oil reserves in place are estimated at around 722 billion barrels, of which nearly 110 billion barrels have been produced since Aramco began pumping crude 70 years ago. The amount that can be pumped with present technology is around 265 billion barrels, said Mohammed Saggaf, Manager of Saudi Aramco’s Advanced Research Centre.

 “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, 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 a recent study, the Organization of Arab Petroleum Exporting Countries (OAPEC), which groups Saudi Arabia, the UAE and eight other regional hydrocarbon producers, put the total Arab oil deposits in place at more than 2,700 billion barrels at an extraction rate of about 35 per cent.

“Assuming an extraction rate of 35 per cent, the Arab oil deposits in place could reach 2,738 billion barrels. This means the oil quantities that can not be extracted by present technology are around 1,809 billion barrels, which are nearly 645 billion barrels above the world’s proven oil resources….these quantities, if they can be extracted, will meet the world needs for 60 years …even if only 10 per cent of them could be extracted, they could be enough for seven years.”

OAPEC said four Gulf countries—UAE, Saudi Arabia, Kuwait and Iraq—controlled around 50 per cent of  the world’s recoverable oil potential and more than 86 per cent of the total Arab crude reserves.

But it noted large quantities of oil and gas remained undiscovered or undeveloped in the region, totaling around 175 billion barrels of oil, 43,368 billion cubic metres of natural gas and 67 billion barrels of gas liquids.

Saudi Arabia pumps around eight million barrels per day of oil in line with OPEC’s collective quota agreement but its sustainable output capacity exceeds 12 million bpd, allowing it to hold over 70 per cent of the world’s idle capacity. At the current output level, its proven oil wealth could last nearly 90 years.

The Kingdom has just completed a $100 billion (Dh367 billion) investment programme launched over the past few years to expand its hydrocarbon industry and maintain its position as the world’s dominant oil power.

Aramco said the largest hydrocarbon investment programme in the Gulf Kingdom’s history has added nearly 3.8 million bpd to the country’s crude output capacity, including around two million bpd in 2009 alone.