Benefits, burdens of Saudi oil and gas
First Posted: 3:15 am - August 9th, 2015 - 666 Views
By Wolf D. Fuhrig
Since 1938, the 30 million inhabitants of the Arabian peninsula have richly benefited from their second-largest underground petroleum deposits and their fourth-largest gas reserves in the world.
At present, these holdings rank second only to the United States, which also is the most important buyer of Saudi oil. After six years of exploration, the Saudis began to produce and export their oil in 1944. When Saudi Aramco grew into the biggest private petroleum producer, the government promptly nationalized the company.
By the year 2000, 12.3 percent of all oil produced worldwide came from Saudi Arabia, according to official data. At present, the country’s oil reserves are estimated to amount to 262.7 billion barrels. Available data give the Saudis eighth place worldwide in refining capacity. That enables them to produce heating oil, gasoline, kerosene and diesel, mostly for countries without refineries.
The Saudis have been a reliable supplier of oil for the Western world, except during the Yom Kippur War between Israel and Egypt in 1973 and the Islamic revolution in Iran. During the Second Gulf War in 1991, they exported all of their production to fill Iraq’s and Kuwait’s capacity and thus stabilize the market. [Iran Revolution: 1979]
Until 2006, the kingdom of Saudi Arabia produced 9 million barrels daily when worldwide the annual total was 3,942 billion tons. By 2007, however, the Soviet Union bypassed the Saudis’ daily output. Some experts theorize that they intentionally curtailed their production to increase the price of oil. Recently, dealers in the United States asked the Saudis to raise their production quotas.
At a conference in 2008, Saudi King Abdullah urged oil producers and consumers to cooperate more in order to avoid what he called “damaging speculation.” His country remains the industry’s leader with 16 per cent of the world’s petroleum output and 49 known oil and 16 gas fields.
Since 2002, over 90 percent of the Saudis’ production has come from only seven giant fields, of which six have pumped over 300,000 barrels daily. Recently it appeared that the productivity of those seven fields has been declining. In 2006 Aramco announced that all of the Saudis’ oil fields have reached a “phase of stagnation” and that the rate of production was going to decline by 8 percent annually. This estimate has since been confirmed by the American investment banker and oil expert Matthew Simmons.
At present, oil and gold are going through a selling panic due to the strong dollar and China’s economic slowdown. The pending nuclear agreement between the United States and Iran may soon bring millions of more gallons of oil into world markets. In the meantime, new technologies, especially horizontal drilling, have created an oil glut in the United States. If President Obama succeeds with his proposal for severe restrictions on carbon emissions, that also could lower American coal and oil production.
Saudi petroleum minister Ali al-Naimi explained his veto of increases in OPEC’s output last year that it was “crooked logic” for low cost producers to sacrifice market share in support of crude oil prices. Saudi commentators looking for motives beyond maintaining market share have given three strategic reasons: King Salman’s accession to the Saudi throne on Jan. 23; the growing geopolitical unrest surrounding Saudi Arabia; and the accelerating progress of North American shale operators.
The Saudis claim that they can produce as much as 12 million barrels a day.
The CIA lists the kingdom as the second largest source of proven crude oil reserves after Venezuela. Ironically, Saudi Arabia is currently a net importer of gasoline and diesel. It also continues to burn a large amount of crude oil to produce electricity.
At present, Saudi Arabia still remains the largest exporter of petroleum based on its possession of 18 percent of the world’s proven reserves. Its oil and gas sector comprises about 50 percent of its gross domestic product and about 85 percent of its exports.
Wolf D. Fuhrig of Jacksonville holds a doctorate in public law and government from Columbia University in New York City.
http://myjournalcourier.com/news/84500/benefits-burdens-of-saudi-oil-and-gas
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COMMENT
How much they burn up producing electricity explains their desire to set up nuclear power stations.
Iranian oil coming onto the market can't be too good for the Russians right now?
I don't really understand the concept of 'maintaining market share' and its relationship with slowing production.
They're increasing the price by slowing the production?
Yes, a veto of increasing production. Means the price is up because it's scarce ... but I've forgotten how this impacts on Russian oil.
Also, I thought prices were DOWN and that this wasn't good for the Russians, who are under sanctions pressure etc.
Don't know. I've obviously missed something somewhere. Might have to think about it some other time. lol
Just some trivia, I'll probably never remember.
*Good Article |
EU-NATO IMPERIALISM ❌ 