“The great Saudi hope is a dud”

According to Business Week: *

Will Saudi Arabia manage to raise their production to 12.5 million barrels per day? BusinessWeek has a reliable source that says the Saudis can not ramp up their production nearly as much as they claim they will.

But the detailed document, obtained from a person with access to Saudi oil officials, suggests that Saudi Aramco will be limited to sustained production of just 12 million barrels a day in 2010, and will be able to maintain that volume only for short, temporary periods such as emergencies. Then it will scale back to a sustainable production level of about 10.4 million barrels a day, according to the data. BusinessWeek obtained a field-by-field breakdown of estimated Saudi oil production from 2009 through 2013. It was provided by an oil industry executive who said he had confirmed it with a ranking Saudi energy official who has access to the field data. The executive, who has proven reliable over several years of reporting interaction, provided the data on condition of anonymity to protect his access to the kingdom and the identity of the inside contact who confirmed the information.

Among those who dismiss Peak Oil fears oil reserves in Saudi Arabia were supposed to provide so much increased production that world oil consumption could continue to rise along with economic growth and increasing demand. But the great Saudi hope is a dud…

…On oil matters, the kingdom’s credibility has been clouded by intense secrecy. The Saudis, for instance, refuse, unlike Russia, Venezuela, and Norway, to release detailed assessments of their oil reserves, which has made many skeptical. “They are just a bunch of empty boasts,” Matthew Simmons, chairman of Houston investment bank Simmons & Co. International, says of the kingdom’s recent promises of 12.5 million barrels a day. He is also skeptical of Saudi reserve estimates.

One dramatic part of the data concerns a site called Ghawar, which has been the kingdom’s workhorse field for decades. It shows the field producing 5.4 million barrels a day next year, but the volume then falling off rapidly, to 4.475 million daily barrels in 2013. “That’s why Khurais is so important—to make up for that decrease,” said the oil industry executive who released the data. He was referring to a supergiant field that is to come online later this year and produce an estimated 500,000 barrels a day of crude. In last month’s gathering in Saudi Arabia, officials of the kingdom told journalists that Ghawar had produced just under 5 million barrels a day from 1993 through 2007.

Mainly the data show flat production; apart from the addition of Khurais and a heavy oil field called Manifa, no increases appear in any of the fields during the next five years. Production at Manifa is to begin in 2011 with 125,000 barrels a day, according to the data, and rise rapidly to 900,000 barrels a day two years later. Though 2014 is not included in the data, one of the fields listed—Shaybah—is to have a volume increase to 1 million barrels a day that year, from 750,000 barrels a day from 2009 to 2013, according to the oil executive.

Still, despite its enormous reserves and bullish statements, Saudi Arabia appears likely to fall well short of the daily production it has targeted in the near term.

Maybe it wasn’t such a good idea to invest all of our hopes and dreams in the hub of world terrorism. But, now that we know better, isn’t it about time we told them to f*ck off?

* Link thanks to Instapundit, who also has good news about solar.

Advertisements

About marypmadigan

Writer/photographer (profession), foreign policy wonk (hobby).
This entry was posted in Uncategorized. Bookmark the permalink.

31 Responses to “The great Saudi hope is a dud”

  1. But they still have a lot of oil, right? They just aren’t able to produce 15 million barrels a day, just 10 or 11 million.

  2. mary says:

    As I’ve said before, it would be good if we would stop groveling before the Sauds, and treat them like we treat China and Russia. I thought the obsequious behavior was motivated by the delusion that they could ‘ramp up the oil’, and keep the price under control.

    If the government’s groveling behavior isn’t motivated by that false promise, maybe there’s some other reason. Maybe some weird sadomasochistic thing?

  3. I thought the obsequious behavior was motivated by the delusion that they could ‘ramp up the oil’, and keep the price under control.

    Why would you think that? Isn’t ten million barrels of oil a day enough power and wealth already? That’s 1.4 billion US a day in oil flowing out of Saudi Arabia.

  4. mary says:

    So, do you think that this obsequious behavior is rational and justifiable? Should it continue?

    Russia and China are genuine economic powerhouses, yet we tell them to f*ck off every once in a while.

    Oh, if you’re a fan of the death penalty and the torture of foreign nationals, you’ll like Saudi Arabia even more when you read this:

    From a report by Amnesty International:

    According to an Amnesty International report on capital punishment, Saudi Arabia executed the third highest number of people in 2007. China, who executed at least 470, was first; followed by Iran (317). In 2007, Saudi Arabia executed 143 people, which was a drastic increase from the total in 2006 (37). The report also notes that Saudi Arabia was one of three countries who executed child offenders in 2007. Also, in 2007, at least 76 of the 143 people executed were foreign nationals.

    Saudis have executed 48 people this year, by beheading, as is their tradition. These figures don’t mention the number of people who had limbs amputated or were whipped. According to Saudi Arabia’s primary executioner, there’s always a lot of leg and hand chopping.

    Our moderate and vital allies.

  5. Russia and China are genuine economic powerhouses, yet we tell them to f*ck off every once in a while.

    China is a powerhouse that the US is indebted to, so I haven’t heard the US tell them to fuck off in quite a long time.

    Oh, if you’re a fan of the death penalty and the torture of foreign nationals, you’ll like Saudi Arabia even more when you read this:

    When you say things like this, I start to seriously wonder about you. As I’ve said dozens of times, I know that Saudi Arabia is a human rights hell-hole, where slavery, rape, torture, executions, and all manner of medieval nonsense go on all the time. My brother worked in SA, and I’ve know two people who grew up in SA.

    Why do you keep assuming that I don’t know all this, and what does it have to do with the topic? Saudi Arabia is treated with kid gloves by your government because it holds your economy hostage, and makes your ruling elite rich. And as more and more of your wealth is transferred there, it and other Gulf states looking for investment opportunites will come to control a large part of your financial sector.

  6. mary says:

    Saudi Arabia is treated with kid gloves by your government because it holds your economy hostage, and makes your ruling elite rich. And as more and more of your wealth is transferred there, it and other Gulf states looking for investment opportunites will come to control a large part of your financial sector.

    So why do you disagree when I say that we should change our course?

  7. mary says:

    ..oh, and I knew that you had relatives working in the KSA. I assumed that this was why you were arguing in favor of continuing the US relationship with the KSA.

    I had a friend who worked in Abu Dhabi for a year. He saved up enough money to buy an apartment building, but he found the conditions (and the government) to be so hellish, there was no money on earth that could make him go back. If we sought alternatives to Saudi oil, people wouldn’t be tempted to work over there.

  8. I assumed that this was why you were arguing in favor of continuing the US relationship with the KSA.

    Say what? I have no idea what that means.

    So why do you disagree when I say that we should change our course?

    I am in favor of SA culture and politics changing. Discontinuing relations with SA will not improve conditions there, and will probably make things worse.

  9. mary says:

    I am in favor of SA culture and politics changing.

    ..and you think I’m being unreasonable? SA culture and politics hasn’t changed since Winston Churchill’s day. They still have slavery. They’re still genocidal and they still lash people for drinking alcohol. This is a very traditional culture, and having Americans kiss their asses every day is not going to change things. Giving this culture lots of money has made things worse, by allowing it to spread through the Muslim world.

    If we continue on our current course, this prediction will continue to be true:

    Saudi Arabia is treated with kid gloves by your government because it holds your economy hostage, and makes your ruling elite rich. And as more and more of your wealth is transferred there, it and other Gulf states looking for investment opportunites will come to control a large part of your financial sector

    ..and America will be ruined. So, again, do you think we should change our course?

  10. So, again, do you think we should change our course?

    I’m not entirely sure what “changing course” means, or how it would change anything. The Saudis will still be rich, and they’ll stil be buying your stuff.

  11. mary says:

    Tell me again why we shouldn’t encourage the Russians (or the Chinese) help the Sauds build their nuclear power plants. That would be an interesting change of course.

  12. Tell me again why we shouldn’t encourage the Russians (or the Chinese) help the Sauds build their nuclear power plants.

    I have no idea what you’re referring to, and don’t know how it applies to the question I asked.

  13. mary says:

    Nevermind. Most economists believe that the current bubble economy in the Gulf will burst sooner than later. In the long run, I think our alliance with Saudi Arabia will drag us down, not because they’re so powerful, but because they’re so weak.

    What do you think of Al Gore’s plan to use only Green Energy by the year 2018?

  14. But wait, before we change the subject, I don’t understand what you think the difference will be if the US “changes course” with the Saudis.

  15. mary says:

    I’m not changing the subject. Using only Green Energy would be a course change of sorts.

    Changing the subject again – friends of mine were planning to protest the city’s construction of an Arabic school that was funded by Saudi money. It was also in a very liberal section of town. Since I am kind of lefty, I advised them to avoid any criticism of Arabs or Islam, and to join the local parents, who were protesting the school because it violated school construction regulations.

    I (and probably you) know that lefties will do anything to avoid being called racists. Literally, they would probably rather die. We also (probably) know that the parents were just as worried about the Saudi-funded school, but they didn’t want to say that outright. Instead, they made a fuss about zoning.

    Anyway, I have to wonder if similar concerns aren’t partly behind the whole Green Energy thing. We’re not trying to bankrupt our enemies, we’re trying to save the planet.

    Not that there’s anything wrong with that.

  16. I’m not changing the subject. Using only Green Energy would be a course change of sorts.

    Sure, in about twenty year it’ll make a difference. What I’m wondering about is what change of course now, and how it would improve the problem with the Saudis.

  17. mary says:

    Sure, in about twenty year it’ll make a difference.

    Gore is talking about 2018. That’s ten years from now.

    Given the quagmire that this enemy/alliance has been in since 2001, going green in 10 years would be a tremendous change of course.

  18. So what change of course are you asking for today? Just more alternative energy use?

  19. mary says:

    Right now, that’s all I got.

    Well, confronting their genocidal slaveowning friends in the Sudan is also a good idea. You wouldn’t believe how angry they are about that. The Sauds are also pushing us towards a military confrontation with Iran. That’s a bad idea.

  20. Well, confronting their genocidal slaveowning friends in the Sudan is also a good idea.

    Which ones? JEM? Or the government? Confront how?

    The Sauds are also pushing us towards a military confrontation with Iran.

    Are they also pushing Israel to do the same?

  21. mary says:

    Which ones? JEM? Or the government? Confront how?

    ICC prosecutor won’t back down on Sudan’s Bashir

    The Sauds are also pushing us towards a military confrontation with Iran.
    Are they also pushing Israel to do the same?

    As usual, the Saudi sponsors of 9/11 and the Saudi supporters of Hamas are going to help Israel and the US deal problems in the Middle East. They did such a good job in Lebanon. This is how we’ve always done things, and this is how we’ll continue to do things, which is why there is no political solution to the problems of the Middle East.

  22. mary says:

    Which ones? JEM? Or the government? Confront how?

    ICC prosecutor won’t back down on Sudan’s Bashir

    The Sauds are also pushing us towards a military confrontation with Iran.
    Are they also pushing Israel to do the same?

    As usual, the Saudi sponsors of 9/11 and the Saudi supporters of Hamas are going to help Israel and the US deal problems in the Middle East. They did such a good job in Lebanon. This is how we’ve always done things, and this is how we’ll continue to do things, which is why there is no political solution to the problems of the Middle East.

  23. ICC prosecutor won’t back down on Sudan’s Bashir

    And what about the JEM rebels the government is fighting with? They’re Bin Laden-loving Jihadist Islamists.

    As usual, the Saudi sponsors of 9/11 and the Saudi supporters of Hamas are going to help Israel and the US deal problems in the Middle East.

    So Israel is doing Saudi Arabia’s bidding?

  24. mary says:

    And what about the JEM rebels the government is fighting with? They’re Bin Laden-loving Jihadist Islamists…So Israel is doing Saudi Arabia’s bidding?

    The Saudis have a history of stirring up trouble in the area, then ‘fixing’ it (at great expense to us, Israel and Britain) to prove their worth. Now they don’t even bother fixing things. They just mess stuff up, get the price of oil to go up, and enjoy the profits. And we play the game, for whatever reasons.

    Trying to understand Middle EAst politics is like trying to clean up a moldy, dusty garage. When you pick up one disgusting thing, there’s more disgusting stuff underneath it. And when you move that, something crawls up your leg.

    The difference is, when the garage is cleaned, it stays clean for a while. The Middle East (and the British/American history of ‘fixing’ it) is built on a mass of moldy crawly stuff.

    Did you read the Michael Young piece MJT linked to? OMG. I hope Young is paid well for wading into that mess. And that’s just a small part of it.

  25. They just mess stuff up, get the price of oil to go up,

    In this case, I’m really not sure how they have got the price of oil to go up. Explain please.

  26. mary says:

    How much oil were we getting from Iraq during the sunni-led ‘insurgency’? How many other small, Islamist-led insurgencies are attacking oil workers and pipes here and there? What will happen to the price of oil if there’s an attack on Iran? And why did Khaddafi put a hit out on Prince Abdullah?

  27. :How much oil were we getting from Iraq during the sunni-led ‘insurgency’?

    Way more now than five years ago when oil was cheaper. It hasn’t effected the price substantially.

    How many other small, Islamist-led insurgencies are attacking oil workers and pipes here and there?

    Again, these kinds of things have not substantially influenced the supply or the price. Besides, why would Saudi Arabia go to all the expense of funding insurgencies to cut the oil supply when they could simply cut their production in half and accomplish the same thing?

    Besides, high oil prices work against Saudi Arabia in the long run, as it makes alternative enrgy more viable.

    In short, what you’re suggesting doesn’t make any sense.

  28. mary says:

    ..why would Saudi Arabia go to all the expense of funding insurgencies to cut the oil supply when they could simply cut their production in half and accomplish the same thing?

    Because that wouldn’t work anymore. During the 70’s and early 80’s Saudis had more control over the (tighter) oil supply, but now (despite what the New York Times says) no nation has genuine, significant leverage over price. Besides, the Saudis have a policy of not being a hemmoroid to us.

    However, Wall Street guys read the Times, and Wall streeters regularly freak out over any remote threat to the price of oil. If a bomb goes off in Nigeria, they panic. If there’s a thunderstorm off the Straight of Hormuz, they panic.

    It is a fact that Saudi Arabia is funding these terrorist militias and it is a fact that they’ve been profiting from many thousands of murders worldwide. Since their society is based on jihad, hate and oil profits, there just might be a connection.

    Of course, they don’t want the price to get too high, because then we seek alternates. Which may explain why the focus of the war has switched from Iraq to Afghanistan..?

  29. During the 70’s and early 80’s Saudis had more control over the (tighter) oil supply…

    Really? In what way?

    …but now (despite what the New York Times says) no nation has genuine, significant leverage over price.

    Really? What would happen to the price if Saudi Arabia decided to stop pumping oil for a while?

    It is a fact that Saudi Arabia is funding these terrorist militias and it is a fact that they’ve been profiting from many thousands of murders worldwide.

    So then why was the price of oil lower when oil production was cut off in by insurgency attacks in Iraq, and higher now that they’ve been reduced and more oil is flowing??

  30. Mary Madigan says:

    What would happen to the price if Saudi Arabia decided to stop pumping oil for a while?

    What would happen if we bombed Riyadh or called King Abdullah a sponsor of terrorism? It’s never going to happen.

    So then why was the price of oil lower when oil production was cut off in by insurgency attacks in Iraq, and higher now that they’ve been reduced and more oil is flowing??

    Because grownups with thriving economies and some measure of sanity in China and India are raising demand worldwide. We’ve been paying so much attention to Iraq, Iran, the lunacy in the Middle East, and ‘global warming’, we ignored the inevitable growing demands for food and fuel.

    I’m not saying that the Saudis plan works, I’m saying that controlling oil profits is one reason the Saudis are financing bloodshed and jihad worldwide.

    Since their only talents are jihad, propaganda and profiting from oil, they use them as they can.

  31. Mary Madigan says:

    What would happen to the price if Saudi Arabia decided to stop pumping oil for a while?

    What would happen if we bombed Riyadh or called King Abdullah a sponsor of terrorism? It’s never going to happen.

    So then why was the price of oil lower when oil production was cut off in by insurgency attacks in Iraq, and higher now that they’ve been reduced and more oil is flowing??

    Because grownups with thriving economies and some measure of sanity in China and India are raising demand worldwide. We’ve been paying so much attention to Iraq, Iran, the lunacy in the Middle East, and ‘global warming’, we ignored the inevitable growing demands for food and fuel.

    I’m not saying that the Saudis plan works, I’m saying that controlling oil profits is one reason the Saudis are financing bloodshed and jihad worldwide.

    Since their only talents are jihad, propaganda and profiting from oil, they use them as they can.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s