“Sign the petition now.” Amnesty International calls for King Salman to be addressed

An analysis published on the American “Bloomberg” confirmed that Saudi Arabia’s ability to produce more oil is less than the US administration expected, and perhaps even less than the Saudis themselves expected, which ‘ may be an indication of the continuation of global energy problems for long periods in the future.

While Saudi Arabia has clearly refused to answer the question “What is the maximum production limit the Kingdom can pump”, or at least keep the answer secret, Saudi Crown Prince Mohammed bin Salman has finally replied that this limit 13 is. million barrels per day.

Statistics show that the average Saudi crude production in 2021 was 10.7 million barrels per day, which is the highest pump level ever, and this coincides with the declarations of the Saudi Crown Prince that the whole world, not just the Kingdom of Saudi Arabia, must invest in fossil fuel production over the next two decades to meet rising global demand and avoid energy shortages.

The analysis sees the refuge of the world’s largest oil producer to such an announcement, as a worrying sign.

In 2020, Riyadh commissioned state-owned oil giant Saudi Aramco to launch a multi-year, multi-billion dollar program to increase its maximum production capacity to 13 million barrels by 2027.

This plan differs from previous ambitions announced by the Saudis in their desire to expand production capacity to 15 million barrels per day.

All of these estimates are radically different from previous figures released by Aramco executives at CSIS Research Center in Washington in 2004, when they claimed that the company could maintain production levels of 10, 12 and 15 million barrels per day for 50 years if necessary.

At the time, Riyadh was fighting the views of the late economist Matt Simmons, author of the much-discussed book Twilight in the Desert: The Next Saudi Oil Shock and the Global Economy, in which Simmons argued that Saudi Arabia was on the brink of peak oil production.

Reasons for advertising

According to the analysis, one of the reasons why Saudi Arabia is now setting a low production ceiling could be climate change, and that it is not sure of the growth in demand for oil in the future, and therefore decision makers in Riyadh can see it is so foolish to spend billions of dollars on new production capacity that may not be needed.

In his speech, the Crown Prince stressed the “importance of reassuring investors” that policies “do not pose a risk to their investments” to “their reluctance to invest.” To avoid investors, because it is a term that also covers the interests of the Kingdom of Saudi Arabia. ”

A decade ago, then-Saudi Energy Minister Ali al-Naimi said Saudi Arabia would be “happy” to pump more than 9 million by early 2020, explaining: “Realistically based on all the predictions I have seen, including ours, is no call for us to exceed 11 million barrels by 2030 or 2040.

But the reality is more positive than that veteran official expected. Aramco will increase daily production to just over 11 million barrels next month.

While Saudi Arabia may revise its investment plans in the face of increased demand, the crown prince’s announcement of the limit may indicate that there is another reason to set this limit: geology.

For years, Saudi Arabia has been advertising new oil fields to compensate for the natural depletion of its old reservoirs, and the authorities have allowed Ghawar, the world’s largest oil field, to operate at low rates, as it seeks to increase production capacity and not just compensate. for natural declines.

Over the years, Aramco has had to rely more and more on more expensive offshore fields, and Riyadh may be less confident in its ability to add new oil fields, as Ghawar field itself pumps much less than the market assumes, after expected production around 5 wash. million barrels, Aramco revealed Its production did not exceed 3.8 million barrels per day.

And if the obstacle to increasing production is geology, and not pessimism about future demand for oil, the world will face a difficult period as consumption becomes stronger than currently expected.

At present, the peak of Saudi production is relatively out of reach for at least the next five years, according to urgent questions whether Riyadh will be able to maintain its current production of 11 million, something he has done only twice in its history and for a short time. period.

The world is highly dependent on three crude oil countries: the United States, Saudi Arabia and Russia, and together they make up almost 45% of the world’s total oil reserves.

With U.S. investors unwilling to finance more investments, U.S. production growth is slower than it was in the first decade of the twenty-first century with expansion in the future.

In the era of climate change, according to the author of the analysis, increasing Saudi oil production will be more important, but if Riyadh can not exceed the limit he set for his production capacity, many countries will be forced to invest in low -carbon energy such as nuclear energy and wind energy, or if Due to continuous rises in oil prices, faster inflation and slower economic growth, the author advises to follow the first path until we are obliged to submit to the second option.

Leave a Comment