Saudi Arabia, the world’s top crude oil exporter, will not have additional capacity to increase production above the 13 million barrels per day (bpd) it has pledged to have by 2027, Saudi Crown Prince Mohammed bin Salman told the leaders of the United States, the Gulf Cooperation Council (GCC) states, Jordan, Egypt, and Iraq at a summit this weekend.
“We also stress the importance of continuing to inject and encourage investments in fossil energy and its clean technologies over the next two decades to meet the growing global demand, with the importance of assuring investors that the policies adopted do not pose a threat to their investments to avoid their reluctance to invest and to ensure that no shortage of energy supply would affect the international economy,” Crown Prince Mohammed bin Salman said in his address.
“The Kingdom will do its part in this regard, as it announced an increase in its production capacity to 13 million barrels per day, after which the Kingdom will not have any additional capacity to increase production,” he added, as carried by the Saudi Press Agency.
Last year, Saudi Arabia said it expects to have boosted its oil production capacity to 13 million bpd by 2027 from 12 million bpd now.
Earlier this year, the Saudis confirmed this target, with Energy Minister, Prince Abdulaziz Bin Salman, telling TIME in an interview, “We are targeting our production capacity to become 13.4, 13.5 million barrels a day by 2027.”
At the Jeddah summit, the Saudi crown prince also criticized the growing backlash against fossil fuels, saying that “The adoption of unrealistic policies to reduce emissions by excluding major sources of energy without taking into account the resulting impact of these policies on the social and economic pillars of sustainable development and global supply chains will lead in the coming years to unprecedented inflation, rise in energy prices, increase unemployment and exacerbate serious social and security problems, including an increase in poverty and famine and crime rates, extremism and terrorism.”
By Tsvetana Paraskova for Oilprice.com
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So when Saudi Arabia says it is now producing 10.0 mbd, it means that only 6.0-6.5 mbd are actually produced with the balance of 3.5-4.0 mbd coming from its stored oil, a practice the Saudis can’t maintain for long as it depletes their stored oil and this deprives them from any means to influence the global oil market and prices. Moreover, more than 90% of Saudi production comes from five giant but aging oilfields (Ghawar, Safaniya, Hanifa, Khurais and Zuluf ) which are more than 74 years old and which are being kept producing by huge injections of water.
Saudi Arabia is now saying it will have a production capacity of 13.0 mbd by 2027. This is impossible because by then Saudi actual production would have declined from an estimated 6.0-6.5 mbd today to 4.98-5.40 mbd and consumption would have risen from 3.54 mbd in 2020 according to the 2021 BP Statistical Review of World Energy to 4.0 mbd in 2027 leaving only 0.98-1.4 mbd to export. To have a production capacity of 13.0 mbd, the Saudis will have to withdraw some 7.6-8.0 mbd from their stored oil. At this rate they will deplete it in less two weeks.
According to my research and calculations, Saudi proven oil reserves which have given the Kingdom strategic, geopolitical and economic influence in both the global oil market and the global economy are estimated currently at 41.4 billion barrels (bb).
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert