The Guardian has a story on Wikileaked cables from the US Embassy in Riyadh this morning, which record conversations between the US Consul-General in Riyadh and Sadad al-Husseini, the former head of exploration at Saudi Aramco, the state-owned oil monopoly in the country. The first cable, from November 2007, is quoted as saying that:
In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.
Al-Husseini disagrees with this analysis, believing Aramco’s reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output.
While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.
Seven months later, another cable:
Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.
The author of the Guardian analysis, John Vidal, also paraphrases the cables as reporting that,
Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point.
Of course, none of this will come as any great surprise to GD readers – we first picked up on questions about “whether … Saudi Arabia hasn’t got any spare capacity to give” back in April 2008.