Riyadh rejects US claims its oil wealth is depleting

Saudi Arabia has sought to reassure global markets by rebuffing recent claims by US experts that it is not an oil superpower and its crude wealth is depleted.

State-owned Saudi Aramco, one of the biggest oil companies in the world, made a detailed presentation to the International Energy Agency (IEA) at a global oil meeting in Paris last week and said it has the ability to hike output by two million barrels a day in just a few days.

Aramco sent its oil reserves chief to Paris to dispel growing world fears triggered by the US allegations and assure the IEA that the Kingdom controls nearly a quarter of the world's recoverable oil reserves and is capable of meeting any future supply gap.

"Saudi Arabia can immediately produce around 10 million bpd for one full year without having to use its rigs to boost capacity," said Amin Naser, who made the presentation to IEA and other western oil officials about Aramco's proven oil reserves.

"Aramco can use some rigs in case we want to continue producing that amount for more than a year. We have the capacity to reach 15 million bpd by carrying out expansion of some fields and we can produce that amount for 50 consecutive years."

Oil analysts said Naser's assertions to the IEA, published in the Saudi press, would help prevent crude prices from spiralling in the long term as markets are banking on Saudi Arabia's mammoth oil resources to fill the growing demand-supply gap.

Although it is believed to possess 25 per cent of the world's oil, Saudi Arabia currently produces only 10 per cent of the global crude supplies of nearly 80 million bpd.

But its share is projected to surge to more than 15 per cent in 2015 and over 20 per cent five years later as international demand is expected to grow by at least 40 million bpd and supply sources from outside the Middle East are gradually eroding.

"We have proved to them that we possess nearly 25 per cent of the world's extractable crude deposits and that the quantities we are extracting from those deposits are far lower than international extraction rates," Naser said.

"Assuming that we do not reinforce our available oil deposits through exploration and discoveries, Saudi Arabia will still be able to produce at least 15 million bpd for 15 years, depending on its proven reserves without having to increase those reserves in place."

Naser said he also made assurances about the Kingdom's ability to finance oil capacity expansions on the grounds production and expansion costs in Saudi Arabia and other gulf states are among the lowest in the world.

"We gave them different scenarios about such expansions. They include reaching a sustainable capacity of 12 million bpd and then 15 million bpd. We also explained to them that we are able to go beyond that level," he said.

He gave no figures on investments needed for such projects but said between $2.5 billion and $3 billion will have to be pumped in to increase capacity to 15 million bpd for 10 years along with unspecified funds needed to maintain the present capacity.

According to Saudi government estimates, the Kingdom has invested at least $52 billion in its oil sector over the past 20 years to support its crude output capacity.

The investments picked up during 1990s as Riyadh stepped up an exploration and development programme at its giant oilfields as it sets off to regain its prestige in the market.

The figures by the Saudi Arabian Monetary Agency, SAMA (Central Bank) showed the oil investments accounted for nearly 8.5 per cent of the overall gross fixed capital formation of 2.27 trillion riyals ($606.5 billion) during that period.