THE IEA says Saudi Arabia will continue to play a vital role in balancing the global oil market and that its willingness to make timely investment in new production will be a key determinant of future price trends.
It notes that five major onshore projects – Khurais, Khursaniyah, Hawiyah, Shaybah and Nuayyim, which collectively hold 13billion barrels of reserves – are in the final phases of development and are projected to provide a total gross capacity addition of close to 3million bpd by 2015. Expansions of the Zuluf, Safaniyah and Bern fields could give further momentum to Saudi output.
“There are 6.2billion barrels of reserves in 11 other known fields in Saudi Arabia that have yet to be developed – the highest in the world,” IEA says in the milestone WEO 2008 report.
“Each holds reserves of at least 150million barrels and the average is 450million barrels. The largest known undeveloped field, Hasbah 1, holds 1.8billion barrels.”
But it warns that part of the increase in gross capacity will be offset by the decline in capacity at existing fields. Saudi intends to sustain long-term spare capacity in the range 1.5-2million bpd.
There is caution regarding Iraq; it has huge potential, but great instability, though on balance, output is recovering gradually following the war in 2003. It is pointed out that Iraqi production has always been low relative to the scale of its reserves.
Indeed, this troubled land harbours the world’s third largest remaining oil reserves, after Saudi Arabia and Iran, with 115billion barrels of oil in the tank, according to Opec.
WEO 2008 says: “Iraq undoubtedly has the potential to increase its production capacity by several million barrels per day.
“On the assumption that security across the country continues to improve, we project production to rise steadily from 2.1million bpd in 2007 to around 3million bpd in 2015 and to accelerate to 6.4million bpd in 2030.
“This projection implies a five to sixfold increase in investment in the upstream oil sector. Achieving this will hinge on political stability and providing opportunities for foreign oil companies on satisfactory commercial and fiscal terms.”
The report adds that oil and NGL (natural gas liquids) production potential in Iran is also very large.
Output will fall to 4.1million bpd in 2010, largely because of delays in implementing new projects, but is forecast to recover to 4.4million bpd by 2015 and jump to 5.4million in 2030.