The old story of Saudi oil reserves
With over 260 billion barrels of proven oil reserves, a quarter of the world`s total, Saudi Arabia is not only the top foreign supplier to the United States - the world`s largest energy consumer - but also essentially the sole source of liquidity in the oil market. According to the Department of Energy`s Energy Information Administration (EIA), the world will become more dependent on Arabian oil in the next two decades. To meet global demand for oil, Saudi Arabia will need to produce 13.6 million barrels a day (mbd) by 2010 and 19.5 mbd by 2020. Both the International Energy Agency and EIA assume Saudi oil output will double over the next 15 to 20 years.
The old story questioned by Matthew R. Simmons, March 2004
In a new study soon to be released, Matthew R. Simmons, president of Simmons and Company International, a specialized energy investment banking firm, contends that this is not likely to happen. He argues that Saudi Arabia`s oil fields now are in decline, that the country will not be able to satisfy the world`s thirst for oil in coming years and that its capacity will not climb much higher than its current capacity of 10mbd.
Simmons analyzed 200 technical papers on Saudi reserves by the Society of Petroleum Engineers and his work was peer reviewed by a dozen senior technical experts. What he discovered tells a different story than the conventional wisdom.
May 20, 2004 - the market believes Matthew R. Simmons not Saudi Arabia
The Saudi announcement on Monday of increasing output was only one day and one dollar good. The proof that the market doesn`t believe the old story anymore is the fact that oil price soared 96 cents to 41.50 dollars a barrel, five cents shy of the record close set Monday.
Gasoline roared 6.34 cents higher to a record close of 1.4503 dollars for a gallon of regular unleaded to be delivered in June.
Historic document from 1999 about the state of G-7 oil reserves