This excerpt is from a report by Stratas Advisors’ Global Refining & Products service. Subscribers have access to the full report.
Saudi Arabian crude oil production comprises 34% of the Middle East’s liquids output (see the figure below, in which NGL and condensate are reported separately). The Saudi share of total regional production has been increasing in recent years because of supply disruptions of other OPEC members around the world, and it is projected to continue to increase through 2035.
In 2014, Iran, Iraq and Kuwait together produced 31% of the region’s liquids (NGL and condensate produced in these countries is counted in a separate category). Condensate and NGL production in the Middle East is expected to increase by about 53% by 2035 as investments to develop the region’s natural gas reserves continue to increase. This corresponds to an annual increase by 2.0% from 2016 to 2035.
Saudi Arabia’s proven reserves are listed at 267 billion barrels (not including its half of the 5 billion barrels in the Neutral Zone between Saudi Arabia and Kuwait), until recently the largest of any country in the world. Venezuela now reports the world’s highest reserves and, in spite of the questionable nature of this claim, Saudi Arabia has not disputed it. Saudi Arabia has embarked on a long-term strategy to expand its resource base and to increase recovery to 70% through the use of enhanced oil recovery technologies. The long-term upstream strategy is to replace 100% of produced reserves and maintain 1.5 million b/d to 2.0 million b/d spare capacity.
The Ghawar field, subject of much speculation as to its future decline rate, has been on a plateau of about 5 million b/d for many years. Ghawar accounts for about half of Saudi Arabia’s total crude oil production capacity and is the world’s largest oil field. In 2015, Saudi Aramco started injecting carbon dioxide to boost the field’s production.
Saudi Aramco has long-term plans to continue expanding crude oil production capacity despite some recent postponements. Prior to experiencing the full force of the global recession and the resulting significant drop in crude oil demand, the Saudi Ministry of Petroleum and Mineral Resources committed to a capacity target of 12.5 million b/d, but larger increases (to 15 million b/d) were under consideration.
However, because of changes in the crude oil demand outlook as a result of the recession and, more recently, of shale oil developments in the US, the 12.5 million b/d target was recently confirmed as the upper limit of current plans. Nevertheless, Saudi Arabia's aim to keep its market share has resulted in continuously increasing production during the past year.