WASHINGTON, 29 April 2004 — Officials from Saudi Arabia's oil industry and the international petroleum organizations shocked a gathering of foreign policy experts in Washington yesterday with an announcement that the Kingdom's previous estimate of 261 billion barrels of recoverable petroleum has now more than tripled, to 1.2 trillion barrels.
Additionally, Saudi Arabia's key oil and finance ministers assured the audience — which included US Federal Reserve Chairman Alan Greenspan — that the Kingdom has the capability to quickly double its oil output and sustain such a production surge for as long as 50 years.
"During times of turmoil, when the world has needed more crude oil, Saudi Arabia has worked without fanfare to promote stability in world markets," Saudi Minister of Petroleum and Mineral Resources Ali Al-Naimi told the 300 attendees at a conference on US-Saudi energy relations co-sponsored by the US-Saudi Arabian Business Council and the Center for Strategic and International Studies.
"We have made a commitment to use our spare oil export capacity — even when it is stressful to our economic stability — in order to create a 'cushion' that maintains a balance in the global market," he said.
"Saudi Arabia now has 1.2 trillion barrels of estimated reserve. This estimate is very conservative. Our analysis gives us reason to be very optimistic. We are continuing to discover new resources, and we are using new technologies to extract even more oil from existing reserves," the minister said.
Naimi said Saudi Arabia is committed to sustaining the average price of 25 per barrel set by the Organization of the Petroleum Exporting Countries. He said prices should never increase to more than 28 or drop under 22.
"This is a fair price to consumers and producers. But, really, Saudi Arabia and OPEC has limited control on world markets," said Al-Naimi.
"Prices are driven by other factors: Instability in key oil producing countries; industry struggles to produce specialized gasoline; and the resulting strains on refineries to meet local demand."
"Saudi Arabia's vast oil reserves are certainly there," Naimi added. "None of these reserves requires advanced recovery techniques. We have more than sufficient reserves to increase output. If required, we can increase output from 10.5 million barrels a day to 12-15 million barrels a day. And we can sustain this increased output for 50 years or more. There will be no shortage of oil for the next 50 years. Perhaps much longer."
Greenspan said he found Naimi's news "most interesting," but during his luncheon speech the Fed chairman cautioned that in order for the United States to sustain economic growth it must increase importation of natural gas products as a hedge against rising energy prices.
"(We need a) massive expansion of liquefied natural gas shipping terminals and (must) develop new offshore re-gasification technologies," said Greenspan, who also warned that the economic growth of China is driving up the global demand - and cost - for steel, coal, oil, and natural gas.
Naimi said Saudi Arabia is acutely aware of the rising demands from China's booming economy.
"People are underestimating Chinese demand for natural gas imports," he said. "But we are ready to meet their demands but not at the expense of Saudi Arabia's oil markets, particularly the US and Europe."
Naimi said internal security is an additional concern to Saudi Arabia, which — according to Abdallah S. Jumah, president of Saudi Aramco — has required the Kingdom's largest oil company to hire 5,000 people to protect its fields, pipelines and terminals."