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The oil resources of the GCC states

There are no surprises in the recent British Petroleum report which provides statistics pertaining to main energy resources. The report, which is considered as a main reference in this field, confirms that Saudi Arabia is the top oil producer and exporter, displacing Russia from pole position, with the average Saudi petroleum production reaching 11.5 million barrels a day in 2013. Certainly, Saudi Arabia has been, and still is, the biggest exporter of crude oil but what is new is that it is now also the biggest producer.

In any case, the three larger crude petroleum-producing countries are Saudi Arabia, Russia and the United States of America, with 13.1 per cent, 12 per cent and 10.8 per cent respectively of the world's total oil production.

More broadly, the Gulf Cooperation Council (GCC) states together produced 24 per cent of the world's total crude oil production in 2013. There is nothing significant about this but on top of that, it is believed that Saudi Arabia has the potential to enhance its oil production when necessary. The ability of Saudi Arabia to compensate global oil markets was manifest clearly during the past few years when oil exports from Libya and Syria were interrupted and in response to the Western boycott of Iranian oil.

The truth of the matter is that the GCC states have the desire, the potential and the ability to invest huge amounts of money in oil production. This is considered vital in light of the rising global economic growth and the subsequent rise in demand for petroleum and petrochemicals, especially by the world's biggest economies such as those of the US, China and India. It suffices to point out that the GCC states control 36 per cent of the world's sovereign wealth and therefore have the capacity to enhance the level of petroleum production.

As for reserves, and contrary to what is widely propagated, Venezuela and not Saudi Arabia possesses the largest crude oil reserves, with 17.7 per cent of the global reserves compared to Saudi's 15.8 per cent. Even so, Venezuela is down in the list of oil producers because it produces only 2.6 million barrels a day, 3.3 per cent of global oil production and much lower than Saudi Arabia's 11m barrels. What is certain is the existence of such huge oil reserves that it is unnecessary to explore for any more.

Other GCC states also possess large crude oil reserves estimated to be as follows: Kuwait 6 per cent, the United Arab Emirates 5.8 per cent, Qatar 1.5 per cent and Oman 0.3 per cent. In total, the GCC states control around 30 per cent of the world's crude oil reserve and that definitely adds to the relative global importance of the Gulf petroleum sector. More precisely, the GCC states possess an oil reserve estimated to be around 500 billion barrels which comprises around 41 per cent of the total reserves of OPEC, which includes some of the biggest oil producers in the world such as Iran, Venezuela and Libya.

Then there is the issue of natural gas, of which Qatar possesses a reserve estimated to be 25 billion cubic metres, thus occupying third place at the global level. This is considered to be an additional gain for the Gulf region. According to the report, Iran comes in first place with a gas reserve estimated to be about 18.2 per cent followed by Russia at 16.8 per cent and then Qatar at 13.3 per cent.

Furthermore, Qatar is significant in one important aspect in the gas industry and that is specifically to do with liquefied gas which makes up 31 per cent of the global gas trade. The truth is that Qatar is the undisputed biggest exporter of liquefied natural gas in the world, controlling about 32 per cent of the market. The list of countries that import Qatari liquefied natural gas include Japan, South Korea, India, Spain, Britain and the US.

Retrospectively, Japan was the first country to sign a deal for the import of liquefied natural gas from Qatar. The deal was concluded in 1992 with Jopo Electric Power Company. The first cargo was shipped to the Japanese company in 1997. That was the cargo that launched Qatar's economy into a new stage of development and growth.

The BP report affirms that Qatar was the most important exporter with regard to the growth in liquefied natural gas in 2013. Qatar's capacity for liquefied natural gas production is, at the moment, around 77 million tons annually. It has the potential to enhance its liquefied natural gas production capacity should the laws of supply and demand warrant this.

It may not be common knowledge that Saudi Arabia also possesses a relatively large reserve of natural gas estimated to be 4.4 per cent of world reserves. This definitely enhances the position of the Kingdom in the entire petroleum sector considering that it is already the biggest crude oil producer and has the second largest oil reserve.

Undoubtedly, car fuel and diesel oil as well as other petrochemicals are considered vital for the global economy; it is difficult to find alternatives. Perhaps it is not even necessary to search for alternatives since crude oil reserves are in abundance and are expected to last up to 200 more years. This estimate takes into consideration current global production. The above reserve figure refers to that of the Gulf countries.

As such, the talk about shale oil as a likely alternative or competitive is unrealistic taking into account the relatively high cost of production of a single barrel of shale oil compared to conventional GCC oil. It would require oil prices to be quite high to justify commercial production of shale oil. This would definitely not be good for importers.

 

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.

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