Saudi Aramco chief optimistic on oil supply

May 17, 2005
Saudi Arabia and Saudi Aramco can tap massive reserves to increase oil production to help meet growing worldwide demand, said Abdallah S. Jum'ah, Saudi Aramco president and chief executive officer.

Paula Dittrick
Senior Staff Writer

HOUSTON, May 17 -- Saudi Arabia and Saudi Aramco can tap massive reserves to increase oil production to help meet growing worldwide demand, said Abdallah S. Jum'ah, Saudi Aramco president and chief executive officer.

In a May 16 address at Rice University's James Baker III Institute, Jum'ah cited the US Energy Information Administration's projection that US oil demand will grow from 20.6 million b/d to nearly 28 million b/d by 2025 and noted that US production is expected to drop by almost 1 million b/d during that period.

The EIA forecasts that Saudi capacity will need to grow from its current 11 million b/d to over 23 million b/d to meet world demand.

Jum'ah said it's difficult to say whether this call on Saudi crude will materialize.

"Nevertheless, the Kingdom is uniquely positioned, because of its reserves and resources, to consider raising its production by such a margin," he said.

Just as Saudi Arabia has relied on US expertise to help develop the Saudi oil industry, the US has relied on Saudi Arabia for much of its energy, Jum'ah said.

"There are some observers who have decried this dependence and questioned, first, the continued need for the strategic reliance on Saudi petroleum and, secondly, the reliability of that supply," Jum'ah said. "I wholeheartedly disagree with those views."

Reserves
He noted that Saudi Arabia has proved reserves of 260 billion bbl in addition to probable and possible reserves of 100 billion bbl. Upon questioning from the audience, Jum'ah stood by the accuracy of those figures.

"There is absolutely no disagreement between our professionals and other oil and gas professionals pertaining to our reserves," he said.

Meanwhile, an aggressive exploration program is under way that could add 200 billion bbl, he added. "We have adopted a long-range view in our reservoir management strategies in order to maximize the ultimate recovery from our fields."

In 70 years of operation, Saudi Aramco never failed to meet a supply commitment for operational reasons, he noted. The energy interdependence of Saudi Arabia and the US is a unifying, positive influence rather than a source of tension, he said.

Natural gas
When asked about Saudi Arabia's plans to develop LNG or to use gas-to-liquids technology, Jum'ah said that the nation is consuming all the gas that it currently produces.

"Gas is fueling the Saudi economy today," he said. The gas is used in petrochemical and water desalination plants.