Saudi Arabia, the biggest oil producer, and Exxon Mobil, the largest oil
company, yesterday declared that the world had decades' worth of oil to
come, in an attempt to calm fears about the record prices experienced in
recent weeks.
Forming a powerful alliance, the Saudi oil minister Ali al-Naimi said, at
an industry conference in Johannesburg, that the country would soon almost
double its "proven" reserve base, while Exxon's president, Rex Tillerson,
spoke of 3 trillion or more barrels of oil that are yet to be recovered.
Mr Naimi said that Saudi Arabia would "soon" add 200 billion barrels to its
current reserves estimate of 264 billion barrels. The level of the
kingdom's reserves and future production capacity are a controversial
issue, with sceptics suggesting that it is running out of oil. Muhammed-Ali
Zainy, of London's Centre for Global Energy Studies, said: "Since these
Opec countries [like Saudi Arabia] are closed, the only information
available is available to themselves alone. So they can come up with a new
reserves figure and the rest of the world will just have to take it."
Mr Naimi also said that there were "no takers" for more oil right now, as a
result of constrained refining capacity. Roughly a quarter of US refining
capacity is still shut after Hurricanes Katrina and Rita struck the
country's southern coast, but global refining capacity - to turn crude oil
into petrol and other products - was struggling to keep up with demand even
before that.
"Give us the customers and we will pump more oil," the Saudi oil minister
told reporters at the 18th World Petroleum Congress, adding that more
refineries needed to be built. He said that enough global output would be
added in the next three to four years to restore "some margin of safety" to
oil markets.
The comments did have a soothing impact on the market. Despite early
reports that Rita has sunk several rigs and left at least nine others
adrift in the Gulf of Mexico, crude oil slipped 75 cents to end at $65.07
in New York yesterday. US petrol prices, however, continued to rise,
leading George Bush to call on Americans to conserve fuel.
[I'm certain someone will correct me if wrong, but only since Rita have I
heard GWB use the word "conserve." I didn't think it was in his vocabulary.]
[Homestead] More oil reserve info,
Gene GeRue, 09/28/2005