The six-nation Gulf Cooperation Council is the undisputed global leader in energy resources, a fact that should provide comfort to many stakeholders.
The new edition of BP Statistical Review of World Energy offered some surprises concerning the oil production of GCC counties at large. Amongst others, Saudi Arabia has overtaken Russia as the leading oil exporter in the world in 2011.
Traditionally, Russia led the world in terms of oil output with Saudi Arabia serving as the undisputed largest oil exporter. At the moment, the kingdom enjoys supremacy in both production and exporting of oil. However, Saudi Arabia has given way to Venezuela with respect to the amount of proven oil reserves.
Saudi Arabia alone accounted for 13.2 per cent of total oil output in the world in 2011 against 12.8 per cent of Russia. The other leading oil producers were the US, Iran and China by virtue of accounting for 8.8 per cent, 5.2 per cent and 5.1 per cent, respectively. In spite of their notable production levels, both the US and China stand out for being leading key oil importers to meet domestic demand.
In retrospect, Russia and Saudi Arabia accounted for 12.9 per cent and 12 per cent of global oil output in 2010, respectively. The change serves as testimony of Saudi Arabia’s willingness to compensate the international oil market from disruption of output elsewhere such as Libya in 2011. The revolution in Libya disrupted normal flow of oil for several months, but Saudi Arabia in particular came to the rescue.
In fact, major oil importers look up to Saudi Arabia to make up for possible disruption to the international oil market caused by sanctions imposed by the US and EU on Iran, the world’s fourth largest oil producer. And much to the delight of Saudi Arabia’s treasury, the tension over Iran’s nuclear programme helps keeping oil prices relatively high, thereby providing an added reason for steady output.
Understandably, developments in the petroleum sector are paying off in terms of ensuring substantial additional revenues. Against this backdrop, Bloomberg has projected a notable 4.8 per cent real inflation in Saudi Arabia’s economy in 2012. Within the GCC economies, only the GDP of Qatar outgrows that of Saudi Arabia. However, Qatar is noted for going on spending spree as part of efforts to prepare the country for World Cup 2022.
Oman’s oil output
Happily, steady rise on oil output and production capabilities are not limited to major producers like Saudi Arabia but others as well, notably Oman. According to the June 2012 issue of BP Statistical Review of World Energy, the Sultanate’s oil production amounted to 715,000 barrels per day (bpd) in 2007 only to increase to 891,000 bpd in 2011.
The performance partly reflects the development at Mukhaizna oil field. Looking back, Occidental of the US and its partners won a concession back in 2005 to develop the field after committing themselves to invest some $2bn, as part of efforts to increase Mukhaizna’s production to 150,000 bpd. Clearly, the innovative production sharing agreements are paying off well.
Nevertheless, a marginal change has occurred last year with regards to the location of proven oil reserves, with Venezuela overtaking Saudi Arabia as the largest depositor of proven oil reserves. According to the same source, Venezuela and Saudi Arabia controlled 17.9 and 16.1 per cent of oil reserves in 2011, respectively. Nevertheless, Saudi Arabia enjoys global leadership in both output and export of crude oil.
Still, several other GCC countries are noted for enjoying relatively strong deposits of global oil reserves, namely 6.1 per cent in the case of Kuwait and 5.9 per cent for the UAE. Collectively, GCC countries control 494 billion barrels or almost 30 per cent of total proven oil reserves in the world, more so than any other entity. In fact, GCC states hold about 42 per cent of total reserves of Opec cartel, which includes oil giants of Venezuela and Iran.
The GCC region particularly matters to the well-being of petroleum business given the production and exporting capabilities. This partly explains the global interest in maintaining peace and security in this part of the world.
Enormous gas deposits
Apart from oil, GCC states are noted for having significant gas reserves. According to BP’s publication, Qatar’s share of natural gas reserves stood at 25 trillion cubic metre or 12 per cent that of the world. Only Russia and Iran possess more gas reserves than Qatar, namely 21.4 per cent and 15.9 per cent, respectively.
But Qatar serves as the world’s largest exporter of liquefied natural gas (LNG) by boosting a record 77 million tonnes per year in 2011. Qatar’s LNG clients include Japan, South Korea, India, Spain, the UK and the US, to name a few.
Key international energy sources consider Qatar as the major contributor of growth in LNG shipments in 2011. Yet, Qatari authorities have decided to apply brakes on further increases of LNG output in order to consolidate gains from existing output levels. Certainly, Qatari authorities cannot overlook some fundamental constraints including weak economic growth in EU countries and the notable fallout of Greek’s debt problem. Still, other bearings on gas consumption relate to purported belief of relatively high gas prices, warm weather and growth of renewable energy sources.
Altogether, GCC member states Saudi Arabia and Qatar are world players in the export of oil and gas, respectively, something that provides comfort to concerned stakeholders like consuming nations and oil traders is the fact that they are willing to adjust output if and when needed.