World

WikiLeaks: Saudi Arabia Drastically Overstated Oil Reserves

The latest unauthorized revelation from diplomatic cables released by the online site WikiLeaks may have major implications for the price of oil. According to diplomatic cables released Tuesday, the United States fears that Saudi Arabia — the world’s largest crude oil exporter — may not have enough oil reserves to prevent oil prices from escalating, the UK’s Guardian reports.

The leaked cables originated in America‘s embassy in Riyadh and reveal that a senior Saudi government oil executive estimates that the Kingdom’s crude oil market reserves may have been overstated by as much as 40 percent — the equivalent of 300 billion barrels.

The startling revelation comes as the price of oil has soared to more than $100 a barrel in recent weeks due to rising global demand and tensions in the Middle East which threaten to disrupt supply lines.

Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.  According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12m barrels a day in 10 years but before then – possibly as early as 2012 – global oil production would have hit its highest point. This crunch point is known as “peak oil”.

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

One cable said: “According to al-Husseini, the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described, and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.”

It went on: “In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.

“Al-Husseini disagrees with this analysis, believing Aramco’s reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output.”

The US consul then told Washington: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”

Later cables also suggest the fears of “peak oil” were very real threats.  “Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term,” one U.S. cable out of Riyadh said.  “Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.”

Another note, from October 2009, claimed that rising demand in Saudi Arabia could further complicate supply to meet the American demand for oil:

“Demand [for electricity] is expected to grow 10% a year over the next decade as a result of population and economic growth. As a result it will need to double its generation capacity to 68,000MW in 2018,” it said.

It also reported major project delays and accidents as “evidence that the Saudi Aramco is having to run harder to stay in place – to replace the decline in existing production.“ While fears of premature ”peak oil” and Saudi production problems had been expressed before, no US official has come close to saying this in public.

Comments (10)

  • smalldog
    Posted on February 11, 2011 at 7:29am

    I remember older stories, I’m thinking over 10 years ago, when much of this work and estimation was done by Americans that suggests the same thing. The oil in the Middle East would run out much sooner than anyone knew.

    They were discredited at the time, and I would imagine that for those wanting to take advantage of the shortages, and make some money, they would have had no reason to act.

    It seems like speculators make money on bad news. If you know bad news is coming, and can profit, why let everyone in on the secret?

    Report Post »  
  • spreadcommonsensenot pc
    Posted on February 10, 2011 at 9:47am

    America is being “bleedout” by regulation——thats the progressive way

    Report Post »  
  • historypaper
    Posted on February 9, 2011 at 12:45pm

    Saudi Aramco cannot defend itself. The U.S. will be forced into another war, this time Obama war.

    Report Post » historypaper  
  • LukeAppling
    Posted on February 9, 2011 at 10:14am

    America is the only nation on earth that has unlimited oil and gas reserves and has allowed the misfits of the country to stop our use of them. If you would real “ Power Grab” By Chris Horner or “The Politically Incorrect Guide to Global Warming” among many other such books which detail the outrageous ideas of the “green movement” to redistribute America’s wealth to third world countries. George Soros is funding much of this B.S. with his “one world-society” hairbrained scheme to enrich himself and his friends at our expense.
    This has been laughed at by Al Gore, Joe Biden, Barack Obama and other very smart people, the “elites” as it were, but the stopping of our drilling everywhere, the refusal to permit more refining, the offering of $2,000,000,000 to Brazil by Obama, to “help” them drill offshore while we sit and watch the prices rise and our wealth sent overseas you can see the idea is true and we have been idiots not to believe the facts, of which AL Gore has no relationship.
    Drilling, natural gas, nuclear all can be done quickly while some entrepreneurs develop bio-fuels, if they are cheap and available to replace the fossil fuels at some later date. 2012 will, be here and I will not vote for anyone who is not willing to stand up to everyone who opposes America return to prosperity and low cost fuels. As the global warming fools slink back under their rocks this issue is a winner.

    Report Post »  
  • auburntaylors96
    Posted on February 9, 2011 at 10:06am

    we should already be drilling everything, everywhere…..don’t you think?

    Report Post »  
  • lobster
    Posted on February 9, 2011 at 8:55am

    And the u.S. dramatically understates our reserves…. Good grief, how could we have elected such idiots…

    Report Post »  
  • kramh
    Posted on February 9, 2011 at 6:22am

    We need to produce energy in the US now. One way is to have a compromise that gives most interested groups a bone. First open up our public lands and coastlines to drilling. Since we the taxpayers own this we hire private exploration firms to drill and not sell leases. Next we put out contracts to private contractors to develop the oil fields. We must contract with private bussiness too keep the government as small as possiable. To help keep costs down no Davis- Bacon wages paid or only 60 to 70% prevailing wages to be paid by contractors which would be well paid jobs. We can use US made steel if it is priced fair to world markets. This can be a real jobs program if all concerned are reasonable. We sell the oil on the world market. The profits should be go this way- 50% goes to pay down the principal balance of our 14 plus trillion debt and a balanced budgit amendment will be needed since we can not trust the spenders in Washington – 30% goes to spend on renewable energy such as solar, wind, hydro, nuke etc.- !0% to US schools for research into clean energy- 10% to the states that the drilling takes place. Like any compromise this is not perfect, but it does throw a bone to many different groups. The debt gets paid down, we spend or invest in renewable energy, The schools get money for research for the future to replace the oil with new tech, and the state directly affected get money for their problems.We also would produce real wealth to pay for real wealth producing jobs in this country.

    Report Post »  
    • taskmaster78
      Posted on February 9, 2011 at 8:56am

      Drill baby drill! it’s time to get the DEP, EPA and all who appose drilling out of the way. Take funding away from them whatever it takes. This is going to come to a boiling point, our government due to the NAFTA agreement buy 30% of our fuel from Canada and we can do better then this they are our partners yet we play games with our reserves. I’m not referring to what is stored but the untapped reserves. Clinton closed down one of the riches coal reserves, lets unlock this by removing by executive order the regulations that were put in place. NOW

      Report Post »  
  • QuietRiot
    Posted on February 9, 2011 at 4:29am

    DRILL BABY Drill and dont give us EPA crap and so on it is vital to this nations security and economy we can do others things as well at the same time but we MUST bring the gulf coast back online and hit other places. The steel industry can make out big with materials made for oil wells and so on. We dont need a High speed rail we need oil and other energy. Made, dug, manufactured here.
    Time to get off our butts. We have done nothing and OPEN ANWAR .

    Report Post »  
    • dominke
      Posted on February 10, 2011 at 11:43am

      Liberals have known this for along time. It fits into Obama’s plan. He will use it in his reelection bid. Its not my fault gas is at 5 dollars a gallon,its saudi fault. More BS.

      Report Post » dominke  

Sign In To Post Comments! Sign In

Sign Up For Our Newsletter!

Glenn Beck Radio

Listen to Glenn Beck 24/7 Listen Now
Restoring Love