By Syed Rashid Husain
ALMOST a decade ago, there was a lot of discussions and debate all around, about Ghawar, its capacity and potential to keep on producing at the current levels. Located in Al-Ahsa Governorate in the Eastern Province of Saudi Arabia, Ghawar is the largest and one of the very few existing super giant oil fields of the world. Measuring 280 by 30 km (174 by 19 miles), it is by far the largest conventional oil field in the world and producing crude for more than a half a century now.
In current times too, despite all the talks of water being flooded into Ghawar, and in large quantities, to keep producing, as per some estimates, Ghawar is producing somewhere around five million barrels a day. That is a significant portion of the total global output representing – almost 50 percent of the total cumulative Saudi daily output.
With people like Matthew Simmons, and his ‘Twilight in the Desert’ still on the global stage then, the argument was that Ghawar will peak in the near future if it has not done so already.
Fatih Birol, the current Executive Director at the Paris-based International Energy Agency, then serving as the chief economist of the IEA, the energy watchdog of the OECD, when asked about his opinion on Ghawar continuing to be able to meet the growing global crude demand, underlined in very clear terms that Saudi Aramco is a professional organization and that he believed in what they are saying and asserting.
Saudi Arabia continues to produce at elevated levels, in fact at historical levels, even after a decade. And there is no indication of slowing down – as yet.
Saudi Aramco announced recently announced privatization plans, with share market listing next year. Most pundits underlined that the move could require Saudi Aramco to open up.
But with an IPO on cards, investors would need to look at audited figures. They would need to know the asset base – from an authentic, independent source.
Saudi Aramco would open up and fulfill the needs and requirements of the potential investors.
These assurances were coming from none else than Prince Mohammad Bin Salman, the Deputy Crown Prince who also heads the Council for Economic and Development Affairs. Prince Mohammad Bin Salman is also regarded as the brains behind the ‘Vision 2030’ and the potential IPO of Saudi Aramco is an integral and essential part of that vision.
And now that promise has been fulfilled.
Saudi Aramco has undertaken an external audit of its reserves base. And the external audit of the oil reserves of Saudi Aramco has confirmed that Saudi Arabia has more than 261 billion barrels of oil reserves, Reuters reported on January 27, citing sources in the know.
A day before, the news broke out that Saudi Aramco had hired two US firms - a unit of Baker Hughes and a Dallas-based reserves auditing firm to look into how much oil reserves it really has. Saudi Aramco had tasked Baker Hughes’ energy consulting services unit Gaffney, Cline & Associates, as well as Dallas-based DeGolyer and MacNaughton, to perform the reserves auditing, various sources told Reuters. Sources quoted by Reuters now say that the audit by both the companies was completed late last year.
The independent audit of the Saudi reserves base takes care of a gap in the global energy database. According to Aramco’s own estimates, the Saudi oil giant has 261.1 billion barrels of crude oil and condensate reserves. According to the BP Statistical Review of World Energy, Saudi Arabia’s total proved reserves were 266.6 billion barrels at the end of 2015.
And now the independent audit has confirmed that. According to two sources, the audit has found that the reserves were “definitely not below” Aramco’s own estimates. “Aramco’s reserves have always been reported internally in line with international practice,” another source familiar with the issue told Reuters.
Fatih Birol had a point. Aramco remains a professionally competent body – and the independent audit of its reserves base confirms that – once again.
