SAUDI ARABIA - Part 1 - The Prospects & Geology.

Saudi Arabia has a sustainable capacity to produce more than 10.5m b/d of oil. This is being expanded to reach more than 12.5m b/d by 2006. A study published in 2001 by the Energy Information Agency of the US Department of Energy expects Saudi Arabia's capacity to rise to 14.7m b/d by 2010, to 17.7m b/d by 2015 and to 22.1m b/d by 2020, projecting world oil demand to rise from 78.7m b/d in 1998 to 87.7m b/d by 2005, to 96.6m b/d by 2010, to 105.6m b/d by 2010 and to 115.4m b/d by 2020.

The kingdom's proven oil reserves are still put at 261.2 bn barrels, an official estimate made in late 1994, despite major oil deposits found in the past seven years. The national oil company, Saudi Aramco, is placing emphasis on natural gas in a major exploration programme. It has exceeded the aim of adding 5 TCF of proven non-associated gas reserves every year. Saudi Aramco's recently released data showed that proven gas reserves stood at 219 TCF at end-2000, including about 86 TCF of non-associated gas (see Gas Market Trends). Major gas fields found in recent years are to be developed by three Western consortia under deals reflecting the most far-reaching policy change announced in a generation (see profiles of the oil and gas fields in Part 2).

With an area of 2.24m sq km, Saudi Arabia's population exceeds 23m. With its growth rate being the highest in the world, this is expected to double in less than 25 years. The country's energy base is expanding rapidly to cope with this increase, with demand for gas rising by 7% per annum and electricity demand to jump from 26,600 MW to almost 60,000 MW by 2020. Major economic reforms introduced encourage foreign investment in the energy base and all the other sectors (see Downstream Trends).

Upstream oil projects include development of new oilfields, new installations such as major gas-oil separation plants (GOSPs), and EOR systems for parts of the Ghawar axis of fields which have begun to decline due to a fall in reservoir pressure. Production streams to be expanded are those for the lighter oils. More of the fields producing heavy oil have been mothballed.

Saudi Aramco has a bold strategy for oil exports and a flexible pricing approach, with Riyadh leading OPEC's effort to keep oil prices defended (see Part 3). Saudi Aramco's overseas oil refining and retail assets, held in partnership with big players on both sides of Suez, are increasing steadily (see Part 4).

The decision makers for petroleum sector are headed by King Fahd Ibn Abdel Aziz who, despite his old age and health condition, continues to be the chairman of a supreme council. But the day-to-day ruler is Crown Prince Abdullah Ibn Abdel Aziz, his half-brother, who leads an impressive team of pragmatists (see who's who in Part 5).