The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.Emphasis mine. Also...
The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.
However, 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.and
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.
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.I note that in this independent forensic analysis, in May 2007, I estimated the remaining reserves in Ghawar, and argued that they were overstated by about 40%:
"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 official figure is the leftmost column, while my estimate is labelled "Staniford". After much back and forth, Euan Mearns and I had come up with similar numbers (see his "Base" case).
At the time, Euan and I were introduced by email to Sadad al-Husseini by the ASPO-USA guys, and he did not feel comfortable confirming to us that Saudi reserves were overstated. But apparently, he did feel comfortable confirming that to US diplomats in private. Also, it appears that I got the degree of overstatement pretty much correct.
Update: see important clarification on the numbers here. It's not clear to me where the Guardian is getting 40% exactly.