Saudi Arabia reveals a hidden secret for 40 years … And an American agency: the source of the wealth of the kingdom is blurred

Saudi Arabia's largest oil producer posted record profits of $ 224 billion last year, before its first international bond issue, state-owned Saudi Aramco reported on Monday. Aramco had previously been reluctant to disclose its financial position, but had to disclose it to obtain a public credit rating and start issuing international bonds.

The economics section of the Bloomberg agency reported on oil production in Saudi Arabia, describing it as "the country's secret and the kingdom's source of wealth". He pointed out that "US military planners have been discussing how to take it by force." Saudi oil was a source of endless speculation.

"The market has finally learned that the Ghawar field in Saudi Arabia (the largest conventional oil field in the world) can produce much less than anyone would think," says the IAEA report.

"When Saudi Aramco released its first profit since its nationalization on Monday for nearly 40 years, it also shed light on the secrecy surrounding its huge oil deposits," Bloomberg said in its report, revealing that "Al- Ghawar could pump 3.8 million barrels a day – far below the $ 5 million injected into the market. "

"As the main orebody in Saudi Arabia, the surprisingly low production capacity of the Ghawar deposit is the highlight of the report," said Virendra Chuhan, head of consulting at Energy Impact Limited in Singapore.

King of oil

"Saudi Arabia is supporting a few giant fields to maintain its production capacity of 12 million barrels a day." Energy Information Administration, a US government agency providing statistical information and often used as a standard by the market oil tanker, for Al-Ghwar it was at 5.8 million barrels a day in 2017. "

"The Aramco bulletin did not explain why the production of the Al-Ghawar field had dropped, which represents a significant drop in all oil fields," the report says, adding that the report n & # 39; It also did not indicate whether capacity would continue to decline at a similar pace in the future.

He lost the crown

"The new maximum production rate for Ghawar means that the Bermayan deposit in the United States, which pumped 4.1 million bpd last month according to government data, is already the largest oil producing basin", said Bloomberg. But adds that "the comparison is not precise – the Saudi deposit is a traditional reservoir, while Bramyan is an unconventional rock formation – yet it shows the balance of markets that change their power.

"The Ghawar field is important to Saudi Arabia because it accounts for more than half of the total cumulative crude oil production in the kingdom," according to the report. Saudi Arabia has pumped oil since the discovery of the Dammam No. 7 well in 1938.

"In addition to the Ghawar deposit, discovered in 1948 by an American geologist, Saudi Arabia relies heavily on two other important deposits: Khurais, discovered in 1957, which can pump 1.45 million barrels per day "Safaniya", which was discovered in 1951 and remains today the largest offshore oil field in the world with a capacity of 1.3 million euros.A total, Aramco manages 101 oil fields.

The report says that the 470-page bond issue confirms that Saudi Aramco is able to pump up to 12 million barrels a day – as Riyadh said several years ago – with a capacity of additional production of 500,000 barrels in the neutral zone With Kuwait, and this region does not produce anything because of a political conflict with its neighbor. "

"While the prospectus confirms the maximum production capacity, the division between the fields is different from that assumed on the market.As a policy, Saudi Arabia reserves about one million to two million barrels per day of its Available capacity and only used during wars or disturbances in places Saudi Arabia briefly pumped a record 11 million bpd by the end of 2018. "

"The company is also using this back-up power as an alternative in the event of an unexpected outage in any area and maintaining production levels during routine maintenance in the field," said Aramco.

Costly strategy

"For Aramco, this is a huge cost because it has invested billions of dollars in facilities that are not used regularly," said Bloomberg, adding that the ability to exploit its excess capacity also allowed it to realize significant profits in times of market crisis. An additional $ 35.5 billion from 2013 to 2018. "

"Aramco has also revealed reserves in the five most important areas, revealing that some of them have a shorter lifespan than previously thought, and the Ghawar field, for example, 48.2 billion barrels of oil remaining, which will last another 34 years However, companies are often able to strengthen their reserves over time using new technologies. "

"In total, the kingdom has 226 billion barrels of reserves, which is enough for another 52 years of production and a maximum of 12 million barrels a day," he said.

"The Saudis have told the world that their fields are getting better and better than expected, with" depletion rates rising from 1% to 2% per year ", which is lower than the 5% decline identified by some analysts, "says the report. "However, he also said that some of his reserves – about a fifth of these – were systematically drilled for nearly a century, with over 40% of his oil already extracted, a significant figure."