Flow Level Pressure
Can Saudi Arabia Really Dominate Hydrocarbons?
Jul 25 2020 Read 423 Times
Despite the turbulent state of the oil and gas industry, Saudi Arabian Energy Minister Prince Abdulaziz has made buoyant claims the Kingdom will soon emerge as the largest hydrocarbon producer in the world. “I can assure that Saudi Arabia will not only be the last producer, but Saudi Arabia will produce every molecule of hydrocarbon and it will put it to good use,” he asserts.
“It will be done in the most environmentally sound and safe way and the most sustainable way,” said Abdulaziz during an online conference organised by the country’s Future Investment Initiative Institute (FII) based in Riyadh. Referring to the oil market outlook in 2050, Abdulaziz assured virtual attendees Saudi Arabia “will be the last and biggest producer of hydrocarbon even then.”
Saudi Arabia eye status as global hydrocarbon leader
In 2019, the Energy Information Administration (EIA) estimated Saudi Arabian oil production was around 11.81 million bpd. This includes crude oil, as well as petroleum liquids, natural gas plant liquids, condensate and biofuels. The figure represents a significant 12% of total world production, giving Saudi Arabia major traction when it comes to ramping up operations and emerging as the global leader in hydrocarbons by 2050.
Analysts also refer to Saudi Arabia’s close relationship with Russia, which produces around 11% of the world’s hydrocarbons. If the pair can work together to stabilise oil prices and balance the global supply and demand chain, the results could be hugely lucrative.
Despite sitting on one of the largest reserves of crude oil in the world, Saudi Arabia hasn’t released plans detailing how it will extract these resources. There are plans to develop natural gas production infrastructure over the next few years though how this will be executed is also unclear.
United States poses major challenge
Of course, the United States could pose a challenge and has a history of opposing OPEC production quotas. The country produces a huge 19.51 million barrels of oil per day, representing 19% of global supply. Other major oil-producing countries not currently engaged with Saudi Arabia and OPEC include Canada and China. Failure to control output from the United States, Canada, China and other big oil producing nations could jeopardise Saudi Arabia’s plans to become the world’s biggest hydrocarbons producer by 2050.
According to the EIA, OPEC nations will produce just 56% of the world’s hydrocarbons in 2050. While this doesn’t align with Saudi Arabia’s plans to become the world’s biggest producer within the next 30 years, Abdulaziz remains confident.
Saudi Arabia’s plans will undoubtedly be affected by the COVID-19 pandemic. To find out more about how the outbreak is impacting the global oil and gas industry don’t miss ‘ATEX and IECEx Covid-19 and Brexit’ with insight from Ron Sinclair on behalf of SGS Baseefa.
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