179 comments on And how is Saudi Arabia getting on? (or more evidence of a deteriorating situation...)
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HO,
Thxs for the reply. If 800,000 is the annual figure--without discovering big, new virgin oilfields to exploit--that seems like an impossible depletion amount to overcome by infield workovers [no matter what the extraction tech level applied].
If this number is true-- can it be reverse-engineered, or more accurately, reverse calculated back into a HL graph to show what reserves can be expected to be extracted at a meaningful production level? Khebab & WT?
I am predicting a long term net decline rate of about 4% per year for KSA, perhaps more sharply at first if Ghawar is crashing.
Hi WT/Jeffrey,
And an export decline rate of...?
The decline in net exports from 12/05 to 12/06 will be, IMO, at least 13%, perhaps as high as 15% (in one year).
westexas,
In regards to declining exports brought about by rising internal consumption, what are your thoughts on the possible chaotic influences brought about by those decreasing exports and actual geological peak? That is, as exports decline and more is consumed internally, the producing nation generates less revenue such that its citizens are less wealthy, thereby softening demand. Past peak, those nations are going to want to keep their citizens happy, thereby given them first rights to the oil and perhaps causing a rapid drop in exports - again less revenue generated by the producing nation and softening internal demand. This drop in wealth may also push those producing nations into modes of internal conservation to protect their exports, and bring their revenue back. Do you see these scenarios as a valid reasons why declining net exports may not wind up particularly dramatic?
Substrate,
I cannot speak for Westexas, but I do see one huge questionable premise in your question:
Just because the quantity of oil that an oil-exporting country exports is declining does NOT mean that the revenue from these exports declines.
For example, exports decline thirty percent in volume while oil prices double: Result, declining volume of oil exports combined with great increase in export revenue.
Because oil is highly price inelastic (especially in the short run) such a scenario of declining volumes with increasing revenues is highly plausible.
And there is another problem with Substrate's reasoning. Lost revenue from exports due to rising internal consumption does not necessarily mean less wealth. It depends on how the oil is used.
I don't hold out much hope that many, or any, of the principal exporters of oil will find productive domestic employment for the source of work they currently export in massive quantities, but it remains possible that they will do so.
I've noticed that the EIA has made three different forecasts for SA Productive Capacity (PC) according to three prices scenarios (data here):
The high price scenario is actually forecasting a much lower productive capacity. I don't know the exact reason but it's probably lower demand.
Just because the quantity of oil that an oil-exporting country exports is declining does NOT mean that the revenue from these exports declines.
shhhhh!!...you weren't supposed to notice that. If the price of oil got high enough though, it'd probably dampen/destruct the economies in the importing countries bringing the price back down again. Also inflation throughout the world might render the new money less valuable.