82 comments on How Would You Manage Saudi's Reserves?
Comments can no longer be added to this story.
| Show without comments | PDF version
82 comments on How Would You Manage Saudi's Reserves?
Comments can no longer be added to this story.
| Show without comments | PDF version
Search The Oil Drum with Google
Support The Oil Drum
Recently on TOD:World
TOD:Campfire
TOD:Europe
- Peak Gold, Easier to Model than Peak Oil? - Part I
- Carbon Capture and Storage
- Oilwatch Monthly November 2009
TOD:Canada
- In this house, we obey the laws of thermodynamics!
- The Round-Up: October 24, 2008
- Compressed Air Energy Storage - How viable is it?
TOD:Australia/NZ
- International Energy Agency calls 'Peak' on OECD Oil Demand
- Australian Senate: Peak Oil motion defeated 31:6
- The Bullroarer - Friday 20th November 2009
TOD:Net Energy
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- Early Warning
- The Energy Blog
- European Tribune
- GraphOilology
- Health After Oil
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- The Big Picture
- Calculated Risk
- The Crash Course
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
Peak Oil Primers
Beware email scams!
Beware email scams claiming to be from this site. We do not have any job openings. If anyone contacts you about a job at The Oil Drum, do not reply to them, and definitely do not give them any personal information or send them money. Read more here.
“Of all races in an advanced stage of civilization, the American is the least accessible to long views… Always and everywhere in a hurry to get rich, he does not give a thought to remote consequences; he sees only present advantages… He does not remember, he does not feel, he lives in a materialist dream.”
—Moiseide Ostrogorski (1902, 302-303)
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Nate Hagens, Gail the Actuary, Prof. Goose
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Heading Out, jeffvail, JoulesBurn, Sam Foucher, Robert Rapier
- TOD:Campfire: Glenn, Jason Bradford
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
- Emeritus: Stuart Staniford
- Technician: Super G
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
GAIA Host Collective
Suppose KSA has indeed a lot of oil left.
Would you like the rest of the world to know?
Well it is quite obvious that Saudi wants the world to think that they have enough oil to last for hundreds of years. Dr. Nansen G. Saleri, head of Aramco's reservoir management, says Aramco's reserves are larger than anyone else imagines. He says they have 900 billion barrels of reserves.
See bottom sidebar in this New York Times article for Saleri's estimates:
So Richard, Saudi Arabia obviously wants the world to think they have an enermous amount of oil left. And Saleri's estimate should prove to everyone that they are wildly exaggerating their reserves.
Why are they doing that Richard? I put the question back to you.
Ron Patterson
I was never happy with this argument:
"any of saudis customers could pick up the phone and offer to purchase more crude"
OK Robert- Whats the phone number?
Lets try a little thought experiment ourselves. If its so easy, you`re in the oil business, you must know the number. Tell us or try the following yourself:
Call the number and offer to buy loads more oil. There are only two possibilities:
If the Saudis say "Sorry no, we can`t", you have your answer right there.
If the saudis say "No problem, where do you want it", you say "only kidding" and slam the phone down- no harm done. Either way we will know the true situation.
Of course nobody "just picks up the phone " and calls the saudis for more oil! If you want oil you buy it on the spot market like everybody else. You say "I want 100,000 barrels" and the broker says "I can do that at the current price of xx.xx" If you agree the deal is done.
Of course, every time a deal like that is done,(buy), the price creeps up a little for everybody else. Thats what determines the price.
TB
Telephone: 966-3 872-0115
Fax: 966-3 873-8190
Telex: 801220 A SAO SJ
Cable: ARAMCO DAMMAM
E-mail: webmaster@aramco.com
OK Robert- Whats the phone number?
Believe me, our crude traders are in contact with Aramco constantly. If they need crude, they call. Simple as that.
If you want oil you buy it on the spot market like everybody else.
False. Saudi doesn't sell on the spot market. They have customers. If they go out and say "We have crude, but no buyers" and somebody actually needs crude, they are going to call. And if Saudi says "You know what, we really don't have it" or "Well, what we have is this tarry crap", it is going to leak to the press just like it did when they cut allocations to Asian refiners. A number of them reported this "off the record."
Has anyone ever put together a compelling case that they were actually lying? Shouldn't someone, if they are going to make that charge? I have detailed exactly why I don't think they were lying over that particular incident. Believe me or not, but their claim would have been verified or falsified the next day.
But there I go. I said I wasn't going to debate this again, and there I go. No more from me on that. Think they were lying if you wish. But don't feel compelled, by any means, to actually build a case.
RR-Thanks for responding! Actually a very robust response - and you called my bluff on the spot market thing, obviously you know a lot more than I about it. (and I learnt something).
However, I am not making a case that they are lying. (Notice I said Either way we will know the true situation).Its the logic behind the argument I am questioning.
If someone does make that phone call, you have it that if they "really don`t have it" that information would leak to the press, but if the DO really have it that information would not leak to the press? That is illogical! Surely the information would leak either way.
No need to respond, I understand your reluctance to debate this, But the logic is flawed, without taking sides.
TB
the big hole in your argument is that a few million bbls either way of Saudi production makes that much difference in the short run. And yes, the info either way would bleed into the press. There are just too many people who spend their lives talking to each other re nominations, price formula, etc. You gotta do something to fill the day.
If no Saudi customer wishes to expand their nominations or load at the upper range of their month's allocation, Saudi isn't just going to over produce to knock the price down. Unless they are trying to send a message to the rest of OPEC not to cheat on quotas or to knock out non OPEC investment. The need to do that is over as everyone else is pretty much maxed out and non OPEC can barely keep production stable in the face of field declines. This ain't the 80's anymore.
tennisball,
I like your logic though....
Let's get the same kind of openness going in all energy industries.
Example: I go to dozens of websites of advanced battery companies that claim they build these miracle batteries, 15,000 cycles with no loss of output, half the size and weight of lead acid batteries or ni cad...recharge in minutes, etc, etc....
O.K., where's the phone number, what's the price, what's the minimum order to get them?
So many of them make claims, but what they don't tell you on the pretty web site is that the public cannot buy these batteries, and in fact, some of them have never been sold to an outside customer at all....:-(
If folks say "we have it" let's have them price it, and sell it....and give us the connection to buy it. It is only in the last few decades that enterprises can survive for decades without ever selling a thing!
RC
Oh yes we have oil, but if you want some now it will have to be this heavy sour stuff. the API of imports from KSA has been going up.
I have been thinking that sour oil is behind this "market is well supplied" line that the Saudis have been using. After all, it's not their fault if they're offering crap and no one is buying, right?
I've raised this issue a couple of times here and it never seems to get answered. If they have crummy oil and no one can refine it, then both sides are right:
1. They have oil but no buyers
2. They don't have oil for people who want it.
These high prices are for light sweet crude. What is the spread today between WTI and the worst Saudi tar?
ROTFLMAO. Cheers Robert, you have just made my day! :)
Ron,
Well, I mean: Nobody really knows how much oil KSA has. They claim to have a lot, but nobody is fooled with the trick they pulled back in the '80.
So is it in the interest of KSA to clear up the question how much oil they really have (i.e. have it audited etc)?
I don't think so.
Suppose they really do have all this oil. Then oil would drop back to 20 US$ a barrel
Well then they are behaving like mad men. They want no one to know how much oil they have yet they are screaming to the world, and to the New York Times, "we have 900 billion barrels of reserves!"
And no, oil would not drop to $20 a barrel if people believed that absurd claim. The cornucopians are saying we have over 3 trillion barrels of oil left. The financial news networks have been repeating that line. Yet oil is over $90 a barrel.
It matters not one whit how much oil is in the ground, and it matters even less how much oil people think is in the ground. What matters is how much oil is extracted! That, Richard, is what determins the price of oil, not what people think may be in the ground.
Ron Patterson
I agree with Ron. The conventional wisdom is that the Saudis have hundreds of billions of barrels of oil left. Ron and I are in the tiny minority that disputes this position.
Actor Robert Wuhl has a great HBO program on historical myths and legends. He quotes a great line from the American Western "The man who shot Liberty Valance." To wit, "When the legend becomes fact, print the legend."
Almost everyone has been "printing the legend" about Saudi reserves, until Matt Simmons started questioning the numbers.