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Saudi oil stock exaggerated by 40 percent: WikiLeaks

Posted by on February 10, 2011 0 Comment

London, Feb 10 (IANS) The estimated stock of oil in Saudi Arabia was 40 percent higher than the country’s actual reserve, which according to the US is not enough to check the rising fuel prices across the globe, secret diplomatic cables have revealed.

US diplomat was convinced by a Saudi expert that reserves of the world’s largest crude oil exporter have been overstated by as much as 300 billion barrels – nearly 40 percent, the Guardian said citing one of the cables released by whistle-blower website WikiLeaks.

The cables sent from US embassy in Riyadh during 2007-09 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.

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 him that Aramco’s 12.5m barrel-a-day capacity needed to keep a lid on prices could not be reached.

According to the leaked cables, 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 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.

One cable said: “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 percent are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.

The US consul then told Washington: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”

Seven months later, the US embassy in Riyadh went further in two more cables.

“Our mission now questions how much the Saudis can now substantively influence the crude markets over the long term. Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.”

A fourth cable, in October 2009, claimed that escalating electricity demand by Saudi Arabia may further constrain Saudi oil exports.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel amid tensions in the Middle East.

Analysts expect that the Saudis and other oil producing countries would pump more oil if rising prices threatened to choke off demand.

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