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Leaking in Persian Gulf: “WikiPeak” Oil?

Kazakhs call oil "The Devil's Tears"

COMMENT: A recent WikiLeaks State Department cable disclosure gives a boost to the “Peak Oil” hypothesis as well as laying the foundation for a further run-up in the price of oil. Quoting a former Saudi official (who may have been speaking from bitterness), the cable says the Saudis’ oil reserves are very much lower than publicly advertised.

In past discussion of “Peak Oil,” we have noted its genesis with the major cartel firms than control the global economy, as well as the use of theory to justify a Nazi-style elimination of human beings.

NB: It was WikiLeaks, recall, that disseminated the East Anglia documents that lent fuel to the argument that global warming was a myth. It turned out that the documents, as edited, were misleading and that leak served the interests of the petroleum industry and its adherents on the far right.

“Have Saudis Overstated How Much Oil Is Left?” by Vivienne Walt [Time]; Yahoo News; 2/10/2011.

EXCERPT: While the world remains transfixed by the Egyptian revolt, a crisis with equally profound global consequences is quietly brewing elsewhere in the Middle East:  WikiLeaks this week released U.S. diplomatic cables suggesting that Saudi Arabia may have vastly overstated its oil reserves – if true, that could dramatically accelerate the arrival of the long-feared “peak oil” moment, when oil production  hits its final high before slowly declining, keeping prices rising for the foreseeable future and slowing global economic growth. But not all industry analysts are convinced by the claims in the cables.

The diplomatic cables from the U.S. embassy in Riyadh between 2007 and 2009 cite a former senior executive of Saudi Arabia’s state-run Aramco oil company as revealing to American officials that the country’s official estimate of 716 billion barrels of oil reserves is, well, hogwash; the real figure is about 40% lower than that, according to the oil executive, Sadad al-Husseini, a geologist who until 2004 headed Aramco’s exploration department – a seemingly impeccable source. WikiLeaks released the four cables on Tuesday.

As a private citizen no longer representing the company, Husseini was apparently free to speak candidly. And in a November 2007 meeting with the U.S. economic officer in Riyadh, he broke the sobering news that the country’s reserves were nowhere near as big as officials were claiming. “First, it is possible that Saudi reserves are not as bountiful as sometimes described,” the U.S. Consul General John Kincannon in Riyadh wrote to State Department officials in Washington, reporting on Husseini’s analysis, “and the timeline for their production not as unrestrained as Aramco and energy optimists would like to portray.” (Read “Is Peak Oil Coming Soon?”) . . .

Discussion

One comment for “Leaking in Persian Gulf: “WikiPeak” Oil?”

  1. If you got it, flaunt it because you deserve it: It’s the OPEC way. At least now it is according to Saudi Arabia:

    Business Insider
    Saudi Oil Minister Says Russia Doesn’t ‘Deserve Market Share’

    Jim Edwards

    Dec. 22, 2014, 12:10 PM

    Saudi Oil Minister Ali Naimi really got the world’s attention in an interview he gave to the energy journal Middle East Economic Survey (MEES). We told you earlier that Naimi said the Saudis don’t care how low the price of oil goes: “Whether it goes down to $20, $40, $50, $60, it is irrelevant

    What’s interesting though is Naimi’s rationale for not caring. Basically, he told MEES, the Saudis can afford not to care about the low price of oil.

    The Russians, by contrast, cannot afford it because they are inefficient producers who can’t stop pumping even if they wanted to. Low prices are decimating the Russian economy because the country is dependent on oil. That’s driving down the value of the ruble, and making it impossible for Russia to pay its debts. Already, Russia’s central bank has had to bail out one of its private banks. A full scale Russian collapse is increasingly likely. Russia can’t reduce the amount of oil it pumps (which might raise prices) because its oil fields and technology aren’t as good as the Saudis’.

    Everyone is asking whether the Saudis should pump less oil and let the price come up, rescuing nations like Russia who need the price of oil to be $105 a barrel. But why should the Saudis be punished for Russia’s uselessness? Naimi told MEES — via The Financial Times — that Russia doesn’t “deserve market share”::

    It is also a defence of high efficiency producing countries, not only of market share. We want to tell the world that high efficiency producing countries are the ones that deserve market share. That is the operative principle in all capitalist countries.

    You know Naimi is talking about Russia specifically because of the geography he calls out by name:

    … The problem with old fields around the world is that they need continuous investment in new wells, and they cannot shut old wells, because if they do, they will not come back up. So they are wary in that respect, particularly in West Siberia, where they have been producing for a long time and the wells there are declining.

    … I want to make one thing clear. It is unfair of you to ask Opec to cut. We are the smallest producer. We produce less than 40% of global output. We are the most efficient producer. It is unbelievable after the analysis we carried out for us to cut.

    Well, at least now we now that the Saudis see oil producing countries as no longer ‘deserving of their market share’ once alternative forms of energy undercut the cost of oil. Good to know.

    Posted by Pterrafractyl | December 23, 2014, 2:03 pm

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