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Leaking in Persian Gulf: “WikiPeak” Oil?


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?”) . . .


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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