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WEEKLY NEWSLETTER
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Saudi Arabia
Index
Saudi Arabia has been described as the world "mother lode" of
oil and gas reserves. Estimates for 1990 placed total oil
reserves of the kingdom at 261 billion barrels. Saudi Aramco
controlled all the reserves within the country's borders with the
exception of reserves in the Divided Zone, which were controlled
by Getty Oil Company and the Arabian Oil Company. Total oil
reserves have risen steadily since oil was discovered in 1938.
During the 1970s and 1980s, estimates of total oil reserves grew
by nearly 91 percent from 137 billion barrels in 1972 (see
table 6, Appendix). The comprehensive reassessment of existing reserves
boosted Saudi Arabia's share of world reserves to 25.8 percent.
At 1992 production levels, these oil reserves would allow oil
production for almost eight-four years.
Until the mid-1980s, all the oil that had been discovered had
been found in the Eastern Province. Aramco had found forty-seven
oil fields, including some during the 1970s in the Rub al Khali.
The world's largest oil field, Al Ghawar, located in the Al Ahsa
region of the Eastern Province, is 250 kilometers long and 35
kilometers wide at its greatest extent. The field is so vast that
names have been given to separate subsections such as Ain Dar,
Shadqam, Al Hawiyah, Al Uthmaniyah, and Harad. Discovered in
1948, the field began output in 1951. By 1990 Al Ghawar had 219
flowing wells. Saudi Arabia also possessed the world's largest
offshore field, As Saffaniyah, located in the gulf near Kuwait
and the Divided Zone. As Saffaniyah was discovered in 1951, began
output in 1957, and by 1990 had 223 flowing wells. Of the four
fields discovered before Al Ghawar--Ad Dammam, Abu Hadriyah,
Abqaiq (also seen as Buqayq), and Al Qatif--only Abqaiq and Al
Qatif were still producing in 1990. Abqaiq had forty-seven
flowing wells. The major producing fields discovered after Al
Ghawar, mainly in the 1960s and early 1970s, are offshore and
include Manifah, Abu Safah, Al Barri, Az Zuluf, Al Marjan, and Al
Khafji in the Divided Zone
(see
fig. 6). Saudi Arabia had a total
of 789 flowing wells during 1990, up from 555 producing wells in
1983.
Figure 6. Major Oil Fields, 1992
The quality of crude oil flowing from these wells is based on
density (measured by gravity standards established by the
American Petroleum Institute--API) and the amount of sulfur and
wax it contains. Light crude oil is generally more desirable and
commands a higher price because it yields more high-value
products such as gasoline and jet fuel. Several Saudi fields,
including those in the Divided Zone, contain heavier grades by
international standards. Al Ghawar field produces crude ranging
from API gravity 33 degrees to 40 degrees, which is considered
light crude oil in the kingdom but is generally heavier than most
international light crude oils. As Saffaniyah produces heavy
crude oil with API gravity ranging from 27 degrees to 32 degrees.
The historical production pattern until the early 1980s
contained greater proportions of light and very light crude oils.
By the mid-1980s, government policy sought to adjust output
between heavy and light crude oils to reflect actual users of
each, so that the kingdom would not exhaust its supply of light
crude oils. Estimates for 1991 showed that this balance was not
achieved, however; Extra Light (from Al Barri field) and Arab
Light (crudes from Abqaiq, Al Ghawar, Abu Hadriyah, Al Qatif, and
others) recorded production levels close to 70 percent of total
output of 8.2 million bpd, whereas Arab Medium (from Az Zuluf, Al
Marjan, Al Kharsaniyah, and other fields) and Arab Heavy (from As
Saffaniyah, Manifah, and other fields) production levels
approached 11 percent and 19 percent, respectively. In the early
1990s, the consensus was that after capacity was expanded, the
split between light and heavy grades would shift to 10 percent
more heavy crude oils, despite recent discoveries of very light
grades south of Riyadh. During the 1980s, technological
developments in refining narrowed the differentials between light
and heavy crudes. Therefore, the traditional price disadvantage
that the Saudis faced was steadily being erased because of the
more sophisticated refineries being brought on line.
Saudi crude oils also contain high sulfur levels. Crude from
Al Ghawar has sulfur content ranging from about 1.9 percent to
close to 2.2 percent by weight, which is generally considered
high. As Saffaniyah crude's sulfur content is even higher at
above 2.9 percent by weight. Sulfur compounds are undesirable,
often contaminating crude oils and corroding processing
facilities.
Data as of December 1992
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