Oil supplies are of vital importance to the Kingdom. Consistent flow of Saudi oil is central to global markets and to the health of the Kingdom itself. Saudi Arabia is the world’s largest exporter of crude oil and has consistently ranked as one of the top three producers (along with the United States and Russia, in recent years). Such is the importance of Saudi production for world markets that its national oil company, Saudi Aramco, claims to maintain redundancy in its crude-oil supply system to offset any supply disruptions that may result from sabotage, technical failure or natural disaster (see section 2.2). Furthermore, despite its leading role in the OPEC cartel, the Kingdom goes to great lengths to communicate its stabilizing role in the global marketplace. These efforts have been evidenced in recent years in its spearheading of consumer-producer dialogue, its agreement to host the International Energy Forum Secretariat in Riyadh’s diplomatic quarter and its financial support of the initiative.
Saudi Arabia produced an average of 11.6 million barrels per day (mbpd) of total petroleum liquids in 2013, of which 9.6mbpd was crude oil and 2mbpd was non-crude liquids production (natural-gas liquids, NGLs). Petroleum export revenues account for roughly 80% of budget revenues, 45% of GDP and 90% of export earnings. In 2013 export revenues amounted to $274 billion, according to the Energy Information Administration (EIA).
It is thus for the maintenance of stability, both internal and external, that the confluence of interrelated factors governing the Kingdom’s oil supplies are so closely monitored by governments, analysts and other stakeholders.
Oil and gas production complex in Saudi Arabia
Maintaining Saudi Arabia’s huge oil output requires a sophisticated network of wells, pipelines, crude processing facilities and export terminals, which function around the clock to serve the global oil markets. The bulk of Saudi production originates from onshore and offshore fields in the Eastern Province (al-Sharqiya; see Map 2 for location of major oil and gas wells). The Kingdom maintains the world’s largest crude-oil production capacity, estimated to have reached about 12.5mbpd by the end of 2014. Saudi Arabia has the world’s largest oilfield, Ghawar, which, alone, is capable of producing 5mbpd, according to Aramco. Aramco also claims that the offshore Safaniya field, with a production capacity of 1.2mbpd, is the world’s largest offshore field.
The viscosity of the crude oil in Saudi fields ranges from super-light to heavy types, with the largest portion in the light range (33° to 34° on the API gravity scale). Lighter grades are generally produced onshore, while medium and heavy grades come mainly from offshore fields. Most Saudi oil production, except for the extra-light and super-light types, is considered sour, that is, it contains high levels of sulphur.
Saudi Arabia’s proven reserves are a matter of some contention. Aramco cites a figure from Oil & Gas Journal of 259.9 billion barrels (bbbl) of proven conventional reserves (excluding reserves in tar sands, shale or tight oil). This is about twice as much as the next-largest conventional crude-oil reserves, those of Iran (at 138.4bbbl), and nearly 25% of world conventional reserves. Given production levels, outside observers’ estimates before the nationalization of Aramco, evidence presented by Aramco at public forums and anecdotal evidence, it is reasonable to assume that Saudi Arabia’s conventional reserves are by far the largest in the world, even if the actual number is imprecise.
Saudi Arabia has 7.45 trillion cubic metres (m3) of proven reserves of natural gas, according to Aramco, though an independent assessment has it slightly lower, at 7.32 trillion m3. These are the fourth largest in the world, behind Russia, Iran and Qatar. Most of Saudi Arabia’s gas (about 57%) is in associated fields, that is, fields that contain layers of both oil and gas, including some fields mentioned above, such as Ghawar and Safaniya. Some important non-associated fields (the red areas on Map 2) are Mazalij, Manjura, Shaden, Niban, Tinat, al-Waar and Fazran. There have recently been two new natural-gas discoveries offshore, Rabib and Arabiya, which boosted Saudi reserves. The first non-associated offshore gas field to be developed is Karan, where five platforms are under development. Production of the field is expected to be 45 million cubic metres (MCM) per day.
Saudi Arabia also produces natural-gas liquids (NGLs) – butane, ethane and propane – that are stripped out at downstream separation plants (discussed in the next section) and condensate, a mixture consisting primarily of pentanes and heavier hydrocarbons that is recovered as a liquid from natural gas in lease separation facilities at the well. NGL production was about 2mbpd in 2013, constituting a significant percentage of total production.
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