2007-09-19: TOO DARN HOT: SAUDI EP BOOM REACHING LIMITS?
With temperatures reaching 115 degrees, the Eastern Province of Saudi Arabia is both literally and metaphorically "too darn hot." With vast investments being made in oil and petrochemical projects, post hears constant complaints of shortages of materials, qualified workers, and infrastructure. All of the residential compounds in the Eastern Province with adequate security have long waiting lists. Aramco's CEO in a recent meeting with the CG admitted that one of his most pressing challenges is finding qualified engineers for all of Aramco's new projects. This cable summarizes data suggesting that the enormous economic boom that the Eastern Province is witnessing may be approaching capacity limits.2007-12-10: FORMER ARAMCO INSIDER SPECULATES SAUDIS WILL MISS 12.5 MBD IN 2009
On November 20, 2007, CG and Econoff met with Dr. Sadad al-Husseini, former Executive Vice President for Exploration and Production at Saudi Aramco. Al-Husseini, who maintains close ties to Aramco executives, believes that the Saudi oil company has oversold its ability to increase production and will be unable to reach the stated goal of 12.5 million b/d of sustainable capacity by 2009. While stating that he does not subscribe to the theory of "peak oil," the former Aramco board member does believe that a global output plateau will be reached in the next 5 to 10 years and will last some 15 years, until world oil production begins to decline. Additionally, al-Husseini expressed the view that the recent surge in oil prices reflects the underlying reality that global demand has met supply, and is not due to artificial market distortions.2008-05-07: PRINCE ABDULAZIZ ON ENERGY MARKETS, OPEC LAWSUITS
In a May 6 meeting with Assistant Minister of Petroleum (MinPet) Prince Abdulaziz bin Salman bin Abdulaziz Al-Saud, he outlined the Ministry's latest thinking on record-high crude prices, and OPEC's general refusal to budge on possible production increases. Contrary a few months ago, Prince Abdulaziz promised no relief on production or pricing. He told the Energy Attache that the Ministry was "extremely worried about demand destruction" in the U.S. as a result of the latest financial crisis indicators. However, he also fretted about squeezed refining margins in the U.S. and globally, noting the grave impact on U.S. refining utilization, currently running a scant 84 percent. He asked if the USG could assist the current political situation in Nigeria, where the production has collapsed to about a million barrels per day (mbpd) during the last week as a result of militant attacks and strikes. On the anti-OPEC lawsuits, he explained Saudi Arabia continued to gather amicus briefs for the now-consolidated cases in Texas. He generally dismissed the further threat of NOPEC legislation, saying if Congress could have passed the legislation, they would have done so already.2008-06-03: IS THIS OIL MARKET BROKEN? VIEWS FROM RIYADH
Minister Naimi's offer of an additional 300,000 barrels per day (bpd) in the wake of President Bush's visit had minimal impact on crude prices; some analysts stated 500,000 bpd-plus would be needed to impact crude prices near $128/barrel. Market analysts in Riyadh point out widespread petrol subsidies in China, India, and the Middle East ensure price feedback mechanisms are broken; they therefore predict crude demand will continue to rise there. Governments are abandoning plans to roll back petrol subsidies in the face of escalating food inflation. Our contacts are concerned languishing refining margins are driving down refinery utilization. Recession may be the one brake on crude prices in the near term, but our contacts are divided on its impact. Their crude price forecasts range between $90 and $150/barrel.2009-11-23: SCENESETTER FOR VISIT OF DOE DEPUTY SECRETARY PONEMAN TO SAUDI ARABIA
Saudi officials feel under the gun, as they are aware that a number of other countries are years ahead of them in pursuing the same strategy. They are very concerned by the tenor of discussion in the West about shifting away from reliance on oil and gas, and moves to develop "energy independence." While they, too, want to develop a more sustainable economy and address environmental degradation, they are concerned that the world will turn away from their main source of livelihood before they have a chance to catch up. In that regard, your visit offers a great opportunity to reset our energy dialogue with Saudi Arabia and explore areas of energy interdependence, rather than energy independence. Your visit will also demonstrate our continued interest in helping Saudi Arabia fulfill the King's vision of developing a knowledge-based economy, which dovetails nicely with the agenda of the President's Cairo speech. It also offers the opportunity to encourage the Saudis to be more forthcoming in areas of concern to us, such as climate change.