Pure Comedy Gold! - "Our Record Is To Understate Rather Than Overstate Reserves" - Saud al Faisal

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Saudi Arabia. Saudi Arabia, which holds 22 percent of the world's known reserves, produces roughly 10.5 million barrels per day (bpd); global daily consumption is 82 million bpd. The kingdom has said it hopes to increase daily production to 12.5 million bpd by 2009. However, some experts say Saudi Arabia’s oil fields, whose capacity and condition are kept secret, are not as bountiful as Saudi officials claim. “The Saudis don’t have that spigot any more,” said Paul Roberts, author of The End of Oil, in a June 2005 Council on Foreign Relations meeting. “They don’t have the capacity to just flip the switch any more. It's been used up.” Others, including Matthew Simmons, have called on the Saudi government to publish audited field-production reports. “‘It would then take anybody less than a week to say, ‘Gosh, Matt is totally wrong,’ or ‘Matt actually might be too optimistic,’” says Simmons, head of Simmons & Company, a company that advises energy investors. Saudis have dismissed demands by Simmons and others to open up their books. “Our record...is to understate rather than overstate our reserves,” said Prince Saud al-Faisal, foreign minister of Saudi Arabia, in a September 2005 Council on Foreign Relations meeting. “When you want to believe or disbelieve somebody, you look at his record. You don’t go and audit his books.” D. Barry McKennitt, executive director of the U.S. National Association of Petroleum Investment Analysts, also notes that much of the new supply is predicted to come from heavier-grade crude, which many refineries, especially in the United States, are unable to handle.

Saudi Arabia has also been accused of using its oil profits to finance mosques and madrassas that spread a violent, anti-Western brand of Islam, experts say. “Without its oil windfall, Saudi Arabia would have had a hard time financing radical Islamists across the globe,” wrote journalist Peter Maass in the August 21, 2005, New York Times Magazine. As such, relations between Washington and Riyadh have soured since September 11, 2001, partly because fifteen of the nineteen hijackers were of Saudi descent, but also because Americans see the Saudi regime as complicit in funding Islamic fundamentalism. On the flip side, Washington has been increasingly viewed unfavorably by Saudis since its March 2003 invasion of Iraq, argues Roger Kubarych, CFR's Henry Kaufman adjunct senior fellow for international economics and finance, writing recently in The International Economy.

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Venezuela. A founding member of Organization of Petroleum Exporting Countries (OPEC) in 1960, Venezuela has emerged as the world's fifth-largest exporter of oil, comprising 15 percent of all U.S. imports. In December 2005, the state-run firm, Citgo, began selling directly to select areas of the United States, including Massachusetts and the Bronx borough of New York City. Nearly all of the foreign investment into Venezuela is energy-related, and oil comprises one-third of the country’s GDP. But the country's leftist president, Hugo Chavez, who has direct control over Venezuela's oil revenues, has threatened to cut off oil exports to the United States, used in his words to “subsidize Mr. Bush.” Much of the animosity stems from 2002, when Washington—in Chavez’s view—supported a failed coup in Caracas. Chavez has also befriended longtime U.S. enemy, Cuban leader Fidel Castro, invited primarily state-run firms in China and Iran to invest in its oil sector, and purchased small arms from Russia that some fear may end up in the hands of Colombian guerillas. In 2007, Chavez forced international oil companies operating in the country to turn over majority control of their projects to a state-owned company, PDVSA, and remain as minority partners, or face a complete nationalization of operations in Venezuela’s Orinoco River basin. Experts expressed concern about the future of the country’s ability to produce oil since much of the revenue is going to social programs and not into oil infrastructure.

Nigeria. Nigeria produces roughly 2.5 million bpd, but because of mismanagement and corruption must buy back refined fuel from outside countries, often non-oil-producers like Spain, at a mark-up. While the country has earned an estimated $280 billion from oil exports over the past thirty years, its government has invested little in expanding or maintaining refining capacity in recent years. Nigeria’s former president, Olusejun Obasanjo, sought foreign investment for that purpose. But he has faced increased protests in recent years over fuel price hikes in fuel, which is heavily subsidized. Another issue is poor security. Attacks on pipelines and other facilities, mostly by locals upset with their share of oil revenues from the Niger Delta, are common occurrences.

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http://www.cfr.org/publication/9484/global_oil_trends.html?breadcrumb=%2F