Kingdom of Oil

Until the crude petroleum oil discovery on its terra firma in late 1930s, Saudi Arabia was known as a land of desserts and barren expanses where tribes and nomads lived and pilgrims from all over the world flocked to visit the two holy sites. The entire region then survived on subsistence agriculture. Even today a meagre one digit percentage area of the country is cultivable. For decades, the lands of Saudi Arabia were considered forbidden; an absolute monarchy that was seen as a land of taboos, endless stretches of sand and tough religious norms. It was only in 1938, that the California Arabian Standard Oil Company struck oil in the region and nothing in the world’s geopolitical arena would ever be the same!

Today it is known as the kingdom with one of the deepest proven reserves of crude oil, sixth largest reserves of natural gas. Though the stigma associated with this Islamic country continues, the country has managed to create huge fiscal reserves; courtesy its natural resources. The Saudi Arabian dessert has huge crude oil and natural gas reserves. So much so that bottled water is said to be cheaper than petrol. The country’s oil reserves are argued to be a little more than 260 billion barrels; second only to Venezuela; though this remains a moot point with some claiming that Saudi Arabia has reached its peak oil.

Geographically, the country is situated on the coast lines of Persian Gulf and Red Sea. Its proximity to the ocean shores provides advantage in the shipping and transportation of petroleum and by products through supertankers. The sand desserts of Saudi Arabia have a rich bounty of crude oil reserves; making it one of the biggest exporters and producer of crude oil. (See figure below)

Saudi Arabia Oil Production 1965 - 2015

According to EIA, Saudi Arabia produced 11,725.68 (thousand barrels per day) barrels of crude oil out of the 267.91 billion barrels proven oil reserves. Many oil fields dot the country’s landscape; but there are only eight major oil fields of Saudi Arabia that account for most of the petroleum production. The major oil and gas fields of Saudi Arabia are: Ghawar, Safaniya, Khurais, Manifa, Shaybah, Qatif, Khursaniyah, Zuluf and Abqaiq. (See figure below)

The major oil and gas fields of Saudi Arabia

The biggest and most famous oil field, Ghawar oil fieldis a mammoth sized oil field, the biggest conventional oil field in the world, measuring about 280 by 30 Km in size. It accounts for more than 50% crude oil production in Saudi Arabia.

According to EIA, the country produced 3258 billion cubic feet of natural gas, with 287.84 trillion cubic feet of proven gas reserves. Saudi Arabia plans to increase generating capacity from 55 gigawatts (GW) to 120 GW by 2020 in order to meet a rapidly growing demand for electricity.

Apart from the country’s own oil fields located in its desserts, the country also benefits from crude oil production in the Saudi-Kuwait Neutral Zone, also known as the ‘Divided Zone’. Saudi Arabia and Kuwait entered into a joint agreement to exploit the crude oil reserves and share the monetary benefits.

Within less than a century, the once obscure, dessert clad land of Saudi Arabia was only on the radar of Islamic pilgrims; but today every news in the region is closely followed by almost all the developed and developing countries of the world. According to United Nations, the country’s GDP is among the top 20 highest GDP in the world. But sceptics think that the benefits earned from these vast oil and gas reserves hardly reach the lower strata of the society in the country. Some also claim that there’s acute poverty in the region. The government of Saudi Arabia closely guards all the information related to it; be it poverty in the country, its oil fields’ performance, field-level production details or peak oil. Obtaining foreign Investment license (from Saudi Arabian General Investment Authority) in any sector, crude oil, infrastructure or manufacturing is extremely difficult. The government has shifted its focus from established oil refineries to identifying newer oil fields, undertaking newer projects and generating more electricity.

It’s a land of absolute autonomy and stringent rules where each move of the industry is decided by the rulers. Whether Saudi Arabia’s land will be able to fuel the ever increasing number of vehicles in the world remains to be seen.