The 10th IAEE European Conference

“Energy, Policies & Technologies

For Sustainable Economies”
7-10 September 2009, Hofburg Congress Center
Vienna, Austria
----------------------------------------------------------------------------------------------------------------------------------------------
Saudi Proven Crude Oil
Reserves: The Myth & the Reality Revisited

By
Dr Mamdouh G. Salameh
Director
International Oil Economist / World Bank Consultant
UNIDO Technical Expert
Oil Market Consultancy Service
Spring Croft, Sturt Avenue
Haslemere
Surrey GU27 3SJ
United Kingdom
Tel: (01428) - 644137
Fax: (01428) – 656262
e-mail: mgsalameh@btconnect.com
 Contents
• Introduction
• Saudi Proven Oil Reserves
• Ever Increasing Oil Initially in Place (OIIP)
• Recovery Factor (RF) & Remaining Recoverable
Reserves
• Failing Propaganda
• Conclusions

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Introduction
• In a paper entitled: ”Saudi Arabia’s Proven Crude Oil Reserves &
Production Capacity: The Myth & the Reality” I gave at the 28th Annual
IAEE International Conference on June 3-6,2005 in Taipei and also in
my latest book entitled:” Over a Barrel” published in the UK on June
2004, I questioned the size of Saudi Arabia’s proven oil reserves. My
research then showed that Saudi reserves are no more than 181 billion
barrels (bb) of oil and not the 264 bb claimed by the Saudis and
parroted by the BP Statistical Review of World Energy and the Oil &
Gas Journal (OGJ) year after year.

• In this new paper, I revisit the topic of Saudi reserves in view of the
outlandish claims that the Saudis have been making about their oil
reserves, their oil recovery factor (RF) and the oil initially in place
(OIIP) they claim to have.

• This paper will argue that far from having 264 bb of remaining oil
reserves, Saudi reserves actually range from 90 bb -125 bb. The paper
will prove that Saudi Arabia’s RF could not be 52% when the average
global RF ranges from 30%-35%. It will contend that Saudi OIIP should
be realistically estimated at 580 bb and not 700 bb as the Saudis claim.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Saudi Proven Oil Reserves

• Saudi Arabia’s proven reserves stood at 264.10

bb at the beginning 2009 according to the 2009
BP Statistical Review of World Energy.
• Saudi reserves had remained remarkably stable
between 1980 and 1987 before suddenly and
dramatically jumping from 169.59 bb in 1987 to
254.99 bb in 1988 and then to 264.10 bb in 2009
(see Table 1).

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Table 1
Saudi Oil Reserves & Production, 1982-2009
Year Proven Production Net Reserves
Reserves Daily Average Annual Cumulative Additions
(bb) (mbd) (bb) (bb) (bb)
----------------------------------------------------------------------------------------------------------------------------------------
1980 164.16 9.90 3.61 42.31 - 2.24
1987 169.59 3.98 1.45 55.76 0.59
1988 254.99 5.09 1 .86 57.62 85.40
1989 260.05 5.06 1.85 59.47 5.06
1992 261.20 8.33 3.04 67.82 0.26
1999 262.78 7.56 2.76 88.29 1.24
2000 261.70 8.32 3.04 91.33 - 1.08
2003 262.70 9.82 3.58 101.01 0.90
2004 262.70 10.58 3.86 104.87 0.00
2005 264.20 11.04 4.03 108.90 1.50
2006 264.30 10.86 3.96 112.86 0.10
2007 264.20 10.41 3.80 116.66 - 0.10
2008 264.20 10.85 3.96 120.62 0.00
2009 264.10 8.01 2.92 123.54 -0.10
----------------------------------------------------------------------------------------------------------------------------------------
Sources: BP Statistical Review of World Energy, 1983-2009 / OPEC Annual Statistical Bulletins,
1983-2009 / Platts, www.platts.com / Middle East Economic Survey (MEES), Vol. XLVIII
No 3./ Author’s estimates.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Saudi Oil Reserves
(Continued)
-------------------------------------------------------------------------------
• During the period 1980-87, net Saudi reserve additions amounted to
a mere 3.19 bb. Between 1989-2009, the additions have been far
more modest amounting to 9.11bb. This makes the addition of 85.40
bb between 1987 and 1988 suspicious to say the least.

• The Saudis say that the constant remaining recoverable reserves of

264 bb since 1993 have been due to increased discoveries and
improved technology in exploiting existing fields. This is
unbelievable and has probably been created by artificially increasing
their OIIP every year by an amount to exactly offset production. Oil
discoveries since 1993 have been minimal, at most about 10 bb
addition to OIIP.

• Independent experts and analysts have disputed the Saudi reserve

claims. Their estimates of Saudi reserves range from 90 bb-148 bb
(see Table 2).

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Table 2
Various Estimates of Saudi Proven Oil Reserve
in 2009 (bb)
--------------------------------------------------------------------------------------------------------------------------------------------------------------

Oil & Gas BP Statistical Colin Samsan Mamdouh

Journal Review Campbell Bakhtiari Salameh
--------------------------------------------------------------------------------------------------------------------------------------------------------------

264.10* 264.10* 148.00* 109 -129* 90 -125*

--------------------------------------------------------------------------------------------------------------------------------------------------------------

Sources: BP Statistical Review of World Energy, 2009 / Oil & Gas

Journal (O&J), 2009 / ASPO USA Newsletter, February 20,
2006 / Author’s Estimates.

* At the end of 2008.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Saudi Oil in Place (OIIP)
• Saudi Arabia stated that its OIIP has been growing steadily since
1982. There is considerable doubt about the validity of this increase
given the lack of new oil discoveries and the unusual nature of its
steady continuous increase. The Saudis claimed that their OIIP was
700 bb at year end 2003. They are projecting that their OIIP will
grow to 900 bb by 2025. Figure 1 below shows Saudi OIIP growth
between 1982 and 2003.

• Only one significant discovery has been made since 1975, the
Hawtah Trend, a collection of about six fields during 1989-91 with
about 2 bb addition to reserves and 6 bb to OIIP.

• However, from 1982 to 2004 there was a total change of 110 bb in

OIIP which leaves a very large unaccounted 104 bb. A study by the
Association for the Study of Peak Oil (ASPO) shows an increase in
discovered reserves of about 5 bb from 1982 to 2004, representing
about 15 bb addition to OIIP, which still leaves an unaccounted 95
bb.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 1

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Saudi OIIP
(Continued)
----------------------------------------------------------------------------

Given the lack of significant new

discoveries, the 2005 ASPO study
estimates that in 2003 the OIIP was a
more realistic 580 bb instead of Saudi
Aramco’s claimed 700 bb (see Figure 2).

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 2

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Discovered & Undiscovered OIIP in Saudi
Arabia by 2025
-----------------------------------------------------------
• Saudi Aramco is projecting that new oil discoveries
between 2004 and 2025 would add 200 bb to their OIIP
raising them from 700 bb now to 900 bb by 2025 (see
Figure 3). This is partly based upon their reliance on US
Geological Survey’s World Assessment stating that there
is an estimated 87 bb undiscovered recoverable oil in
Saudi Arabia.

• The forecast of 200 bb yet-to-find could provide a weak

basis to a continued increase in the OIIP. The future
estimated OIIP increase of 200 bb suggests an average
discovery rate of about 10 bb (OIIP)/year from 2004. It's
now 2009 and there have been no discoveries
announced which could comprise 10 bb/year.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 3

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Recovery Factors and Remaining
Recoverable Reserves
----------------------------------------------------------
• Saudi Arabia may have some high recovery factor fields such as the
Shaybah field, but an average RF of 52% could be easily
discounted.

• ASPO estimates the average global RF at about 30%-35%. This is

based on data from the IHS Energy database on 9,000 fields
worldwide containing 1,400 bb of reserves. The RF bands are
shown in figure 4 below.

• According to the International Exploration company, Schlumberger,

the average global RF is about 35%. However, it is recognized that
recovery factors for sandstone reservoirs are higher than for
carbonates”. Given that the majority of Saudi Arabia’s key reservoirs
are carbonate, it would seem appropriate that 35% is assumed as a
reasonable upper limit for the average RF of all Saudi fields based
on Schlumberger’s statements.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 4

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Recovery Factors and Remaining Recoverable
Reserves (Continued)
------------------------------------------------------------------
• Part of Dr Mamdouh Salameh’s expert comment to the Oil Depletion &
Analysis Centre (ODAC) made on May 7, 2007 discussed Saudi
Arabia’s recovery factors.

• “And despite the great technological strides by the oil industry, the
average global oil recovery rate has been stuck at 32% of the oil in
place since the early 1990s. However, rates of 50% and even 55% have
been achieved in the North Sea and also in the most recently-
developed, state-of-the-art “Shaybah oilfield” in Saudi Arabia
respectively. But I hasten to add that 90% of Saudi oil production
comes from four giant oilfields (Ghawar, Safaniya, Hanifa and Khafji),
all of which are more than 50 years old and are being kept flowing by a
huge injection of water. Oil recovery rate from these four oilfields
ranges between 25% and 30%.”

• Based on Dr Salameh’s statement, 30% is assumed as a reasonable

lower limit for the average recovery factor of all Saudi Arabian fields
(see Figure 5).

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 5

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Recovery Factors & Remaining Reserves
-----------------------------------------------------------------------------------------------
• Applying the previously assumed lower and upper global RF limits of
30% to 35% to the more realistic estimate of 580 bb Saudi OIIP gives a
range of 174 bb to 203 bb of recoverable reserves. Given that Aramco
has cumulative production of 120 bb to the year end 2008, this gives a
range of remaining recoverable crude oil reserves from 54 bb to 83 bb
not Aramco’s propaganda claim of 264 bb. Even if we accept the Saudi
OIIP figure of 700 bb, we come to estimated reserves of 90 bb to125
bb.

• What about the effects of Aramco’s improved technology in exploiting

existing fields? Surely multilateral horizontal wells and smart wells
should increase RF even just by a couple of percent since 1998.
However, Fig 5 shows a constant 52% RF starting in 1988. This is odd.
Perhaps the real answer is that Aramco was unable to increase RF
because 52% has been unrealistically high since 1988.

• Figure 6 from the Norwegian oil company, Statoil, shows possible

increases in RF due to enhanced oil recovery (EOR) methods. Statoil
calculated how the average RF goes up from 29% to 38% by applying
EOR methods. The Statoil data provides enough support to increase
Saudi Arabia’s RF upper limit of 35% to 37%.
Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 6

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Failing Propaganda
• Overall, Saudi Aramco’s propaganda methods have been successful.
Many governments, corporations and individuals accept Aramco’s
statements and also accept Aramco’s repeated statement of 264
billion barrels remaining recoverable crude oil reserves.

• Ali Naimi, the Saudi oil minister, made further unsubstantiated and
false statements raising Aramco’s propaganda to a new peak. He said
that Saudi Arabia planned to add another 200 bb of oil to its proven
reserves, which is equivalent to an absurd increase of over 75%, from
260 bb to 460 bb. No sources were given for this planned reserve
increase of 200 bb.

• After Saudi Aramco tells the truth, the other OPEC members should do
the same as it is highly likely that they have also artificially inflated
their remaining recoverable crude oil reserves. The two charts in
figure 7 show the years from 1980 to 1990 shaded in grey. The chart
on the right shows that OPEC discovered most of its oil prior to 1980,
as shown by the green area, and only about 20 to 30 bb from 1980 to
1990. However, over the same decade, the chart on the left shows that
OPEC reserves increased by over 300 bb, which is ten times greater
than these discoveries.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
Figure 7

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Conclusions
-----------------------------------------------------------
• Saudi Arabia claims that its remaining proven oil reserves amount to
264 bb based on an RF of 52% and an OIIP of 700 bb. However, far
from having 264 bb of recoverable reserves, Saudi reserves
actually range from 90 bb-125 bb while Saudi OIIP should be
realistically estimated at 580 bb and not 700 bb as the Saudis claim.

• Moreover, Saudi Arabia’s RF could not be 52% when the average

global RF ranges from 30%-35% according to the most authoritative
sources in the field. Even with enhanced oil recovery systems, the
upper limit of Saudi RF could not exceed 37%.

• It is high time for the Saudis to come clean about their oil reserves to
enable the world to take precautions against an impending global oil
disaster before it is too late.

Dr Mamdouh G. Salameh
Oil Market Consultancy Service – UK
 Thank You
Dr Mamdouh G. Salameh
Director
International Oil Economist /World Bank Consultant
UNIDO Technical Expert

Oil Market Consultancy Service

Spring Croft, Sturt Avenue
Haslemere
Surrey GU27 3SJ
United Kingdom
Tel: (01428) - 644137
Fax: (01428) – 656262
e-mail: mgsalameh@btconnect.com