|
Another stream, smelling less of sulphur
but more of oil, burst from under the rocks a little further on, and
it is near here that attempts have been made in the past to tap the
petroleum reservoir which probably exists somewhere beneath the ground.
Some day a happy man may hit the right spot, and then his fortune is
made; but it is a speculative business. Half a dozen inches to the right
or left, and you are, as Fate may decide, a pauper or a millionaire.
|
People
have been using petroleum and bitumen in the Middle East for 5,000 years. But
it was not until the 20th century that the Middle East entered the consciousness
of the “Hydro-carbon Man” as the petroleum repository of the world,
as Daniel Yergin describes in his 1992 book The Prize: The Epic Quest for
Oil, Money, and Power. This transition took place over several decades,
as modern drilling for oil, beginning in Iran in 1908, in Iraq in 1927, in Bahrain
in 1932, and in Kuwait and Saudi Arabia in 1938, proved successful.
An offshore rig drills for petroleum in
the Abu Sa’fah oil field of Saudi Arabia in the Persian Gulf. The Abu Sa’fah
field was discovered in 1963 and has been in operation since 1966. Courtesy
of Saudi Aramco.
With soaring prices of oil, natural gas and gasoline in recent years, and continuing
violence in the Middle East, this region’s petroleum geopolitics remains
a major focus of international relations today. Given the volatile nature of
the petroleum industry, it is imperative to understand both the numbers and
the climate surrounding Middle Eastern petroleum.
Supply
Ten countries in the Middle East produce nearly all of the region’s petroleum:
Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates
and Yemen. Except for Bahrain and Yemen, these countries are also members of
the Organization for Petroleum Exporting Countries (OPEC), which has been dubbed
in the West “the world’s oil cartel.”
These Middle Eastern countries together cover an area of 5.1 million square
kilometers (about 1 percent of Earth’s land surface) and are home to 168
million people (2.6 percent of the world’s population). However, they possess
the largest concentration of petroleum resources anywhere on Earth, thanks to
a combination of several favorable geologic factors.
The Middle East was part of the giant equatorial Tethys Sea, which stretched
from southern Europe to south-central Asia from 265 to 55 million years ago.
Organic-rich mud deposited on the continental shelf of the Tethys proved an
effective source rock for petroleum. After the closure of the Tethys, the collision
of the Arabian Plate with Asia and the formation of the Zagros Mountains in
Iran that began about 55 million years ago, a foreland basin formed atop the
Tethyan shelf sediments. Thus, a thick pile of sediments spanning the last 500
million years of Earth’s history has developed multiple source, reservoir
and cap rocks for petroleum in the Middle East.
This sedimentary sequence is sealed in many places by impermeable salt layers
below Cambrian sediments and above Miocene reservoir rocks. Although the majority
of reservoir rocks in the region are fine-grained limestone, physical and chemical
processes have created sufficient spaces and permeability in these rocks to
store and yield economic volumes of petroleum. Gentle folding, salt domes and
faulting have formed large structural traps within which petroleum accumulated.
Despite what we know about the sedimentary basins in the Middle East, uncertainty
remains regarding how much oil the region still contains, due to both geology
and politics. Petroleum data are not always reported fully or correctly because
of political and national security considerations. Additionally, varying methods
of estimating and reporting reserves are responsible for our poor knowledge
of the Middle East’s oil reserves.
Data reported by the British Petroleum Statistical Review of World Oil
in 2005, the Oil and Gas Journal in 2004, and the OPEC Annual Statistical
Bulletin in 2003 indicate that the Middle East holds 730 billion barrels
of recoverable proven oil. (Recoverable proven reserves are those quantities
that exist geologically and can be reasonably recovered under existing engineering
and economic conditions.) This estimate accounts for 61 percent of the world’s
recoverable proven oil (about 1.2 trillion barrels). Some petroleum geologists
have questioned these figures, however.
In an April 4 article in the Oil and Gas Journal, for instance, retired
petroleum geologist Colin Campbell argued that in the late 1980s, many OPEC
countries suddenly and unjustifiably raised their reserves levels simply to
obtain higher production quotas. The Middle East thus added 275 million barrels
to its reserves. Although some of these reserves may reflect geologic discoveries
or increased recovery efficiency, Campbell rightly cautions that these “political
reserves” or “reserves on paper” remain doubtful.
Nonetheless, Middle Eastern countries may still hold potential for more petroleum
discoveries and production. After the end of the Iran-Iraq war in 1988, large
oil fields in the Zagros basin containing billions of barrels of oil, such as
the Azadeghan and Yad Avaran fields, were discovered in Iran, and whole desert
areas in central Iran still remain largely unexplored. Iraq, whose petroleum
exploration and production have been severely hindered by decades of wars and
economic sanctions, also holds a geological wild card in future petroleum developments.
The Silurian-Triassic sediments in the deeper levels of the Middle Eastern basins,
such as those in Iran, Iraq, Kuwait and Saudi Arabia, are also attractive targets.
According to the U.S. Geological Survey (USGS) World Petroleum Assessment
2000, undiscovered petroleum resources in the Middle East (within 50 percent
confidence level) include 197 billion barrels of crude oil, 71 billion barrels
of liquid natural gas and 1,204 trillion cubic feet of gas. Given that USGS
has estimated about 649 billion barrels of undiscovered conventional oil and
4,669 trillion cubic feet of undiscovered natural gas for the world, the Middle
East accounts for 30 percent and 26 percent of the total undiscovered resources
of oil and gas, respectively.
Data on oil production are more certain than those on oil reserves. So far,
the Middle East has produced close to 300 billion barrels of oil, which is nearly
a quarter of the world’s production to date. Last year, the Middle East
produced 24.6 million barrels a day (about 30.7 percent of world production).
What makes the Middle East’s petroleum quite significant for the international
economy is its net export: Oil production in the Middle East far exceeds oil
consumption in the region.
In 2004, the Middle East consumed about 5 million barrels of oil a day, or nearly
one-fifth of the oil it produced. This consumption resulted in the net export
of 19.6 million barrels a day, which was imported by Southeast Asia (7.2 million
barrels), Japan (4.0 million barrels), Europe (3.2 million barrels), the United
States (2.5 million barrels) and China (1.3 million barrels). The export of
Middle Eastern petroleum to East Asian countries has markedly grown in the last
decade, due to those countries’ rapid economic growth. U.S. imports from
the Middle East accounted for 19.4 percent of its total petroleum imported.
Over the past 45 years, the Middle East’s share of U.S. petroleum imports
has ranged from 3.5 percent in 1970 to 28 percent in 1977, averaging about 17
percent. However, as populous East Asian countries increase their demand for
petroleum, the Middle East’s oil flow to North American and European markets
will become more competitive.
Demand
With rise in the world demand for oil, some analysts are questioning whether
the petroleum-rich Middle East has the capability to raise its production sufficiently
to meet demand. In his 2005 book Twilight in the Desert: The Coming Saudi
Shock and the World Economy, energy investment banker Matthew Simmons raised
this question specifically for Saudi Arabia by analyzing the reservoir performance
history of 12 oil fields in that country. Simmons argues that nearly all of
Saudi oil comes from seven fields, including Ghawar, the world’s largest
oil field, which alone has produced more than 5 million barrels a day in recent
decades. Simmons warns that major Saudi oil fields reached their peak production
years ago, and that “it is virtually impossible for Saudi Arabia ever to
produce the 20 to 25 million barrels a day envisioned by the forecasters.”
While
Saudi officials dismiss Simmons’ ideas about their inability to raise the
production levels significantly, this important question is open to debate;
given the geologic, technologic and economic uncertainties and the opaqueness
of petroleum data, only time will resolve it. If, as Simmons suggests, all of
Saudi Arabia’s oil production comes from only seven fields, the implication
is that a number of other oil fields in the country (not considered by Simmons)
have great potential to boost production.
The central production facilities for the
Qatif oil field in Saudi Arabia produce 500,000 barrels of crude oil per day.
Photo courtesy of Saudi Aramco.
Currently, Saudi Arabia has a production capability of 10.5 million to 11 million
barrels a day. Doubling that amount in the next decade or so will be an enormous
task. If the rapid production increases come from the existing fields with existing
technologies, the oil fields may suffer damage from the over-injection of fluids
(a procedure that puts pressure on the subsurface to get oil to flow upward).
Perhaps the application of more expensive recovery techniques or drilling new
wells will prolong the lifespan of the mature Middle Eastern oil fields. New
geologic concepts applied to petroleum basins coupled with increased investments
in exploration will also help new discoveries. The petroleum geology dictum
that “we usually find oil in new places with old ideas, but we seldom find
much oil in an old place with an old idea” is very valid for the Middle
East.
As the world’s demand for natural gas (which is less polluting than oil)
increases, the gas resources of the Middle East will become more attractive.
The planned gas pipeline from Iran to India is a telling example of this trend.
Like oil, we do not have an accurate picture of the gas reserves, but current
estimates of the proven gas reserves in the Middle East are 2,571 trillion cubic
feet, or 41 percent of world reserves.
Economic changes within the Middle East also have implications for the petroleum
industry worldwide. Population and economic growth in the Middle East are raising
the domestic consumption of oil and gas. Current population growth in the region
ranges from 1 percent in Iran to 3.4 percent in Yemen, and the growth of gross
domestic product last year varied from 1.2 percent in Oman to 8.7 percent in
Qatar. A recent report by the consulting company FACTS, based in Honolulu, Hawaii,
shows that Middle Eastern oil demand has grown at an average rate of 4 percent
in the past decade, and that these nations will continue to use more of their
own petroleum resources to fuel their economies, industries and life styles.
The increases in oil and gas prices are also enabling Middle Eastern governments
to invest more in refineries and thus export more petroleum products rather
than only crude oil.
Back to the Future
A huge threat to the stability of the oil industry and world economy is the
continued political strife, terrorism and violence in oil-producing regions.
Addressing these issues requires comprehensive measures, including economic
cooperation, security, proactive diplomacy, cultural dialog and grassroots understanding.
Experts on the Middle East have long debated the impact of petroleum on the
political, economic and cultural development of this region. Some analysts view
petroleum as an easy resource for investments in infrastructure, industrialization
and raising living standards. Others see it as a hindrance for creativity and
hard work and as a source of corruption. Both sides offer strong arguments.
Nonetheless, it is evident that the Middle East needs to embark on a genuine
development path with less reliance on petroleum revenue and more emphasis on
industries, services, cultural products and digital technologies. Currently
more than two-thirds of government revenue in Middle Eastern countries is from
oil exports. A shift from this “raw-resource economy” would be helpful
not only for world peace and stability, but also for the future of the Middle
East in a post-oil era.
Global dependency on Middle East petroleum is too great, as is the Middle East’s
dependency on petrodollars. Regions such as the South China Sea, the Caspian
Sea, and the Niger Delta have been claimed to be “another Middle East,”
but we have not discovered another Middle East yet. Taking some of the heat
off Middle Eastern petroleum supplies will make the world economy less vulnerable
to major crises. It also may actually help the spread of democracy in the region
because as long as the governments feed on petroleum revenue rather than depend
on taxpayers, they may have little incentive to engage their citizens. It is,
however, highly unlikely that we can reduce our dependency on the Middle East’s
relatively cheaper petroleum without first reducing dependency on petroleum
itself.
 |
Geotimes Home | AGI Home | Information Services | Geoscience Education | Public Policy | Programs | Publications | Careers  |