Wednesday, May 25, 2005

Questioning Saudi Crude Calculations

Rigzone says there's skepticism about the actual and reported oil production in Saudi Arabia:
Call it the 4% difference.

That's the gap between what Saudi Arabia says it pumped since March and outside estimates of what the world's biggest and most important oil producer actually did.

Total up what Saudi Oil Minister Ali Naimi and his aides say the kingdom has produced from February to April and you get 848 million barrels.

But OPEC estimates based on secondary sources put the total at 839 million barrels. And the International Energy Agency pegs it at 814 million barrels - a 34 million barrel difference.

The Saudi figure is based on public statements by Saudi officials that put February output at 9.25 million barrels a day, rising to 9.5 million b/d in March and staying there ever since.

But numerous outside sources say the Saudis haven't hit 9.5 million b/d since at least December, if ever.

As the article goes on to say, the method outsiders use to account for crude is to watch the size and number of tankers leaving Saudi Arabia. It's an inexact science, so some error is inevitable, but the heart of the problem is Saudi credibility. If the error continues to rise, it begins to look like bad faith rather than just inaccuracy.