Friday, October 28, 2005

NYT: Not-So-Secret Government Report Rebuts Saudi Future Production Plans

According to a piece in the New York Times, a secret U.S. government report has questioned Saudi abilities to increase their production.
... [D]oubts about Saudi Arabia's assurances of how much it can expand capacity - and for how long - have been raised in a secret intelligence report and in a separate analysis by a leading government oil adviser, according to a federal government official and the oil expert.

If those skeptical assessments are correct, the administration's hopes of increasing supplies would become still more difficult to fulfill. Washington's expectations about oil production from Iraq and the United Arab Emirates have proved overly optimistic, and the White House has failed to heed advice about both those countries from industry and government specialists, according to documents and interviews.


But when it comes to oil supply, American companies are limited: the countries that control most of the world's oil keep out private producers. So whatever the political repercussions from high energy costs, the administration has had little choice but to rely on the promises by Saudi Arabia, the world's largest exporter, that it would continue to be the market's linchpin.

"There's always been this tenet on the American side," said Nawaf Obaid, a consultant to Saudi Arabia on energy security, "that the Saudis knew what they were doing and rightfully so."

But a senior intelligence official, who insisted on remaining anonymous because he was not permitted to speak publicly on the issue, said that the Saudi plans to increase production by nearly 14 percent in the next four years were not enough to meet global demand. Even the Energy Information Administration recently scaled back its expectations of how much more oil the Saudis could pump in 20 years.

More on this at Rigzone and at The Oil Drum. Update: ... and at Energy Outlook.