The days of 'easy oil' are over for the Saudis

Friday, February 27, 2004

Saudi Arabia faces increasing difficulty in extracting oil as the kingdom's production capacity appears to have peaked after more than 60 years of operations.

A leading oil expert told the Washington-based Center for Strategic and International Studies that Saudi oil fields have been operating from as early as 1940 and that the last huge oil field was discovered in 1967. Matthew Simmons, an energy investment banker and regarded as a key adviser of the Bush administration, said the extraction of oil in Saudi Arabia will become increasingly difficult.

Simmons, in an assessment disputed by Saudi oil executives, said Saudi Arabia could face a steady but slow decline in oil production, Middle East Newsline reported. He cited Ghawar, the world's largest oil field, which was discovered in 1948, now the world's largest oil field and which accounts for production of up to 60 percent of Saudi oil.

"The small number of great but old oil fields in Saudi Arabia that created 'the miracle' are now facing challenges," Simmons said. "The easy oil era is over."

"The entire world assumes Saudi Arabia can carry everyone's energy needs on its back," Simmons said in his address on Tuesday. "But if this turns out not to work, there is no Plan B. And if conventional wisdom is wrong, the world faces a giant energy crisis."

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