Government spending to boost Saudi Arabia GDP (oil production to decline)

[jpak]

http://archive.gulfnews.com/articles/07/04/01/10115135.html

Riyadh: Economic growth in Saudi Arabia, the largest Gulf Arab economy, could accelerate this year on the back of a projected rise in government spending, Riyadh Bank said in a research report.

<snip>

Saudi oil production is expected to fall from an average 9.12 million barrels per day in 2006 to 8.44 million bpd in 2007. "For 2007 ... we forecast oil prices to rise/fall by $3 per barrel," it said.

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[NickB79]

1. Looks like a 7% decline per year

Ouch.

[4dsc]

2. 50% over the next 10 years??

Now who is going to ignore peak oil??

[Delphinus]

3. Rise/fall by $3 per barrel?

Um, I don't think so. My guess is that the prices are going to rise much more than $3 per barrel.

[GliderGuider]

4. These numbers support an 8% pa decline rate

This is the same rate that was observed over 2006 that prompted the intense analysis of Ghawar over on The Oil Drum. The Oil Drummers' findings support the conclusion that the observed decline is involuntary and is likely to continue and worsen. If the Saudis' prediction of 8.44 Mbpd average this year is correct, it implies a production rate in December of about 8.1 Mbpd. Their production in subsequent years will depend on the success of projects currently in planning, the quality of the portions of the reservoirs with remaining oil and the balance between the capacity of their water separation equipment and the rising water cut of the extracted fluids.

Announcements like this should be seen as Saudi damage control, attempts to soothe the market and keep it from destabilizing in the face of mounting evidence of trouble in the desert. We'll know the truth by September.

[IDemo]

5. You've mentioned September several times

Can you tell us what factor(s)in particular you believe point to September as the watershed (no pun intended!) moment?

[GliderGuider]

6. Several factors

Summer driving season will raise demand, putting pressure on all major producers to open the taps. If they don't, and oil prices rise to $70-$75/bbl in the absence of any major above-ground events, this will be a major clue to the fact that global swing capacity is gone. Also, September will give us another half-year of production figures for KSA and Mexico. If their declines continue unabated for six months in the face of rising demand and falling inventories the current MSM mutterings about peak Oil will rise to a more generally audible level.

Basically, if we are now at the beginning of outright production declines as I think we are, and significant producers/fields will continue to exhibit 8+% annual declines, the signals will be obvious and un-spinnable within six months. A war with Iran would allow TPTB to continue the masquerade for a while longer, and if production does manage to show an improvement then the Peak Oil movement will have the wind taken out of its sails for another year.

[IDemo]

7. I figured the end of the summer driving season was a factor

with refineries reformulating for the cool season.