Sadad-Al-Husseini, ancien Executive Vice President d’Aramco, estime que la production pétrolière mondiale a atteint un plateau qui pourra être soutenu au plus durant 15 ans, avant que ne s’amorce son déclin.

En marge de la conférence « Oil & Money, » David Strahan s’entretient avec Sadad-Al-Husseini, ancien responsable de la production et de l’exploration de la compagnie nationale saoudienne Saudi Aramco.

M. Husseini estime que l’Occident ne doit pas rendre l’Arabie Saoudite ni l’OPEP responsables de l’irréalisme de ses prévisions sur la production de pétrole. Nous sommes actuellement au maximum de production globale, juge-t-il.

Ce maximum devrait pouvoir être maintenu jusqu’en 2020 avec beaucoup d’efforts. Au delà, il faut se préparer au déclin de la production.

Quand aux prix, ils vont continuer à grimper. Un prix plancher de 100$ est à prévoir pour 2010 car les capacités de productions sont saturées et la croissance mondiale stimule toujours la demande.

Par David Strahan, 29 octobre 2007

David Strahan : Sadad-Al-Husseini, thanks for talking to me. You are about to give a presentation at the Oil & Money conference. What are you going to tell them about future direction of the oil price ?

Sadad-Al-Husseini : Well, every indications that the increasing prices that we have been seeing are part of a trend and the factors that cause the prices to raise are unlikely to go away so we are going to have a sustained price increase as long as the factors that drive prices persist.

David Strahan : How much do you think the prices are going to go up in the next few years ?

Sadad-Al-Husseini : Well you can’t put a control on the ceiling because the ceiling is a function of political events and other factors, emotional, speculation etc. But you can predict that the floor on oil prices and based on what we have seen so far, I would guess, the next 4 to 5 years, the floor will keep rising at 12, to may be a little bit more, dollars per barrel per year.

David Strahan : So where do you see prices in 2010 ?

Sadad-Al-Husseini : In 2010, the floor of prices may well be above a hundred dollars, that is three years time 12. That is 36 plus 70 - where we are. It makes $106 as a floor.

David Strahan : So where is the technical floor know as you see it ?

Sadad-Al-Husseini : Now the technical floor should have been around $70-$72 but of course the global hedging related to the dollar being sold and commodities and so on have driven the prices higher. But that is not because of basic structural elements of the industry, it is because of the financial markets.

David Strahan : So what you are saying really is that in 2010, it is unlikely, rather unlikely, that oil prices will be less than $110 a barrel.

Sadad-Al-Husseini : Absolutely, that is the whole point, that if you persist the way we do, the demand as it is, the economy globally growing as it is and the supplies being as constrained as they are, no question the current dollar value of oil would be well above $100.

David Strahan : And where do you think it could be in terms of its maximum, I know you can’t put a constraint on that, but what is your guess ?

Sadad-Al-Husseini : We have seen fluctuations, it is a volatile market and we have seen fluctuations of plus or minus may be 20 percent so it could be as high as $120-$125.

David Strahan : Isn’t there a counter-argument here though. Traditional economics would tell you that if the price of oil goes up and goes up strongly then it would either bring on additional supplies and/or a depressed demand and either way, might not that rather suggest the oil prices are going to head South rather than going further North ?

Sadad-Al-Husseini : Yes, the point that you are making is that you would have demand destruction and demand destruction would result in excess capacity and therefore the prices will come down. But the reality is that what we have seen is that there is a momentum to demand. This momentum is basically GDP. Unless you have a global recession that actually brings GDP down to zero, you are always going to have some incremental demand and what we are seeing is that there is no spare capacity of any significance and therefore the factors that are driving prices up will persist.

Now the only way for reversing this is the introduction of alternative energies in very short order which is unrealistic. As I said, a global recession which we don’t see materializing or alternative fuel which again are a problem to deliver in a short term. Based on all of that, we can only expect prices to go up. Now there is also a question of who is going to buy the oil. There are economies in the world that can afford it. So they will bid the price up. And there are countries and economies that cannot afford it so they will unfortunately be hurt by this price trend.

David Strahan : But the other side of the traditional economics equation would suggest also that additional supplies would come on stream if the price goes strongly upwards. Isn’t that going to happen ?

Sadad-Al-Husseini : What we have seen is that although the price of oil has almost quadrupled or more in the last few years, the supplies has not. The non-OPEC, non-former Soviet Union countries, and that includes countries like Mexico, North Sea and others have in fact gone down even though the price had increased four fold or five fold. And we are also seeing that OPEC and non OPEC former Soviet Union are leveling off. So the normal economic theory is not working in this case and that is because of course there are ceilings in the industry that don’t allow the normal equation to work.

David Strahan : What are the ceilings ? Are they geopolitical, resource nationalism or are we fighting do you think against some fairly fundamental geological constraints ?

Sadad-Al-Husseini : I think it is the later. There is no question there are giant fields left in the world and there are major reserves left in the world but they are all in maturing oil fields, large fields but maturing. The additional discoveries that are happening are very complex fields, smaller, less doable, less sustainable. The demand on resources both human and equipment is increasing to the point where there isn’t any additional resource, human or mechanical. All these factors put together have created a structural ceiling. It is not politics, it is not a negative strategy by OPEC or any of the major producers. These are the realities of the industry.

David Strahan : Is it Peak Oil ?

Sadad-Al-Husseini : I don’t call it peak because I believe that with increasing prices you would be able to sustain some demand but it is may be more appropriately a plateau, a ceiling that is very hard to go above. It is sustainable, my guess is another 10 to 15 years. Now beyond that, it is pretty hard to predict but certainly the resources will be very severely depleted by then.

David Strahan : So from what you say, you seem to think that we are on this plateau already ?

Sadad-Al-Husseini : The evidence is that in spite of the increases, very large increases, in oil prices over the last 4 years, we haven’t been able to match that with increase in capacity. So essentially, we are in a plateau.

David Strahan : And this point 15 years from now is when you foresee production actually starting to fall ?

Sadad-Al-Husseini : In my own modeling of the resources, I cannot see additional reserves coming on line fast enough to sustain a plateau. But you know it is as far as I can see with any clarity. Now there may be other solutions. The Department of Energy in the US, the IEA, both believe that there will be some additional fuels, perhaps unconventional fuels, extra-heavy crudes, gas to liquids. Perhaps. But as far as a conventional oil resources, I cannot see that they will be sustainable beyond that time frame.

David Strahan : And in your own mind, do you think that those non conventional, slightly non conventional sources of fuel, like gas to liquids, oil sands and so forth. Can you see them making up the decline of conventional crude ?

Sadad-Al-Husseini : By 2030, with my model, they would have to be producing something like 24 mb/d to meet the demand and also increase capacity to the levels as anticipated by some of these international agencies. That is a very substantial volume and it requires a very early start in investment which we still don’t see.

David Strahan : So, do you think it is credible they could provide 24 mb/d by 2030 ?

Sadad-Al-Husseini : It is a stretch. You need to see a lot more activity on the international level to believe in that.

David Strahan : You have talked about the maturity of the giant fields which is of course the main stuff of global production. There is, in the outside world, obviously an intense debate about Ghawar and Saudi production more generally, an intense debate as to whether Ghawar has already gone into decline and whether or not the Saudi cutbacks over the last couple of years — at least — were voluntary or involuntary ? It is fair to say I think that everyone in the outside world is working pretty much in the dark about this. Can you shed any light on it ?

Sadad-Al-Husseini : Well, Saudi Arabia has a large number of very giant fields and its policy has always been to be very prudent in how they are managed and to sustain their capacity over the long howl. I don’t have a concern about Saudi Arabia’s production. I think the confusion is that many of these international organizations have assumed that Saudi Arabia will double or more its capacity. In other words, produce 20, 20+ mb/d.

That is the unrealistic aspect of these forecasts. But as far as Saudi Arabia is sustaining its capacity, it is doing very well and can sustain its capacity. The problem is nobody else seems to be doing anything whether in the Gulf region or internationally, whether it is Russia or Mexico or any of the others. So it is a bit of an unfair burden to assume Saudi Arabia will pull everybody’s chestnuts out of the fire.

David Strahan : A Saudi official said recently I think that Saudi capacity would rise to 12 mb/d by about 2012. Is that achievable do you think ?

Sadad-Al-Husseini : Certainly the investments are being made. The total capital program that has been announced since say 2003 to 2011 is over 80 billion dollars. Something like 55 billion is into the oil capacity. So certainly the investments are being made. How the reservoirs will respond, some of these are new fields, will be determined as they start producing. But the investments are definitely being made. It is an achievable number.

David Strahan : And what about beyond that because Saudi officials have also said I think that Saudi would have no trouble in producing 15 mb/d for 50 year or for decades. Is that credible do you think ?

Sadad-Al-Husseini : I haven’t hear that myself. What I have read and seen is that the capital program is intended to reach 12.5 and what I have read is that the government officials in Saudi Arabia and in the oil company, Saudi Aramco, said that they intend to wait and see once they reach that level what to do next. So, those numbers I believe are achievable. Beyond that, I haven’t heard of any official strategy to go higher.

David Strahan : As you say, the international agencies and energy departments in the big consuming nations do assume in their forecast that Saudi Arabia and the Middle East big five are going to continue to make it to all the demand growth in the future and you have cast doubts on that today. How safe, it is a rhetorical question I guess, but how safe do you think those assumptions are ?

Sadad-Al-Husseini : Some of those assumption for example assume that OPEC will go from about 30 mb/d which is about what it produces now to well over 45 or 47 mb/d. Other companies, oil companies, have even shown as high as 60 mb/d. That is what I am calling unrealistic. Staying at 30 mb/d is not a small feat. That is a lot of oil. That is half of the exported, sold oil, in the markets today. And to stay there requires a sustained investment program which is quite massive and a lot of resources. I think that is realistic, staying at 30. Going to some of these numbers, 47, 48, 60 mb/d, I think that is quite unrealistic.

David Strahan : So what risks do you think Western consuming nations run by sticking to those assumptions ?

Sadad-Al-Husseini : I think perhaps they are not looking realistically at prices because the equation has three factors. Supply, demand and price. If you assume that you have an endless supply to meet demand, then price would stay reasonably low. If you assume supply is constrained which is what I am saying, and has a ceiling, then the only way to balance the equation is to assume that price will increase significantly and I think that is a more prudent and realistic outlook.

David Strahan : Sadad-Al-Husseini, thank you very much for talking to me.

Les illustrations sont extraites de la présentation effectuée par M. Husseini à la conférence Oil & money.