The Oil Price How Long Can It Go on Rising?

…There is a hysteria about what the reserves are. But there is an even worse hysteria produced by a guy called Simmons. I have met him, he is a fun guy, but he is dangerous.

You mean Matthew Simmons, the author of Twilight In the Desert: The Coming Saudi OH Shock and the world Economy? The book that is a bestseller In the States?


He has said that the Ghawar field in Saudi Arabia, which is something like 110 miles long and 17 miles wide….

It’s huge. It’s the biggest one in Saudi Arabia, isn’t it?

Yes, and it is well behaved, too. Simmons has said, “It cannot produce anymore. It is declining, and there is water in it.” Well, every field has water. If there isn’t water in it, the oil doesn’t come out! oil is not like a swimming pool, it is in rock, in porous rock. There is water and gas, so when you make the hole, you bring the pressure down, and the water pushes up, so all oil has water in it, and you have to take it out. He claims it’s a lot more, and makes a comparison with a field in Oman which is declining. But this is like comparing a calf with an elephant. A small thing with something big. He has written nonsense on Ghawar.

Then he said Saudi Arabia has no surplus capacity. In other words, that they don’t have the capacity to produce more than they are producing today. Why? I was in Saudi Arabia, and I haven’t seen this. Whose leg is he pulling? You can’t see any evidence for this. We have lists of the fields that Saudi Arabia has shut down. This is public knowledge. ‘Surplus capacity’ means that you can produce more, but you keep it in the ground, you shut down certain fields so that you can re-open them when you need it.

Middle East