As we pointed out in one of our first posts, Saudi Arabia oil exports are in decline which adds further fuel to the peak oil thesis.  (See earlier post here.)

Saudi Arabia, of course, has been the one country the world has turned to for increased supply whenver crude oil prices rise rapidly, as they have in the past few years reaching $100 a barrel and more.

UPI reports that Saudi oil exports will fall significantly in the long term as domestic consumption absorbs an increasing share of its oil production.   Moreover the country could face a serious revenue crisis within the next ten years as it cuts back on exports to meet rising demand at home.  Saudi Arabia’s population has increased five-fold since the first energy crisis back in 1973 and is projected to keep on this pace over the next decade.  See chart below.

 

                                                                       Source: EarthTrends

 

The country relies entirely on its petroleum resources to support its population growth including financing government, its welfare system and its defense expenditures.  In addition, it uses its oil to generate electricity and to desalinate water. As the following chart shows, Saudi domestic oil consumption tracks Saudi population growth.

Despite all the oil revenue that has flowed into the kingdom in the desert over the past 40 years, the country has yet to achieve economic diversification.  Oil still accounts for more than 90% of the country’s exports and nearly 75% of government revenues.

 

                                                                 Source: GraphOilogy

 

Saudi oil consumption is rising rapidly with the domestic use of crude oil averaging 2.4 million bpd in 2010, up from 1.9 million bpd in 2007 and 1.6 million bpd in 2003.

Oil  exports have declined from around 7.5 million barrels per day in 2005 to 5.8 million bpd in 2010 and are likely to drop further by 2015.   UPI cites one report that suggests that exports could fall to 6 million bpd in 2020 and to 4.9 million bpd in 2030.  This is happening at the same time that Saudi’s production also appears to be in decline.

 

                                                              Source: Energy Insights

 

As one analyst commented:  “Combined, these trends paint a picture of significant future challenges for the Kingdom.”

 

 

 

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