Saudi Arabia is known for its oil production. The country’s political and social economic policies have made it one of the most attractive trading partner to oil consumers. The country is heavily endowed with the vital resource and has been a producer of the same since the 1950s and has been the world’s biggest producer since 1976. This paper attempts to put into perspective oil production in this Arab country.
Since 1991, the Kingdom of Saudi Arabia has been the most important oil producer in the world. The country which at formation in 1932 had been one of the poorest in the world has been transformed by its vast oil reserves into an economic power in the Middle East. The country is the largest exporter of oil in the world with a net export of 10.782 million barrels per day (1.7142×10^6 m3/d) in 2012. With a proven oil reserve of 265.4 *109 barrels (42.20* 109m3 ) the country is only second to Venezuela in terms of oil reserves. This accounts for about 18% of the proven world reserves. The government- owned giant petro- company Saudi Aramco's produces over 1.7×10^6 m3/d (11 million barrels) per day of oil and is planning to invest $71 Billion to increase the production to 1.99×10^6 m3/d (12.5 million barrels per day) by 2015. Due to the long period of oil production, natural decline is starting to take its toll on the levels of production.
Most of Saudi’s oil is shipped to refineries around the world via supertankers. There are three major ports that are used for oil shipping and include Ras Tanura, the largest offshore petroleum loading facility in the world with a capacity of 6 million barrels per day the Ras al-Ju'aymah facility on the Persian Gulf, and Yanbu on the Red Sea. The country lacks international pipelines.
Due to its massive production and relatively limited domestic needs, the kingdom has maintained dominance in the world oil production that has remained unchallenged for more than two decades. The country accounted for nearly 12% of the global output and 33% of the OPEC totals in 2009.
Saudi’s position in the global oil production.
Due to the high volumes that the kingdom produces, political and economical policies in the country usually have a direct impact on the world oil prices. The country on several occasions employed the dominance it holds to tilt oil prices in their favor.
Impact of oil on the Economy
Saudi Arabia's economy is based on the petroleum industry. Oil accounts for at least 90% of the exports and almost 45% of the country’s$ 20,700 gross domestic product". The industry accounts for three quarters of the total government revenues. Saudi Arabia has per capita GDP of.Though large efforts have been made to diversify the economy, it still remains largely petroleum-based. The petrochemical sector which is also partially dependent on the petroleum production in the country is also thriving and contributes a sizable portion of the GDP.
Being an absolute monarchy, the royalty has the biggest say in the oil industry. Saudi Aramco is the company mandated by the Saudi government to explore, produce and export oil on its behalf. The Saudi government owns at least 97% of the Aramco oil business. This is after the government purchased nearly the whole of the company’s share to raise its stake to the current position from the 25% it held in 1973. Though the company is government-controlled it also has a board of advisors and Chief Executive Officer.
The role of the Kingdom of Saudi Arabia in global oil production cannot be underscored. The prevailing peaceful conditions in the country coupled with its massive oil production have put the kingdom on the global map.
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