BC: SAUDI ARAMCO 2006 ANNUAL REVIEW
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Saudi Aramco gives future oil supply warning in their 2006 Annual Review
saudiaramco.com
“Taking the Initiative”
saudiaramco.com.
This is the first paragraph:
When we look at the global energy situation today, we find a convergence of a wide range of complex challenges. These include misperceptions about future adequacy of supply, underinvestment in oil infrastructure, a mismatch between refinery configurations and the types of crude in the market, increased demand for natural gas, the need for a well-trained and innovative workforce, and stewardship of the natural environment.
Aramco starts by saying that there are misperceptions about future adequacy of supply. This could be a warning flag that supplies may not be adequate. Aramco then mentions those annoying "above ground" oil supply factors: not enough oil infrastructure, not enough refinery capacity, not enough skilled people and not enough consideration to the natural environment.
Next, Aramco indicates difficult times ahead by saying:
Perhaps never before has the petroleum industry faced such immense challenges...
...While the issue of oil supply is important today, it will become even more critical in the coming years.
Aramco also believes in conservation:
Because fossil fuels will continue to meet the lion's share of the world's energy needs for many decades to come, improving their efficiency and lightening their environmental footprint are among the most important steps that can be taken to preserve the natural world for future generations.
In the last paragraph, Aramco indicates a possible significant gap, in the future, between demand and supply:
At Saudi Aramco, we believe development of alternative sources of energy is important, and given the projected growth in total demand, contributions from all sources will be needed. However, many projections for energy supplies from alternative sources may not be realistic, and if decisions about adding conventional energy supplies are made on these projections, the world could face a significant gap between demand and supply.
And just in case the reader does not understand the warning from Aramco, the next section of their 2006 Review:
saudiaramco.com.
starts mentioning "above ground" oil factors again:
At Saudi Aramco, we believe the real issues swirling around oil and gas have less to do with supply — the world has abundant supplies of petroleum — and more to do with challenges on the surface: distribution, refining bottlenecks, regulatory and business concerns, and others.
And yet another statement about "above ground" oil factors from the section appropriately called "The Production Capacity Challenge":
saudiaramco.com.
In recent years, world demand for petroleum has continued to grow, but investments in production and processing capacity and distribution networks have not kept pace, straining world energy markets.
Yet more on "above ground" oil factors from "The Downstream Challenge"
saudiaramco.com.
The petroleum industry has seen tighter capacities all along the oil supply chain, resulting in a smaller margin for error and a curtailed ability to make up for supply disruptions and shortfalls, which in turn have led to greater price volatility.
Aramco’s 2006 Annual Review states that Aramco has ramped up production in the past to provide a reliable supply of petroleum. However, Aramco states clearly that the issue of oil supply will become even more critical in the future. Contributing factors include the above ground “oil factors” of infrastructure underinvestment, refinery capacity shortage, regulatory and business concerns, skilled people shortage, and environmental issues. Furthermore, Aramco indicates that conventional energy investment plans could be insufficient as these plans are being made on overoptimistic energy supply forecasts from alternatives.
Aramco has given a warning about future oil supply – the world needs to draft coordinated response plans now. |
