Saudi will need $320 oil unless curbs demand
Riyadh, November 16, 2012
Saudi Arabia will need steadily higher crude oil prices to balance its budget, reaching $320 per barrel by 2030, unless it curbs domestic oil consumption, an economist and specialist on the kingdom said as reported by an industry newsletter.
International Oil Daily (IOD) reported that Brad Bourland, a private consultant and former chief economist at Saudi-based Jadwa Investment and Samba Financial, had outlined three trends that would make it hard for Riyadh to meet its fiscal obligations: a 1.5 per cent rise in demand for Saudi oil per year; a 6 per cent annual increase in domestic consumption; and state budgetary spending growth of 7 percent per year, in line with historical patterns.
Bourland's comments echoed the view of other experts that soaring Saudi energy consumption will cut into the kingdom's oil exports in the next two decades, with major implications for global markets.
Such a squeeze could lead the government to post a budget deficit by 2014, deplete its foreign assets by 2026 and run up a large foreign debt by 2030, IOD reported Bourland as saying at an energy conference in London on Wednesday.
If left unchecked, domestic oil consumption would rise to 6.5 million barrels per day (bpd) by 2030 from 3 million bpd now he projected, which would take a large chunk out of predicted total production of 11.5 million bpd.
Saudi Arabia, the world's leading oil exporter, produced about 9.7 million bpd last month, according to Oil Minister Ali al-Naimi.-Reuters