Kingdom stands on the front line of global energy security
Looking back at the oil industry in the past two to three decades, you can see only one country, Saudi Arabia, playing a strategic role in balancing global crude supply and demand through a remarkable historical strategy called “Excess Capacity.” This strategy allows a country like Saudi Arabia, the largest oil exporter and the thirdlargest oil producer, to play the role of what is called today “Swing Producer.”
A swing producer builds its capabilities to be able to increase its oil production within a few weeks in case of a global energy supply interruption, caused by any reason.
It also allows it to decrease its production for any reason such as an unexpected demand decline, economic recession or a supply/demand imbalance. This is also complemented by a flexible storage strategy where several surface storage facilities are either owned or rented close to the major crude consumers such as Asia, Europe and the US.
These combined Surface and Subsurface Excess Supply Strategies maximize global energy security and minimize any energy interruption impact on the global economy, energy access and human prosperity. Unfortunately, few give Saudi Arabia the credit it deserves despite the fact that this strategy is extremely costly.
It mandates developing fields, drilling wells, constructing pipelines and building facilities that will allow this strategy to be executed in case of any need.
The overall cumulative cost runs to tens of billions of dollars. Only one country within OPEC or outside OPEC has had the capability and the will to pay this extra cost on behalf of the world.
Saudi Arabia has been and will continue to be the first to adjust its production if there is any need to improve the supply-demand imbalance or offset any crude supply interruption.
At the same time, you see some biased views published in reputable newspapers talking negatively about this great country, questioning every decision made, whether it is economic, social or even political.
Most of these articles are driven by emotion, not facts.
This week I read an article in the UK Financial Times questioning Saudi Arabia’s capacity to handle the weekend attacks on its oil facilities. The piece did not mention the strategic role that the Kingdom plays in ensuring a stable global energy market and uninterrupted supplies.
It totally ignored the historical capabilities of Saudi Aramco and its engineers in managing the world’s largest crude reserves and doing so while maintaining high safety standards, unmatched performance in energy efficiency, carbon intensity, environmental protection, and corporate social responsibility.
This unjustified terrorist act, affecting almost 6 percent of global oil production, must be condemned by all. The world must stand together, not only in stopping any terrorist act against global energy security, but also recognizing the capabilities of the Saudi oil industry.