The widely accepted forecast is that
the global demand for oil will increase at a steady rate
from the current 79 million barrels per day (mbpd) to
120 mbpd in 2030. On the supply side, the major assumption
has been that the key producers of the Persian Gulf region
will meet most of the growth in future oil demand. Yet,
a majority of these countries face stringent self-imposed
restrictions on their ability to invite foreign companies
to assist them in developing their hydrocarbon resources.
These restrictive policies, of course,
are not limited to the Middle East or to OPEC countries.
Mexico, for instance, remains firmly closed to foreign
equity interests in its upstream oil sector. In addition,
some of these countries are or have been for sometime
subjected to vigorous economic sanctions by the United
States or even by the United Nations. As a result, there
has been no significant foreign investment in the Persian
Gulf region’s oil and natural gas exploration and
production for almost three decades.
Looking over the horizon, it becomes
more and more apparent that there will be a serious supply/demand
imbalance within the next two decades. Indonesia and Malaysia,
Southeast Asia’s largest oil exporters, are expected
to become net oil importers before 2010. In Latin America,
Venezuela and Mexico may need several years before they
have the will and the means to increase oil production
and delivery capacity. In West Africa, oil companies are
only focusing on offshore due to the constant struggle
to do business onshore. Nigeria specifically has to grapple
with internal strife, with a fairly solidly polarized
rivalry between the North and the South, which will not
go away soon. Finally, the hopes of exporting oil from
the Caspian Sea region became mired in the politics of
running pipelines through regions where the national interests
of U.S. and other major players are often at odds with
each other.
Over the past decade, however,
for various economic and political reasons Iran, Iraq,
Kuwait and Saudi Arabia, have been actively searching
for mechanisms to facilitate foreign investment in their
upstream oil sector. These four countries, collectively,
possess over 53% of the world’s proven oil reserves,
currently provide 23% of the world’s oil production
and are expected to supply 31% of the global oil requirement
by 2020.
We are now at a turning point. Despite
widespread rhetoric of how diverse oil supplies are at
the present time, the Middle East is still the “oil
king” destined to play a much larger role on the
world stage of energy. Meanwhile, the strategic choice
that these resource-rich countries have to make involves
the inclusion of foreign oil companies for capital, managerial
capabilities, and cutting-edge technology to meet the
world’s future energy demands as well as socio-economic
and political expectations of their own increasingly youthful
population.
This
200 plus page in-depth report is the result of an ongoing
independent investigation and analyses of the thought
processes, views, and actions of the original members
of OPEC in the Persian Gulf region since September 2001
regarding reopening of upstream oil and natural gas to
foreign interests. The report discusses the oil
and natural gas situation in Iran, Iraq, Kuwait and Saudi
Arabia and their respective experience with the concept
of reopening; aspirations and requirements of the international
oil companies (IOCs) related to opportunities in the region;
risks; and a realistic outlook. Particular emphasis has
been placed on two innovative, yet controversial, concepts
that have attracted considerable attention worldwide for
almost a decade: “buyback” and “Project
Kuwait.” Access to relevant information selected
from various sources and carefully evaluated such as those
contained in this report is an essential prerequisite
for a comprehensive understanding of the global energy
industry; therefore, is highly recommended.
