Saudi Arabia is a global giant when it comes to hydrocarbons. It is the world’s second-largest producer of crude after Russia and holds proven reserves of 267 billion barrels of oil and almost 284 trillion cubic feet of gas, according to the US’ Energy Information Administration (EIA). At the current rates of production, the UK’s BP estimates that the kingdom’s oil reserves will last another 65 years and its gas reserves 82 years.

Saudi oil production has been climbing steadily over the past decade. In 2002, the kingdom produced less than 9 million barrels a day (b/d), but by 2011 this had reached about 11.2 million b/d. Total production capacity is now about 12 million b/d.

Saudi Arabia’s reserves are concentrated in the Eastern Province, including Al-Ghawar, the largest oil field ever discovered, which produces about 5 million b/d.

Swing producer

Its high levels of reserves and large production capacity means that Saudi Arabia is a key swing producer of crude for the world, able to increase or decrease production levels in response to global demand and political events in a way that other countries cannot.

This ability has been exercised a number of times over the past decade. In 2002, for example, it dropped output to try and shore up prices in the wake of the 11 September 2001 terrorist attacks in the US. In 2011, the reverse happened when Saudi Arabia increased its crude production to help make up for the shortfall in supplies when Libya’s oil stopped flowing due to that country’s revolution.

Natural gas production has also been rising fast. Since the turn of the century, when production was running at less than 5 billion cubic feet a day (cf/d), it has almost doubled, reaching 9.6 billion cf/d in 2011. This figure is expected to rise, helped by the start of production at the country’s first offshore, non-associated gas field, the Karan field, in late 2012. Saudi Aramco plans to process up to 1.8 billion cf/d of non-associated sour gas from the field by April 2013.

Further non-associated gas discoveries have also been made in the Red Sea – an area which has become a focus of exploration efforts in recent years.

Saudi Aramco is the largest oil company in the world and dominates the hydrocarbons sector in its home market. It is responsible for more than 95 per cent of the kingdom’s oil output and is also widely seen as the region’s best-run national oil company.

Aramco is the eighth-largest refiner in the world, with a worldwide refining capacity of more than 4 million b/d at its domestic and international plants.

A number of international oil companies are involved in joint ventures with Aramco, particularly in the refining sector. They include the US’ ExxonMobil in the Samref venture, which operates an oil refinery at Yanbu; the UK/Dutch Shell Group, which formed the Sasref venture to operate a refinery at Jubail; and France’s Total, which has a stake in a refinery and petrochemicals complex at Jubail.