Introduction to oil geography in middle-east.
- Saudi arabia
- United arab emirates
- Reserves and production
- Abu Dhabi National Oil Company
- Major oil fields
- Dubaï Mercantile Exchange
- Dubaï International Financial Centre
- From oil prospecting to nationalization
- Qatar petroleum Company
- Oil fields
- Energy City Qatar
- Economics and future
Saudi Arabia oil industry is issued from prospection dating 1930 years which allowed discovering the greatest oil deposits in the world. Saudi Arabia is presently the second world oil producer (behind Russia) and holds the second greatest world reserves, just behind Venezuela, with 264.6 billions barrels.
So, up to 1930, under motionless sands of Arabian East, greatest oil world reserves had been lying. In 1933, the king, through St John Philby, granted to SOCAL (Standard Oil of California) the exclusive rights of oil prospecting and mining in the Eastern part of Arabia, as well as special rights in other regions of the realm, for a 60 year-duration, extended then to 66 years. A new entity, California Arabian Standard Oil Company (CASOC), held for 50 % by Socal (which became then Chevron) and (since 1937, to 50 % by Texas Company (future Texaco), became landlord of the concession in 1934. In 1944, Casoc was renamed Arabian American Oil Company, worldwide known as Aramco. In 1948, Standard Oil Company of New Jersey (which then took the name of Esso, and then of Exxon), and Socony-Vacuum Oil Company (the ancestor of Mobil) joined Aramco capital. The four companies, all American, remained till 1973 the kingpins of the oil development in Saudi Arabia.
In 1973, Saudi Arabia usurped 25 % Aramco rights and properties. This re-appropriation of the domestic estate led the government to take the control of Aramco, acquiring 60 % in 1974, then 100 % in 1980. Aramco carries out today the duties of an operator for the country production and plays the part of an intermediary in some construction and civil engineering projects. Aramco power grew with the management of operations before extraction, for example the setting-up in 1988 of a co-enterprise with Texaco intended for refining, distributing and marketing oil derivatives in East and in the Gulf region of the United States.
The research of new deposits, during 55 years after the first discoveries, fast revealed that Eastern Province held the greatest oil fields in the world. The first Ghawar segment, the greatest deposit in the world, was discovered in 1948. It is then located in Saudi Arabia, 100 km approx away from Teheran. Ghawar extends on a surface of 280 km long and 30 km large. The deposit belongs entirely to the Saudi oil company Saudi Aramco.
Ghawar, the greatest oil field in the world:
Safaniya, the greatest deposit offshore, was discovered in 1951.
In 1991, 60 minable deposits had been discovered, 5 of which were discovered in the single year 1990. In 1989 and 1990, a total of 7 new deposits, light crude but higher quality, were discovered in the south of Riyadh, within a region located out of supposed oil reserves.
Mining and transport:
Drilling started in April 1935 in Dammam Dome region, along the coast of Persian Gulf, but the first well started to produce in March 1938 only. The first barrel left Ras Tanura in May 1939, one of the greatest oil exporter terminals. In 1991, over 60 billion barrels had been produced since 1938 by Aramco only, but the known reserves amount to 260.1 billion barrels and are able to increase as far as deposits from south Nadj will be found. Pending extension programs plan an increase of the production up to 10 million barrels a day.
The single operator for the Eastern province, Aramco has never had to drill and mine more than the optimum number of wells. Only 850 wells are used to cover a production up to 9 million barrels a day, what represents an average of 10 588 barrels a day each.
Transport and processing plants:
Handling, transport and processing oil derivatives requires a complex network of plants. These are distributed in all Arabian East and linked between them by over 21 000 km oil pipelines. Each one of 60 Gas-Oil Separator Plants (Gas – Oil Separator Plants or GOSPs) serves several wells in a considerable range, through a dense mesh of oil pipelines.
Abqaiq and Juaymah processing plants soften acid crude flows. In Ras Tanura, a giant refinery plant, with a capacity of 530 000 barrels a day, opened in 1941 and constantly extended, processes a part of crude before dispatching it. Here plants specialized in oil derivatives operate (as in the new city of Jubayl).
Along the coasts, from Ras Tanura to Juaymah by passing through Yanbu, there are great export terminals.
Big refineries have also been built in Jubayl (280 000 barrels a day) and in Yanbu (250 000 barrels a day for export and 170 000 barrels a day reserved for domestic consumption). Refineries of Riyad (134 000 barrels a day, Jiddah (95 000 barrels a day), Rabigh (332 000 barrels a day) and Khafji (30 000 barrels a day) bring up to 8 the total number of refineries in Saudi Arabia with a total capacity of 1.82 million barrels a day.
The long TransArabia oil pipeline (Tapline) open in 1951, requiring constant repairs, ceased to be profitable in 1970 and became little by little not exploitable. It was completely closed in 1990. Nevertheless, Saudi people did never quit the idea of an outcome in the West, this time not for normal exports but in view of strategic aims. Ormuz strait, shared between Oman and Iran, is a dangerous passage in case of conflict between Gulf States and Gulf navigation (presenting real dangers since Iran-Iraq war).
These strategic considerations led in 1980 to the construction, costing several billion dollars investment, of three great oil pipelines joining Yanbu Harbor to East oil fields. The oil pipeline, 1170 km long and 66-76 cm diameter, linking East to West, was put into service in March 1981 and todays carries 270 000 barrels a day (oil equivalent). Moreover, the crude oil pipeline, 122 cm diameter, opened in June 1981, as well as the bypass way of 142 cm diameter which had been attached in 1987. Both are 1200 km long. The attachment of hydraulic pumps and the extension of storage capacities at each extremity of this transport system of the crude confer it today a capacity equal to 5 million barrels a day (ten times Tapline flow-rate) and an absorption capacity of half Aramco production.
These audacious dispatching systems crossing peninsula, new energy Trans-Siberians, equip Saudi Arabia with a totally sure domestic route, which make it free, in great part, of blockade threats.
Saudi peole remain, however, subject to a prohibition of their exports from Yanbu if both straits (Suez Canal and Chatt-el-Arab) of the Red Sea are prohibited to them.
Note that Saudi Arabia was one of OPEP and OPAEP founding members and played a first scene part in OPEP since the beginning. As production of Saudi Arabia represents each day a more important part of oil world production, the country was appealed to play a leadership and regulator part in oil quote index by making its production fluctuate.
As per Oil and Gas Journal, Saudi Arabia holds 261 billion barrels proved oil reserves, i.e. approx one quarter proved conventional oil world reserves. Although Saudi Arabia holds approx 80 oil fields, over half its reserves are in four fields only, and over half its production comes from a single field, Ghawar field.
One challenge for Saudi people to maintain or increase their production is that the production of their present fields reduces by 5-12 % a year, requiring then an equivalent complementary annual capacity. International Energy Agency forecasts for Saudi Arabia an extraction of 7 billion barrels a year in 2020.
Saudi Aramco is the Saudi domestic oil company (its name is the contraction of Arabian American Oil Company). It owns the quasi-integrality of oil resources of the realm (95 %) and from its reserves and production point of view, it is the first world oil company.
Its headquarters is in Dhahran, East country.
Saudi Aramco in a few figures (2010):
- Mean daily crude production : 7.91 million barrels
- Annual crude production : 2.887 billion barrels
- Estimated crude reserves : 260.1 billion barrels
Aramco is known for its multiple skills. Indeed, it is the best in each sector, from mining, production, refining, petrochemicals to marketing and sea transport on an international scale to the image of its subsidiary Vela International Marine Limited which manages a float of supertankers (15 VLCC (Very Large Crude Carrier) and 1 Aframax (the greatest existing vessel able to transport from 80 000 to 120 000 tons), as well as 20 tankers and 4 MRT (Medium Range Tanker)). And let us note its real interest (high investment) in mining and also in research, namely in the process of various types of oil.
Aramco has been the leadership in the sector for 80 years (though it is in terms of mining, export or reserves, although Russia comes now first (in 2010) in terms of export).
Its main customers are Asia (45 %), North America (18 %) and Western Europe (15 %).
In 2011, Saudi Aramco investment program aims essentially at Khurais project.
This deposit will increase the production by 1.2 million barrels a day of Arabian Light. Other major projects are pending, such as:
- Abu Hadriya, Fadhili and Khursaniyah : these three deposits will combine a total increase of 500 000 barrels a day of Arabian Light total production.
- Shaybah Expansion : brings an excess of production of 250 000 barrels a day of Arabian Extra Light at present, then of 750 000 barrels a day in a short time.
- Nuayyim : brings an excess of production of 100 000 barrels a day of Arabian Super Light.
In Saudi Arabia, investments in the industry fail to appear and the country lives majorly with the oil annuity. Indeed, oil incomes represent 55 % GDP in 2008, 31 % in 2009 and 35 % in 2010. They also represent, and mainly, 90 % exports and 85 % budget revenues.
Iraq holds the fourth conventional crude reserves in the world up to 143,5 billion barrels. Totally, it has 66 oil fields, 7 of which considered as “super giants”. 71 % reserves are located south country, mainly in the suburb of Bassorah, 450 kilometers away south Bagdad. The greatest Iraq oil field is Qourna-West, with 43 billion barrels (second in the world). North country, mainly Kirkuk region, counts 20 % crude, whilst the 9 % left are located in the center.
First deposits were discovered between 1925 and March 1926 by Hugo mission from Bockh, and during the following months, five boreholes are carried out between Bagdad and Kirkuk. Works start in April 1927 and on October 15, crude oil springs out in Baba Gurgur.
This discovery involves in new agreements within Turkish Petroleum Company (TPC), controlled at that time by Anglo-Persian Oil Company (23.75 %), Royal Dutch Shell (23.75 %), Compagnie Française des Pétroles (23.75 %), Near East Development Corporation (23.75 %) and Calouste Gulbenkian (the famous “Sir 5 %”).
On July 31, 1928, at a seminar in Ostend (Belgium), Gulbenkian marks out on the map of Middle East the famous “Red Line” which delimits “ancient ottoman territories” supposed to belong to the original concession of Turkish Petroleum, and excludes Kuwait, under British protectorate since 1899.
This “red line” forces the different TPC associates to mine communally the crude oil of the zone that it surrounds and this agreement will remain valid till 1948. Two months later, on September 27, 1928, a meeting resulted in an agreement relative to the crude oil marketing, constituting the basis of the “Cartel” requested to dominate production and Iraq crude oil market during almost half a century.
In 1929, TPC becomes Iraq Petroleum Company (IPC), Mossoul and Kirkuk production progresses regularly, causing soon a transport problem. French people propose to build an oil pipeline from Kirkuk to Tripoli (Lybia) but Bristish people, wanting to impose an itinerary passing through the territories that they control, request that the pipeline opens onto Haïfa (Palestine). Both partners agree on a compromise solution, the oil pipeline has to divide itself into two parties from Euphrate, a first branch going towards the Syrian shore, the second branch towards the Palestinian coast.
As from July 1934, Iraq crude oil reaches Tripoli before arriving to Haifa five months later. As from that time, four million tons may then be carried away every year to Mediterranean harbors. On the eve of the Second World War, Iraq Petroleum Company holds concessions over the whole Iraq territory, either directly, or through its two subsidiaries, Mossoul and Bassorah Petroleum.
On April 7, 1972, Saddam Hussein, vice president of revolution council, with the help of USSR, nationalizes its crude oil to the profit of Iraq National Oil Company (INOC), national company founded in 1966 by Iraq government. Since that date, INOC has the exclusivity concerning Iraq crude oil exportation, exploration and mining.
Crude oil Affair in exchange for food:
The Affair of crude oil in exchange for food is a program aiming at meeting the requirements of humanitarian needs of the Iraq population further to Kuwait war (also called Gulf war). This war takes place from 1990 till 1991, opposes Iraq to UNO countries, as a response to Kuwait invasion by Saddam Hussein Iraq army.
In 1996, Iraq being under international embargo by UNO since 1991, knows easing of its regime. Exchanges of crude oil in exchange for food are imposed and mainly controlled by UNO Sanction Committee.
Several surveys accuse the regularity of the program operations, as Saddam Hussein and his acquaintances distributed secretly “crude oil barrel allocations” to foreign personalities supposed to support their causes.
During the program period, the Iraq State and numerous companies in the world shared an amount of 1.8 billion dollars due to an ingenious system. Any contract for buying primary necessity products concluded between a company and the Iraq State had to be validated by the Ministry of Foreign Affairs of the country of origin of the goods, as well as to obtain UNO quietus to be allowed to start to work with Iraq. A representative committee takes care of validating or blocking the contract concluded to allow controlling the types of goods imported.
Over 2200 companies are implied, identified by UNO Investigating Committee (IIC) led by the previous president of United States Federal Reserve, Paul Volcker.
A double system of commissions:
The purpose of this system was for Iraq to apply a discount amounting to approx 50 cent a barrel when selling, with a price already under the quote. The company which purchased the oil saw its profit increase by 25 cent a barrel and gave 25 cent to Iraq. The money was brought by full suitcases into Iraq Embassies (such as to Geneva Embassy for example).
Concerning food entrance, this system aimed at over-invoicing inputs : companies saw their profit increase and had to give back 50 % to the Iraq State, always through embassies.
In parallel, Iraq smuggles oil goods through “over-lifting” technique, a secret overload of supertankers, with the complicity of several oil brokerage companies. Iraq people do not enjoy this smuggling because incomes generated are intended for a network of shell companies registered in privileged taxation countries.
Oil to lobbying:
Iraq regime delivers oil bonds to foreign Public Figures in exchange for lobbying activities to get embargo clearance decided by the Security Council of United Nations further to Gulf War in 1991.
Extract from Volcker report : “As from the beginning, Iraq preferred to sell its oil to companies and individuals issued from countries perceived as Iraq “friends”, particularly if they were permanent members of UNO Security Council, and able potentially to reduce sanctions”. Russia and France are particularly solicited.
Production was strongly reduced in 1991 (-86.5 %), as infrastructures had been seriously damaged by Gulf War.
In spite of difficult mining conditions, production restarted and is progressing continuously. Iraq oil production amounted to 3 million barrels a day in June 2000.
In the year 2000, for the sixth phase of the program oil in exchange for food, Iraq exported 45 % its oil to Europe, 39 % to the United States, 14 % to Far East and 12 % to Brazil and South Africa.
The main Iraq oil fields:
West Qurna : This oil field is the biggest in Iraq. It is located 70 kilometers away, northwest Bassorah, and owns some 43 billion proved barrels, ranking it as the third oil field in the world. Phase 1 of its mining was granted in November 2009 to the alliance ExxonMobil-Shell to develop 9 billion barrels, forecasting to increase production from 0.27 million to 2.25 million barrels a day in 2015. The phase 2, in December 2009, is supervised by Lukoil (Russia) and Statoil (Norway), the rights of mining amounting to 12.88 billion barrels are granted to them. Their purpose is to develop production of 120 000 barrels to 1.8 million barrels a day over 13 years.
Majnoon : this field is located 100 kilometers away, northeast Bassorah, Iraq south, and holds 23 to 25 billion reserves of proved oil barrels. Formed during the upper cretaceous period, it was discovered in 1975 by Petrobras (at that time Braspetro). It suffers a halt during the war Iran-Iraq, mainly further to Kheibar operation. The production has then been reduced to 46 000 barrels a day. In 2007, Total and Chevron signed an agreement with Iraq government to explore it. In 2009, Iraq government authorized a joint venture composed of Royal Dutch Shell and Petronas in view of operating the deposit and of tripling its production. In 2010, Total and Chevron signed an agreement with the Iraq government to explore a part of Majnoon field (12.6 billion barrels). In 2010, Total and CNPC got a production and development contract over 20 years. The operator Shell holds 45 % interest, Petronas 20 % and the Iraq government 25 %.
Ramallah : this field is located 50 kilometers away, southwest Bassorah, southeast Iraq, 30 km away from Kuwait border. This deposit was the object of a war in 1990, Kuwait claiming this deposit and invading Iraq. It was discovered in 1953 par BP. Nationalized by Saddam Hussein, it is nowadays the fourth biggest deposit in the world with 17 billion proved barrels (15% Iraq reserves). It is located 2 400 meters away underground. The field now belongs to BP and to CNPC, via the agreement of Iraq Producing Field Technical Service Contract (PFTSC). BP holds 38 %, CNPC 37 %, and SOMO (State Oil Marketing Organization – Iraq company) 25 %. The project expansion is managed by ROO (Rumaila field Operating Organization – i.e. BP, CNPC and SOMO). In June 2010, the field produces 960 000 barrels a day, what represents 40 % Iraq production (stated at 2.4 million barrels a day). BP and CNPC wish to develop production to 2.85 million barrels a day up to 5 years. It will become then the second biggest field mined in the world in terms of production.
Baba Gurgur : located 5 kilometers away, northwest Kirkuk (northeast country), this field was discovered in 1927. It was set in operation by Iraq Petroleum Company (IPC) in 1934 and remained the most important well mined in north Iraq with over 10 billion oil proved barrels (quote dating from 1998). Further to over seven decades of mining, this deposit still produces meanly 1 million barrels a day. Its resources are exported via Kirkuk-Cehyan pipeline, ending so in Cehyan Turkish harbor open to the Mediterranean Sea.
East Bagdad : it is a group of oil fields located 20 kilometers away, east Bagdad. It holds 8 billion proved barrels. It was discovered in 1976. Its potential production is estimated at 400 000 barrels a day. It measures 11 kilometers large and 64 kilometers long. It is managed by Iraq oil Ministry.
Nahr Umr : located 100 kilometers away, north Bassorah, this field holds 6.6 billion oil barrels. It was discovered in 1949 by BP.
Az Zubair : located 40 kilometers away, southeast Bassorah, it was discovered in 1949 and holds 4.5 billion proved barrels. It produces 195 000 barrels a day. It is supposed to increase the production up to 1.125 million barrels a day up to 5 years. The development contract has been obtained by ENI (32.81 %), Korea Gas Corporation (18.75 %) and Missan Oil Company (Iraq company, 25 %).
Halfaya : located east Amarah, it holds 4.1 billion proved barrels. Its production was 3000 barrels a day till December 2009, date on which CNPC got 50 % the development contract of the field, and Total and Petronas (Malaysia) 25 % each. The consortium produces in 2011 some 535 000 barrels a day.
Activity recovery, auctions:
The very bad condition of its units, as they are victim of a ten-year international embargo, then of two following wars, and the alarming situation of its finances coerce today Iraq to reopen its deposits to capital and to the foreign survey.
In 2009-2010, taking advantage from a relative political slack period, Iraq launches a great number of blocks which are quickly attributed.
Companies selected must obligatorily go into partnership with one of both domestic oil public companies, i.e. Bassorah Petroleum and Mossoul Petroleum, and share with them the management of deposits, the development of which these companies will finance alone. Foreign companies selected will not be remunerated by a withdrawal of a part of the production, but on the basis of a fixed amount by barrel produced, and only after reaching the production threshold previously fixed in the contract by the government.
Three auctions have already taken place :
These tender offers have enabled to open to the international competition Iraq resources nationalized since 37 years under the regime of Saddam Hussein.
Reserves called amounted totally to 41.2 billion barrels.
Among these sales, the most important ones were obtained by the following consortia:
The consortium led by the Russian Loukoil (85 %) and the Norwegian StatoilHydro (15 %) won the mining of the giant oil field “Qurna-west 2” (12.8 billion barrels), located south Iraq. The consortium Shell (60 %) and Petronas (40 %) won the giant oil field “Majnoun” (12.58 billion barrels) located south Iraq. The consortium led by the Chinese CNPC (50 %), Total (25 %) and Petronas (25 %) won that of Halfaya (4.1 billion barrels), located east Bagdad. Garraf field (0.86 billion barrels) was attributed to the Malaysian consortium Petronas (60 %) and to the Japanese Japex (40 %). Najmah field, located in Ninive province, north) holding 858 million barrels, was won by the Angolan Sonangol. This even company won in the same province Qaiyarah field (807 million barrels). Badra-east oil field (109 million barrels) was won by the consortium Gazprom (40 %), the South Korean Kogas (30 %), the Malaysian Petronas (20 %) and the Turkish TPAO.
In 2009, Iraq government had already signed eleven contracts with foreign companies for mining its giant oil reserves and wishes to raise its production capacity to 12 million barrels a day in 2017, compared to 2.5 mb/d in 2010, what would make Iraq become the first producer in the world. This politics will lead Iraq to confrontation with Saudi Arabia and Iran, as well as Russia, while being the first oil producer in the world.
The next auction session is forecast in January 2012.
In spite of its great reserves and of its low cost price (one of cheapest to be extracted : 1.5 to 2 US $ a barrel), the production only restarted in 2011 due to auctions initiated by Iraq government. The political risk is the main stress of Iraq oil production and will remain so in the near future.
In 2011, incomes obtained by crude oil sale in Iraq reached levels never equaled since Iraq invasion by United States in 2003.
Iraq exported 67 million barrels of oil in January 2011, generating an income equal to 6.082 billion dollars. It is question of the highest exports in Iraq since 2003. If this situation carries on, that will refund their budgetary gap.
Let us note that the country strongly depends on its oil resources which assure 90 % incomes of Iraq government.
Let us also note that numerous zones have never been explored and some analysts do not exclude that the country holds in realty the first reserves of the planet.
Iran holds the 5th conventional crude oil reserve in the world with approximately 10 % world crude (137.6 billion crude proved barrels). It is the 4th crude producer in the world and the 2nd OPEC (Organization of the Petroleum Exporting Countries) exporter.
Let us talk first about crude oil geopolitics in the Middle East.
The first concession contract for crude oil mining in Iran was granted in 1901 to a British businessman, William Knox d’Arcy. This concession contract became then famous under the name “d’Arcy agreement”. In 1908, d’Arcy engineers found out an important crude oil reserve in Masjed-Soleyman. This discovery constituted the starting point of a huge political and economical evolution in Iran as well as in the world. Further to this first success, the holders of concession stepped up mining to discover new reserves in the country.
On the threshold of the First World War, the British government had purchased d’Arcy concession and had become the undisputed master of Iran huge crude oil reserves, in south and south-west country. Iranian crude oil played a determining part by supplying energy and combustible that the British Marine needed during the Big War.
After the War, Great Britain decided to develop its influence in Iran while preventing crude oil companies coming from third countries from participating to Iranian oil mining projects. People from Iranian political communities claimed to require a review of d’Arcy concession contract, as the Iranian part only received a small part of the huge incomes from oil exportation by Great Britain.
On the other hand, Anglo-Persian Oil Company (APOC) activities in Iran and the discovery of new crude oil deposits had drawn the attention of other countries and their oil companies. So, as from 1920 years, the United States and the Soviet Union started to develop their activities in Iran.
The Iranian public opinion tended towards the decrease of Great Britain control on crude oil deposits. To reply to these internal claims, Reza Shah tempted to make believe to a modification of D’Arcy concession contract by bringing low modifications. In 1941, Reza Shah surrendered in favor of his eldest son Mohammad-Reza.
From 1945 till 1948, the Iranian Parliament approved numerous laws to forbid crude oil concessions grant by foreign countries. London reacted violently against movements which had prejudiced its interests in south and south-west Iran oil reserves mining. Within this scope, Great Britain planned to add an annex to APOC contract, which became then famous under the name of “Gass-Golshayan Agreement”.
So, in 1951, the Iranian Parliament approves the nationalization of the Iranian oil industry. A few months later, the Progressive First Minister Mossadegh nationalizes indeed the Anglo-Iranian Oil Company (AIOC), which was between the hands of British people. These latter reply by blocking Persian Gulf, not allowing any drop of Iranian crude oil pass through. This leads to a radicalization of Mossadegh policy and to huge mobilizations of the population. With the support of religious factions (led by ayatollah Abou al-Qassem Kachani), the first Iranian minister Mohammad Mossadegh nationalizes the Anglo-Iranian Oil Company on March 15, 1951.
Founded in 1948, the National Iranian Oil Company (NIOC) or Iranian national crude Company is a company producing and distributing crude (and natural gas) until its nationalization and integration to Iran crude oil Ministry. This nationalization involves an immediate conflict with Great Britain. Markets close themselves to Iranian crude oil, resulting in a serious crisis in the country. The chief of the government is then pushed away from power further to a conspiracy orchestrated by British and American services, Ajax operation. In 1953, a coup orchestrated by CIA reverses Mossadegh government. Power is transmitted to Shah Pahlavi, who settles a very repressive regime. Following the example of Israel (the shah entertains excellent relations with this country), Iran will remain during 25 years a United States faithful ally.
In 1979, a popular revolution pushes the Shah away from the power. It is directed to the foreign interference, to the shah repression and to a small elite which, accompanied by foreign financial groups, gets rich disproportionately at population expense. This revolution presents a strong Islamic identity. Further to twelve exile years, ayatollah Khomeyni enters Iran and leads the country towards a strongly Islamic regime, which will repress progressive movements. The present president Ahmedinejad is at that time one of the young managers of the Revolutionary guard.
In 1980, the start of Iran-Iraq war stops the intern fight between the various forces within the regime. The war stabilizes Khomeyni power. Within an Islamic frame, the regime discharges the West and mainly the United States interference. At the same time, economical relations take place with Germany and other European countries but also and mainly with China, India, Japan and Russia.
When, in 2005, Mahmoud Ahmadinejad (who had participated in 1979 Iranian revolution) takes control of the country, he made exchanges evolve with these latter and closes definitely the access of Iranian crude oil to the United States (which had, on the other hand, forbidden any exchange USA-Iran since 1995 (by president Clinton), i.e. far before the question of Iranian nuclear arisen by Bush in 2004.
NIOC and Iranian production:
National Iranian Oil Company (NIOC) is a company producing and distributing crude oil (and gas), the headquarters of which are located in Teheran. The company is public and belongs to Iran crude oil Ministry. It was founded in 1948. NIOC was founded in view of prospecting, developing, producing, marketing and selling crude oil and natural gas. NIOC holding all reserves of Iran oils and natural gases is considered as one of greatest crude oil companies in the world.
At present, NIOC crude oil reserves reach 137 billion barrels.
NIOC production capacities include over 4 million crude oil barrels a day. The company exports from their plants on Karg, Lavan and Siri islands, with 17 piers at the disposal of tankers for exporting its crude oil.
NIOC disposes, among others, of the following deposits:
Total reserves in Middle East are estimated at 741.6 billion barrels petrol equivalent. Iran holds 18.4 % of them.
Iran intends to supply with 12 % the production of oil and natural gases in the world up to 20 years.
Iranian production does not lower down, it is stable : approx 4.2 million barrels a day since 2003.
Iran energy situation is however precarious.
Paradox : fourth producer in the world, Iran lacks refining capacities and must import an important part of its refined gasoline (approx 30 %). Sanctions applied by the United Nations Council in June to react against Teheran nuclear policy make the situation far more complicated.
Iran produces meanly approx 1.5 billion barrels a year.
Importers and commercial partners:
China, India and Japan growing needs in crude oil (and in gas) give to Iran an important position in the world economy and politics. China needs more and more oil for its constantly growing economy. This explains its very big interest in Iran.
Teheran and Beijing are discussing about the use of a barter system to exchange Iranian oil for Chinese goods and services. American financial sanctions blocked China in order to pay at least 20 billion dollars for crude oil imports. The repeated operations of American financial sanctions imposed in reply to Iran challenge consisting in pursuing its nuclear program, devastated the bank sector of the country by limiting its capacity in making business with other banks in the world.
Chinese crude imports from Iran increased by 49 % in 2010 (over one year).
The Chinese ambassador in Teheran, Yu Hung Yang, at a seminar about business in Teheran which held in June 2011, declared that the amount of commercial exchanges between both countries had increased by 55 % during the first four months of 2011, compared with the same period of the last year and reached 13.28 billion dollars. It also predicted that the figure would be over 40 billion dollars up to the end of the year.
India is the second greatest customer of Iran, behind China. Iran does not intend to put in danger this outlet. From its side, India knows a rapid economical development and its energy needs increased by 80 % in 35 years. Iran is its second oil supplier, behind Saudi Arabia.
Crude oil Iranian stock exchange:
The creation of such a stock exchange enters the strained relations between Iran and the United States.
Iranian International Petroleum Exchange – IIPE is a stock exchange inaugurated on February 17, 2008 by the Iranian minister of crude Gholam-Hossein Nozari and the minister of economy and finance Davoud Danesh Ja-fari, where some oil derivatives are exchanged, and in a short term crude oil.
The stock exchange is located on the Kish Island, a free zone.
The peculiarity of this stock exchange is that exchanges are carried out in Iranian rial and not in US dollars, as in the other stock exchanges throughout the world. This peculiarity damages the supremacy of the American currency which serves as standard money in crude oil selling (petrodollar). In a short run, oil will certainly be exchanged in euro at Kish stock exchange, indeed a currency basket (including certainly euro, yen, yuan and rouble, but excluding in any case the American dollar).
Passing to another currency than dollar to exchange crude oil involves in economical consequences for the United States. As dollar served as exchange currency, the foreign countries felt obliged to purchase dollars from the Federal Reserve of the United States, which is the only institution authorized to issue the American national currency. Passing to another currency prevents from claiming dollars to pay crude oil. So, money inputs diminish in the United States, what may, in a morose American economic context and a low dollar compared to euro and yen, incite various countries to use another currency than dollar to carry out oil transactions.
Mahmoud Ahmadinejad declared “the drop of the dollar value is one of major problems in the world today. Damages caused are already felt in the global economy, particularly for energy exporting countries… Therefore, I reiterate my suggestion that a combination of the strongest currency in the world becomes the basis of transactions for crude oil, or then OPEC member countries choose a new currency for crude transactions”. He added that “Russia and Iran, two main producers of the world energy, should encourage crude oil (and gas) transactions in various currencies other than dollar, freeing the world from its slavery face to dollar”.
The aim of this stock exchange is, in a first step, to compete that of United Arab Emirates, then in the future IPE (London) and NYMEX (New York). The last aim is to serve as a reference index for crude oil in the Middle East.
Let us say that the opening of Iranian crude stock exchange happens at a time where the future of the American dollar, as a dominating world currency, is questioned as never before. Georges Soros, at last World Economic Forum in Davos outlined that the world was at the end of dollar era and that a “system failure” might happen.
If you add that OPEC might pass to euro up to ten years because the European Union imports far more from OPEC than the United States and 45 % Near East imports come from this one.
The Saudi Minister of Foreign Affairs, Prince Saoud al-Faiçal, conceded, at the last Summit of OPEC in Riyad, that dollar should collapse if OPEC decided to pass to euro or to a currency basket.
Venezuela, Norway and Russia are all ready to do without petrodollar. France also supports officially the request of a strongest part for euro on oil international commerce.
Symbolism of the Iranian oil stock exchange is striking : it shows that the distance from dollar is irreversible.
However, what will be the United States reaction ? Denunciations from Iranian officials still maintain that Washington threatened to stop crude oil exchange of its country (by means of an on line virus, an attempt for a regime modification or even a unilateral preventive nuclear strike).
Tensions between Riyadh and Teheran:
Both countries face each other on each side of the Persian Gulf. Saudi Arabia and Iran are direct competitors in the region for two reasons : crude oil and religion.
Saudi Arabia is the only country producing more crude than Iran. Both countries export the quasi-totality of their crude production via Ormuz Strait, strait that Iran has already threatened to close if it was attacked by a foreign power allied with the United States. Crude plants of both countries are within the reach of missiles of the adverse part, on each side of Persian Gulf. Both countries tempt to secure their long term contracts with big consumers, such as China or India. Moreover, Iran being Shiite and Saudi Arabia being Sunnite, this does not help a dialog between both opponents.
Short example of eviction attempt of the opponent, Prince Turki al-Faisal from Saudi Arabia let know that he was favorable to the intensification of the embargo against Iran, to asphyxiate its government and prevent it from developing its nuclear program. It should be question not to purchase its crude any longer, what represents almost half Iran incomes. And not to destabilize crude production and quote, he also proposes that Saudi Arabia compensates itself Iranian production.
“To give a perspective, Saudi Arabia has such an undermined production capacity (almost 4 million barrels a day) as we might replace instantly the whole Iranian crude production.
Although Saudi Arabia has then qualified this declaration as not official, claiming that this belonged only to the Prince who was at that time no longer in function, this has as effect to grow tensions between both rivals because everybody knows that this is a call launched to the International community.
Future of Iranian crude oil:
“Energy security in the world without Iran presence does not have any sense”, the Minister of Iranian Crude, Massoud Mir Kazemi, declared, requesting “policy of mutual understanding with Iran”.
He also declared that Iran was going to invest up to 2015 “150 billion dollars upstream and downstream” to develop its energy sector.
Kuwait holds the sixth oil reserves in the world with 97 billion proved barrels, i.e. slightly behind United Arab Emirates. Most Kuwait oil reserves come from Burgan field, the second biggest oil field behind Ghawar in Saudi Arabia, with 70 billion proved barrels.
Kuwait already extracted approx 40 billion barrels from its ground (2011) but hopes however to intensify its oil production to reach a capacity of 4 million barrels a day (at present 2.7 million in 2009) up to 2020, although Burgan deposit, discovered in 1938, is in serious depletion.
Burgan field is then the second oil conventional deposit on the planet, in size, behind Ghawar deposit.
Burgan was discovered in 1938 and represents the first oil discovery in the country. It is often question of “Greater Burgan” zone, including also Al-Magwa and Al-Ahmadi deposits. The production started just after the Second World War, to reach 1 million barrels a day in 1955, then 2 million in 1968, and a peak to 2.41 million in 1972, quantity which will never be matched undoubtedly. In 2005, production reached 1.7 million barrels a day. The International Energy Agency forecasts a production of 1.64 million barrels a day in 2020 and 1.53 million in 2030. Kuwait Petroleum Company (KPC) hoped to reach over 2 million in 2008, but this was not the case. Now, it maintains a stable production at approx 1.7 million barrels a day (2009).
Kuwait Oil Company:
In 1934, Kuwait Oil Company (KOC) was created by Anglo-Persian Oil Company (APOC), now known as British Petroleum (BP), and by Gulf Oil Corporation (GOC), now known as Chevron.
KOC discovered its first field in 1938 : Burgan field. In June 1946, Her Majesty Sheikh Ahmad Al-Jaber Al-Sabah, last Kuwait emir, inaugurated the first Kuwait cargo export.
In 1975, Kuwait government took 100 % KOC shares.
In 1980, the government called all emirate oil companies to gather themselves into an only one entity : Kuwait Petroleum Company (KPC). Kuwait Oil Company (KOC), Kuwait National Petroleum Company (KNPC), Kuwait Oil Tanker Company (KOTC) and Petrochemicals Industries Company (PIC), among others, are now KPC subsidiaries. Some productions of the company are named Q8. So, we find for example gasoline stations called Q8 in Scandinavia, in Belgium, in the United Kingdom, and so on.
Since, new deposits were developed, as well as export techniques. An example : the construction of Mina Al-Ahmadi North oil terminal, located 45 km south Kuwait city, and south Piers, which were achieved in 1998.
Early years 2000, twelve offshore spaces allow loading over 2 million oil barrels and may receive the biggest oil tankers. Mina al-Ahmadi piers are able to handle 100 000 ton oil tankers or cargoes. This artificial island, Sea Island, may handle 375 000 ton tankers. The island consists in a loading platform with six reception platforms. Only one attachment point is linked by submarine oil pipes.
In Mina Al-Ahmadi, the first refinery in the country history was built in 1949, having an oil refining capacity equal to 465 000 barrels a day.
Its main two habors are Ash Shuwaikh and Ash Shuaiba.
Kuwait War as well as Gulf War, from 1990 till 1991, opposing then Iraq from Saddam Hussein to Kuwait (helped by UNO among others), devastated the emirate in 1990.
As from January 19, 1991, with the sabotage of Kuwait oil wells and of Sea Island oil terminal by Iraqi army, over one million tons oil flow into the Persian Gulf causing the greatest oil spill.
5 Iraqi oil tankers pre-positioned in Mina-al-Ahmadi terminal have been emptied out their cargo. Ground storage tankers have also been emptied into the gulf through a submarine pipeline.
No other accident with tankers, no voluntary destructions of such a size happened further to this catastrophe.
The victory of the coalition involved in Kuwait liberation. Further to the liberation, dated February 26, 1991, Kuwait production recovered its former capacity.
Kuwait oil fields (out of Burgan):
The oil export represents 90 % Kuwait public revenues.
United arab emirates
United Arab Emirates hold the fifth oil reserves in the world with 98 billion proved barrels. They produce approx 1.1 billion barrels a year (2010). Abou Dabi holds 94 % United Arab Emirates oil reserves.
Gulf Emirates, named in the XIX Century “Truce States”, under British protectorate from 1892 till 1968, became in 1971 the independent federation of United Arab Emirates.
Early 1960, a first oil well was discovered in Abou Dabi, allowing the emirate to develop quickly driven by Cheikh Zayed ben Sultan Al Nahyane.
Dubaï was also touched by this impetus of economical development, helped by oil export earnings.
The different emirates started to come closer and to take over control from British hands. In 1968, the British announced their decision to put an end to the protectorate treaty which bound them to Truce States and to Bahrein and Qatar emirates.
The nine States tempted to gather themselves, but as they did not reach an agreement, Bahrein and Qatar declared their independence respectively in August and in September 1971. But an agreement was concluded between six emirates : Abou Dabi, Dubaï, Charjah, Oumm al Qaiwain, Fujaïrah and Ajman. It resulted in the creation of a federation, called United Arab Emirates, officially born on December 2, 1971. Early 1972, the seventh emirate, Ras al-Khaimah, joined the federation.
Reserves and production:
The oil mining started in 1962 in the territory of Abou Dabi emirate. It remains the main producer of the federation.
Abou Dabi emirate represents 93 % (92 billion barrels) reserves of the federation, i.e. the equivalent of 10 % world oil reserves, the left quantity being shared between Dubaï (4 billion barrels) and Charjah (1.5 billion barrels).
United Arab Emirates produce approx 2.9 million oil barrels a day but has announced its intention to carry this figure to 5 million barrels a day up to 2014.
Most oil is contained in Zakum field, the third greatest field in the Middle East with 66 billion barrels.
United Arab Emirates have produced 28 billion barrels of their reserves at this date (2011), i.e. 6.2 % OPEC reserves. They still have 100 years reserves at equal production.
Abu Dhabi National Oil Company (ADNOC):
The oil company of United Arab Emirates (UAE) is Abu Dhabi National Oil Company (ADNOC).
ADNOC, company belonging entirely to the government and created in 1971, is one of the main world oil companies holding important oil reserves. It now produces over 2 million oil barrels a day.
ADNOC is one of most important domestic oil companies and one of most advanced concerning the techniques of seismic analysis and optimization of recovery rates of its deposits, as well onshore as offshore. It also owns Ruwais and Umm Al Nar refineries.
Equipped with numerous specialized subsidiaries (NDC, ADCO, ADMA-OPCO, NPCC, TAKREER, ADNATCO, and so on), ADNOC is an integrated company covering all aspects of oil industry up to oil products dispatching.
In 2011, ADNOC produces over 2.7 million barrels a day, representing the quasi-totality of the emirate production (95 %).
However, other oil companies exist, such as Dubaï Petroleum Establishment (DPE) and Abu Dhabi Ports Company (ADPC) specialized in port freight.
Major oil fields:
Bab is the first field to be mined. Research started in 1947. The first drilling took place in Ras Sadr, close to Taweela, in 1950. This was the first deep drilling in the Middle East. Murban deposit was drilled in 1960 and the production started in Bab field in 1963. This was doubled with Habshan field in 2001, further to GASCO and ATHEER fusion.
Bu Hasa, the second field in United Arab Emirates, is located south west Abu Dhabi. It was discovered in 1962 and its production started in 1965. It has the best output out of all ADCO fields. In terms of proved reserves, this field is one among the first twenty in the world. The reservoir is located between 2 200 meters and 2 800 meters deep. Its formation is estimated between 112 and 135 million years.
Asab and Sahil fields entered into production in the years 1970 and Shah in 1983. Shah production is at present 1.8 million barrels a day. Shah is located 230 kilometers south Abu Dhabi. It covers 160 square kilometers. It is located slightly north Asab field, located 185 kilometers south Abu Dhabi and Sahil, this latter is located approx 90 kilometers south Abu Dhabi.
Al-Jalila is the last field discovered in 2010, starting to produce in 2011.
United Arab Emirates export their crude through Jabal az Zannah terminals and through Das island. A smaller terminal is located in Al Mubarraz.
Dubai Mercantile Exchange:
Arab Light Crude is a light crude oil extracted in Dubaï emirate. Sometimes, it is named Fateh. It serves as an index or indicator to the whole Persian Gulf, because it is one being available immediately, and this case is rare. It aims at ranking at the same height as Brent and WTI. Its terms are limited to one or two months.
Dubaï crude oil is a light oil, 31° API, with 2 % sulfur content.
In 2011, NYMEX holds 25 % DME, highly specialized in oil. In 2012, it intends to carry its share to 50 %.
Dubai International Financial Centre (DIFC):
DIFC is the biggest International Financial Center which aims at developing itself to compete with New York, London and Hong Kong centers.
Emirates take their heart on teaching about their resources and hope to compete with Western on this field in the future years. They are already in partnership with several famous universities such as London Business School.
United Arab Emirates have succeeded in diversifying their economy, mainly in tourism but also in industry and real estate.
Qatar holds 12th oil reserves in the world with 30 billion proved barrels.
It is the smallest OPEC producer. In 2011, it produces 1.1 million barrels crude a day (815 000 of which are light crude), since deposits, most of which are ancient. Dukhân, located onshore, is the main deposit.
From oil prospecting to nationalization:
Further to Ottoman Empire fall after the First World War, Qatar became under the British influence. The exploration of its subsoil started in May 1935 thanks for a partnership between Anglo-Persian Oil Company (APOC, future BP) and Qatar Sheikh Abdullah Bin Jassem Al-Thani leading to the creation of a subsidiary of APOC, the Petroleum Development Limited (PDL). Due to frontier conflicts with Saudi Arabia and Bahrain, it started really to explore in 1938. Oil was discovered in 1940 on the west coast of the peninsula, by 1730 meters deep : it is question of Dukhan field. Due to the Second World War, the export started in 1949 from Mesaieed harbor located on the east coast of the country. Production rose from 34 000 barrels a day in 1950 to 67 700 barrels in 1952. Offshore, the first field discovered was Al-Idd Al-Sharqi in 1960, then that of Maydan Mahzam in 1963 and at last that of Bul Hanine in 1970. Shell Company Qatar (SQC) was in charge of extracting these fields offshore. Then they were connected to the terminal located on Halul Island. Qatar production rose to 233 000 barrels a day in 1965.
On September 3, 1971 Qatar acquired it independence.
Qatar Petroleum Company (QP) was created in 1974. Qatar emirate raised to 25 % the capital of these two companies, i.e. of QP for onshore concessions and, one year later, of SQC for offshore concessions. It grew its share into the two companies up to 60 % in 1975, and then QP, the present domestic company in 2010, became controlled by Qatar government as from 1976.
Qatar petroleum Company (QP):
Qatar petroleum Company (QP), created in 1974, is the Qatar domestic company. It controls the quasi-totality of emirate oil production and export since 1976.
The company is present at each phase : exploration, production, refining, transport and storage. Its present manager Mohammed, Bin Saleh Al-Sada, in jobs since 2008, is also the Qatar minister of energy and industry since 2011. QP activities are directly related to the governmental agencies and regulation authorities.
The company is the third oil group in the world in terms of cumulated reserves of oil and gas.
QP operates the domestic Qatar network of oilpipes which connects production wells to UM Said refinery, built in 1953, and to the export terminals on Halul Island and Ras Laffan.
Refinery is carried out by National Oil Distribution Company (NODCO), a QP subsidiary created in 1968.
Only one field is located onshore, it is question of Dukhan. All the others are located offshore.
Dukhan is the main oil field of Qatar and the only one onshore. Located on the west coast of the peninsula, it was discovered in 1939. However, the commercial exploitation only started in 1949.
It includes four reservoirs (Khatiyah, Fahahil, Jaleha and Diyab) in different strata, the deepest one contains natural gas. It belongs to the famous “Khuff” formation. Oil and gas are separated in 4 stations : Khatiyah North, Khatiyah Main, Fahahil Main and Jaleha. Crude is injected into pipelines connected to Mesaieed habor, located 100 kilometers east Dukhan.
The field presently produces some 340 000 barrels a day of light crude oil (40° C API), but with a relatively high sulfur content (1.5 %). Much gas is injected (not only its own associated gas which is then recycled, but also North Dome gas).
The field spreads over approx 80 km from north to south, on 8 kilometers large. It is located 80 km west Doha. Initially, its reserves reached 5 billion barrels. It reached maturity mid 1990 but constantly profits from the last extraction technologies, allowing maintaining its production in a stable way.
Discovered by Maersk in 1992, it holds 780 million barrels crude (estimated in 2003). Production started in 1994. At present, it reaches 330 000 barrels a day.
Idd Al Sharqi:
Discovered in 1960, it was the first offshore field discovered and the second biggest one discovered in Qatar territorial waters. It lies at 80 kilometers east Qatar. Its production started in 1964.
In 2006, it produced approx 150 000 barrels a day.
Discovered in 1965, located 100 kilometers east coast, this field belongs to Qatar since 1969 further to the result of the sea delimitation with Abu Dhabi. It is one of the biggest offshore in Qatar. It covers 80 square kilometers.
Discovered in 1964, it covers 20 square kilometers. It is at the limit of the sea border with the United Arab Emirates. So, its production is divided by two between both States.
Discovered in 1936, it covers a surface of 30 sq kilometers.
Many other fields such as Al Rayyan (18 000 barrels a day), Al Khaleej (21 000 barrels a day) and Al Karkara are producing.
Numerous oil fields are close by Qatar east coast. However, they are sometimes held by Qatar, sometimes United Arab Emirates and Iran.
Energy City Qatar (ECQ):
Qatar honored the first stock exchange of energy in Middle East at Energy City. A city which spreads over 2 sq kilometers and welcomes the offices of companies located in this sector, as well as a multitude de services : laboratories, banks, insurances, training centers in the energy sector, hotels, and so on. It is a giant complex aiming at competing directly that of United Arab Emirates.
Economics and future:
Pear Island, an artificial island with a five star hotel complex and other touristic attractions, now competes with “The World” of United Arab Emirates. Located east country, at 30 km away from the coast, connected by a bridge, this island aims at becoming an asset for the emirate as from 2012.
Qatar Authorities tend towards a diversification of the economy. They want to develop their touristic sector.
Indeed, until now, Qatar main resources come from its hydrocarbons exports. Oil brings to Qatar 80 % its export incomes and constitute 2/3 its revenues.
On the other hand, Qatar holds the 3rd biggest natural gas reserves in the world, concentrated in the giant offshore field “North Dome” or “South Pars”, shared with Iran.
Hydrocarbons employ 38 % the population, generating 60 % GDP, the services sector (tourism, construction) employs 59 % the population.
Qatar living standard may be compared with that of Western Europe. GDP by inhabitant rose at 98 000 $ in 2011 due to the good economic politics observed by the state.
In 2011, Qatar unemployment rate is almost zero (0.5 %).
The Sultanate of Oman started to explore in 1925 but geological studies led to bad results. Further to twelve years research, numerous companies stopped exploring due to these bad results, to tribal tensions, to the inhospitable character of the environment and to logistic problems involved. Only Shell and Partex (consortium created on Calouste Gulbenkian demand (the famous “Mister five per cent”) in 1928, including BP, Total and Exxon) continued the exploration.
Efforts were not vain in 1962 in Yibal, northwest country. Then Fahid and Fahud deposits appeared nearby. They built a 276 kilometer long pipeline linking the production zone to the country coast. Then they built Mina al Fahal industrial complex, a terminal including a storage park and an attachment zone.
The first Oman export was carried out on July 27, 1967. The consortium is now composed of Shell at 85 %, Total (Compagnie Française des Pétroles) at 10 % and of “Mister five per cent”.
Then, new discoveries appeared, such as Ghaba North in 1972, followed by Saih Nihayda, Saih Rawl, Qan Alam and Habur. These five fields, located a bit more east Yibal deposit, were on the way of the pipeline leading to the terminal. They connected the pipeline to new oil pipes, making the production raise to an average of 340 000 barrels a day in 1975.On the east, Amal, Amin and Marmul fields were then discovered.
On 1st January 1974, the government raised to 25 % the capital of the consortium through Petroleum Develoment Oman (PDO). Six months later, it raised to 60 %. Shell only held 34 %, Total 4 % and Partex (Gulbenkian) 2 %. This never changed since then.
In 2010, oil reserves of the Sultanate of Oman are valued at 5.5 billion barrels.
It is a country outside OPEC, classified 22 in terms of oil proved natural reserves.
Petroleum Development Oman (PDO):
Petroleum Development Oman (PDO) is the Oman domestic company. They hold 60 % their capital in 2010.
In 1984, they produce an average of 400 000 barrels a day, i.e. 146 million barrels a year. They were, at that time, a precursor in terms of mining techniques such as horizontal drilling.
Between 1967 and 1980, only eleven fields contributed to the production of PDO. In 1988, this number raises to 50, in 1990 to 60 and in 1999 to nearly 100 fields, a great part of which in south country.
Today PDO produces approx 600 000 barrels a day.
Yibal deposit was discovered in 1962 by Shell in a south extension of the Arab-Persian oil field. The production started in 1969 and raised gradually.
The production peak amounts to 250 000 barrels a day in 1998. Since, it is declining. In 2006, it amounted to 80 000 barrels a day.
Yibal already produced over 1.6 billion barrels in 2010 and its total production should not exceed 2 billion barrels.
Nowadays, Oman produces approx 700 000 oil barrels a day. Oil represents approx 90 % exports. Oil extraction is nevertheless in decline (by 4 %/year) since 1998, date on which Yibal saw its production decline.
Over 65 % GDP depends on oil extraction. Then they have tourism (Mascate and Salalah region) and agriculture (around Sohar city).