Bulletin #29

From: Francis Feeley <Francis.Feeley@u-grenoble3.fr>
Subject: Persian Gulf oil natural gas exports information

Dear Colleagues ane Friends,

We recently received a message from our research associate, Professor Gabriel Kolko, who has recommended the following web sites on OIL, plus background information on the Persian Gulf.

F. Feeley
Director of Research



<http://www.eia.doe.gov> or <http://www.eia.doe.gov/cabs/pgulf.html>

March 2002

Persian Gulf Oil and Gas Exports Fact Sheet
In 2001, the Persian Gulf countries (Bahrain, Iran, Iraq, Kuwait, Qatar,
Saudi Arabia, and the United Arab Emirates) produced about 28% of the
world's crude oil, while holding nearly two-thirds of the world's crude oil
reserves. OECD net oil imports from Persian Gulf countries decreased
slightly, to about 12.0 million barrels per day (bbl/d) during the first 9
months of 2001, from 12.2 million bbl/d for the whole of 2000. The Persian
Gulf accounted for nearly half of total OECD net oil imports during that
period. Besides oil, the Persian Gulf region also has huge reserves (1,918
trillion cubic feet -- Tcf) of natural gas, accounting for 36% of total
proven world gas reserves.

The Persian Gulf, also known as the Arabian Gulf, is a 600-mile-long body
of water which separates Iran from the Arabian Peninsula, and one of the
most strategic waterways in the world due to its importance in world oil
transportation. At its narrowest point (the <http://gulf2000.columbia.edu/reference/hormuz.html>
Strait of Hormuz), the Gulf narrows to only 34 miles wide.

There have been, and continue to be, significant territorial disputes
between Persian Gulf countries. Besides the Iraqi invasion of Kuwait in
August 1990, and before that the Iran-Iraq War from 1980 to 1988, another
important dispute is between the UAE and Iran over ownership of three
islands -- Abu Musa, Greater Tunb Island, and Lesser Tunb Island, all
strategically located in the <http://gulf2000.columbia.edu/reference/hormuz.html>
Strait of Hormuz. The three islands were effectively occupied by Iranian troops in 1992.
In 1995, the Iranian Foreign Ministry claimed that the islands are "an inseparable
part of Iran." Iran rejected a 1996 proposal by the Gulf Cooperation
Council (GCC) for the dispute to be resolved by the International Court of
Justice, an option supported by the UAE. In early 1996, Iran took further
moves to strengthen its hold on the disputed islands. These actions
included starting up a power plant on Greater Tunb, opening an airport on
Abu Musa, and announcing plans for construction of a new port on Abu Musa.
In September 2000, Iran stated its willingness to resume talks with the UAE
on the dispute. In March 2000, Jane's Defence Weekly reported that
satellite images of Abu Musa and the Tunbs did not show any evidence that
Iran had fortified the islands militarily, or turned them into "unsinkable
aircraft carriers capable of closing the (Hormuz) Strait during a crisis."
On December 31, 2001, the GCC issued a statement reiterating its support
for the UAE's sovereignty over Abu Musa and the Tunbs, declared Iran's
claims on the islands as "null and void," and backed "all measures...by the
UAE to regain sovereignty on its three islands peacefully."

In February 1991, Iraqi troops, before being expelled from Kuwait by
coalition forces, dumped millions of barrels of oil into the Persian Gulf,
creating an environmental crisis and also threatening desalination plants
in the region. During the Iran-Iraq War, oil tankers were attacked in the
Persian Gulf by both Iraq and Iran, leading in part to the U.S. decision in
1987 to "reflag" Kuwait tankers and also to increase U.S. naval forces in
the Persian Gulf.

In January 2002, in his State of the Union address, President Bush labeled
two key Persian Gulf coutnries -- Iran and Iraq -- as members of an "axis
of evil" that supported terrorism and were developing weapons of mass
destruction. This speech came five months after the terrorist attacks of
September 11, 2001, the worst such attack ever on U.S. soil.

The Persian Gulf contains around 679 billion barrels of proven oil
reserves, representing approximately 66% of total world oil reserves, and
1,918 Tcf of natural gas reserves (35% of the world total). Also, as of
early 2002, the Persian Gulf maintains about 22.7 million bbl/d of oil
production capacity, or about 31% of the world total, and accounts for 27%
of world total oil production. Perhaps even more significantly, the Persian
Gulf countries maintain a significant percentage (about 91%) of the world's
excess oil production capacity (note: as of early 2002, world excess oil
production capacity had increased to around 7.3-7.8 million bbl/d from
about 4.4 million bbl/d in 2001). Excess production capacity is important
because, in the event of an oil supply disruption, this capacity can be
brought online to compensate. If such a disruption were to occur in the
Persian Gulf, it would leave the world with relatively limited options for
making up the lost oil production.

In 2001, Persian Gulf countries had estimated net oil exports of 16.8
million bbl/d of oil (see pie chart).  Saudi Arabia exported the most oil
of any Persian Gulf country in 2001, with an estimated 7.4 million bbl/d
(44% of the total). Also in 2001, Iran had estimated net exports of around
2.6 million bbl/d (15%), followed by the United Arab Emirates (2.1 million
bbl/d -- 12%); Iraq (2.0 million bbl/d -- 12%), Kuwait (2.0 million bbl/d
-- 12%), Qatar (0.8 million bbl/d -- 5%), and Bahrain (0.02 million bbl/d
-- 0.1%).

According to the Energy Information Administration's International Energy
Outlook 2001, Persian Gulf oil production capacity is expected to reach
about 30.4 million bbl/d by 2010, and 44.5 million bbl/d by 2020, compared
to about 23 million bbl/d currently. This would increase Persian Gulf oil
production capacity to 36% of the world total by 2020, up from 31% as of
early 2002.

Offshore Persian Gulf Oil Development
Major offshore Persian Gulf oil fields include Khafji and Hout, both of
which are connected to Saudi Arabia's Safaniyah, the world's largest
offshore oilfield (with estimated reserves of 19 billion barrels). Saudi
offshore Persian Gulf production includes Arab Medium crude from the Zuluf
(over 500,000 bbl/d capacity) and Marjan (270,000 bbl/d capacity) fields
and Arab Heavy crude from the Safaniya field.   The Doroud 1&2, Salman,
Abuzar, Foroozan, and Sirri fields comprised the bulk of Iran's offshore
output, all of which is exported.  Iran plans extensive development of
existing offshore fields and hopes to raise its offshore production
capacity to 1.1 million bbl/d by 2003 (from around 600,000 bbl/d now).
Iran's national oil company (NIOC) has expressed interest in developing
five oil and gas fields in the Hormuz region (Henjam A -- HA, HB, HC, HD,
and HE), which, according to NIOC, hold an estimated 400 million barrels of
liquids (oil, natural gas condensates, etc.) and have production potential
of 80,000 bbl/d.

Offshore Persian Gulf Natural Gas Development
Besides oil, the Persian Gulf region also is important because it contains
huge reserves (1,918 trillion cubic feet -- Tcf) of natural gas, with Iran
and Qatar holding the world's second and third-largest reserves (behind
Russia), respectively. This likely will become increasingly important in
coming years, as both domestic gas consumption and gas exports (by pipeline
and also by liquefied natural gas -- LNG -- tanker) increase. In late 2000,
Saudi Arabia resolved a long-standing offshore Persian Gulf border dispute
with Kuwait, opening the door to development of the huge (13-Tcf) Dorra gas
field, which lies in waters straddling Iranian, Saudi, and Kuwaiti
territories. Most of Qatar's gas is located in the North Dome Field, which
contains 380 Tcf of in-place and 239 Tcf of recoverable reserves, making it
the largest known non-associated gas field in the world. The Qatari
government believes that the country's economic future lies in developing
this vast gas potential. Currently, Qatar has two LNG exporters: Qatar LNG
Company (Qatargas); and Ras Laffan LNG Company (Rasgas). The Dolphin
Project would supply gas from Qatar's North Dome to the United Arab
Emirates, Oman, and possibly Pakistan at some point in the future (although
at present this seems unlikely).

Another major Persian Gulf offshore gas project is Iran's huge South Pars
field. Current estimates are that South Pars contains around 280 Tcf of
gas, of which a large fraction will be recoverable, and over 17 billion
barrels of liquids. Development of South Pars is Iran's largest energy
project, and already has attracted around $20 billion in investment.
Natural gas from South Pars largely is slated to be shipped north via the
planned 56-inch, $500 million, IGAT-3 pipeline (a section of which is now
being built by Russian and local contractors), as well as a possible IGAT-4
line, and then reinjected to boost oil output at the mature Aghajari field
(output peaked at 1 million bbl/d in 1974, but has since fallen to 200,000
bbl/d), and possibly the Ahwaz and Mansouri fields (which make up part of
the huge Bangestan reservoir in the southwest Khuzestan region). South Pars
natural gas also could be exported, both by pipeline and possibly by
liquefied natural gas (LNG) tanker. Initial gas production from South Pars
is expected in early 2002. On September 29, 1997, Total (now TotalFinaElf)
signed a $2-billion deal (along with Russia's Gazprom and Malaysia's
Petronas) to explore South Pars and to help develop the field during Phase
2 and 3 of its development.  In July 2000, Italian firm ENI signed a
$3.8-billion deal with Iran to develop the South Pars region for gas. The
deal reportedly was the largest between Iran and a foreign company since
the 1979 Islamic Revolution.

In addition to South Pars, Iran aims to develop the 6.4-Tcf, non-associated
Khuff (Dalan) reservoir of the Salman oil field, which straddles Iran's
maritime border with Abu Dhabi, where it is known as the Abu Koosh field.
NIOC is seeking to develop the Khuff reservoir, which could lead to the
production of 500 Mmcf/d of non-associated gas, along with the 120,000
bbl/d of crude oil that is now being produced from a shallower reservoir.
Also, the 47-Tcf North Pars development will be integral to Iran's
long-term gas utilization plans. Development plans call for 3.6 Bcf/d of
gas production, of which 1.2 Bcf/d would be re-injected into the onshore
Gachsaran, Bibi Hakimeh, and Binak oil fields. The other 2.4 Bcf/d would be
sent to the more mature Agha Jari oil field.

Strait of Hormuz
In 2001, the vast majority (around 80%) of oil exported from the Persian
Gulf transited by tanker through the
<http://gulf2000.columbia.edu/reference/hormuz.html>Strait of Hormuz ,
located between Oman and Iran, and onwards. By far the world's most
important oil "chokepoint," accounting for transit of around two-fifths of
all world traded oil, the Strait consists of 2-mile wide channels for
inbound and outbound tanker traffic, as well as a 2-mile wide buffer zone.
Closure of the Strait of Hormuz would require use of longer alternate
routes (if available) at increased transportation costs. Such routes
include the 4.8-million-bbl/d-capacity East-West Pipeline across Saudi
Arabia to the port of Yanbu, and the Abqaiq-Yanbu natural gas liquids line
across Saudi Arabia to the Red Sea. The 13 million bbl/d or so of oil which
transit the Strait of Hormuz goes all over the world, eastwards to Asia
(especially Japan, China, and India) and westwards (via the Suez Canal, the
Sumed pipeline, or around the Cape of Good Hope in South Africa) to Western
Europe and the United States. Another route for Saudi oil exports which
reportedly has been under consideration is through Yemen to the Gulf of Aden.

Bab al-Mandab
Oil heading westwards by tanker from the Persian Gulf towards the Suez
Canal or Sumed pipeline must pass through the Bab al-Mandab. Located
between Djibouti and Eritrea in Africa, and Yemen on the Arabian Peninsula,
the Bab al-Mandab connects the Red Sea with the Gulf of Aden and the
Arabian Sea. Any closure of the Bab al-Mandab could keep tankers from
reaching the Suez Canal/Sumed Pipeline complex, diverting them around the
southern tip of Africa. This would add greatly to transit time and cost,
and effectively tie up spare tanker capacity. In December 1995, Yemen
fought a brief battle with Eritrea over Greater Hanish Island, located just
north of the Bab al-Mandab. The Bab al-Mandab could be bypassed by
utilizing the East-West oil pipeline. However, southbound oil traffic,
which totaled about 1 million bbl/d in 1997, would still be blocked. In
addition, closure of the Bab al-Mandab would effectively block non-oil
shipping from using the Suez Canal, except for limited trade within the Red
Sea region.

<http://www.dataxinfo.com/hormuz/icons/sat64b.jpg>Suez/Sumed Complex
After passing through the Bab al-Mandab, oil en route from the Persian Gulf
must pass either through the Suez Canal or the Sumed Pipeline complex in
Egypt. Both of these routes connect the Red Sea and Gulf of Suez with the
Mediterranean Sea. Around 3 million bbl/d of Persian Gulf oil exports
transit the Suez Canal/Sumed complex, destined mainly for Europe and the
United States. Any closure of the Suez Canal and/or Sumed Pipeline would
divert tankers around the southern tip of Africa (the Cape of Good Hope),
adding greatly to transit time and effectively tying up tanker capacity.

Other Export Routes
In 2001, around 3.4 million bbl/d (20%) of oil from the Persian Gulf was
exported via routes besides the Strait of Hormuz. This oil was exported
mainly: 1) via the Saudi East-West pipeline to the port of Yanbu on the Red
Sea (about 2 million bbl/d); 2) via pipeline from Iraq's Kirkuk oil region
to the Turkish port of Ceyhan (about 0.8 million bbl/d); 3) by pipeline via
Syria (around 0.2 million bbl/d); 4) by various means (smuggling by truck
and small boat, for instance) to a variety of destinations, including
Kurdish areas of northern Iraq, Turkey, Jordan, Iran, India, and Pakistan;
and 5) by truck to Jordan.

OECD Oil Imports from the Persian Gulf
U.S. gross oil imports from the Persian Gulf increased during 2001, to
around 2.7 million bbl/d (of which 2.6 million bbl/d was crude), from 2.5
million bbl/d (of which 2.4 million bbl/d was crude) in 2000. The vast
majority of Persian Gulf oil imported by the United States came from Saudi
Arabia (63%), with significant amounts also coming from Iraq (25%) and
Kuwait (11%), and small amounts from Qatar and the United Arab Emirates.
Iraqi oil exports to the United States increased by about 160,000 bbl/d in
2001 compared to 2000, to around 780,000 bbl/d, while Saudi exports
increased by about 80,000 bbl/d, to 1.66 million bbl/d. In 2001, the United
States imported more oil on a daily basis from the Persian Gulf than in any
previous year.  The Persian Gulf accounted for about 25% of U.S. net oil
imports, and 14% of U.S. oil demand, in 2001.

Western Europe (defined as European countries belonging to the Organization
for Economic Cooperation and Development -- OECD) averaged 2.8 million
bbl/d of net oil imports from the Persian Gulf during the first 9 months of
2001. This represented a decrease of about 0.3 million bbl/d from the same
period in 2000. The largest share of Persian Gulf oil exports to Western
Europe came from Saudi Arabia (47%), with significant amounts also coming
from Iran (27%), Iraq (15%), and Kuwait (8%).

Japan averaged 4.1 million bbl/d of net oil imports from the Persian Gulf
during the first 9 months of 2001. Japan's oil imports from the Persian
Gulf as a percentage of demand were up slightly compared to 2000, at about
76%. Japan's dependence on the Persian Gulf for its oil supplies has
increased sharply since the 58% figure of 1986. During the first 9 months
of 2001, around 31% of Japan's imports from the Persian Gulf came from
Saudi Arabia, about 30% from the United Arab Emirates, 14% from Iran, 13%
from Kuwait, 12% from Qatar, and 1% from Bahrain.

Net Oil Imports from the Persian Gulf Region
As % of Demand
As % of Total Net Oil Imports
US W. Europe Japan US W. Europe Japan
1982 4.5% N.A. 58% 16.1% N.A. 60%
1983 2.9% N.A. 60% 10.1% N.A. 60%
1984 3.2% N.A. 61% 10.6% N.A. 61%
1985 1.9% N.A. 58% 7.1% N.A. 59%
1986 5.6% N.A. 58% 16.7% N.A. 58%
1987 6.4% N.A. 59% 18.1% N.A. 60%
1988 8.8% N.A. 57% 23.2% N.A. 58%
1989 10.7% N.A. 64% 25.8% N.A. 63%
1990 11.5% 29% 66% 27.4% 45% 65%
1991 11.0% 27% 64% 27.7% 41% 64%
1992 10.4% 26% 66% 25.6% 42% 66%
1993 10.3% 29% 69% 23.3% 47% 69%
1994 9.7% 25% 70% 21.4% 45% 69%
1995 8.8% 23% 70% 19.8% 44% 70%
1996 8.7% 21% 69% 18.8% 41% 70%
1997 9.4% 23% 75% 19.1% 44% 75%
1998 11.3% 26% 75% 21.8% 47% 77%
1999 12.6% 22% 73% 24.8% 43% 74%
2000E 12.6% 21% 75% 23.8% 42% 75%
2001E* 13.9% 19% 76% 25.3% 36% 76%

*January-September 2001

For more information from EIA on the Persian Gulf, please see:
<http://www.eia.doe.gov/emeu/international/bahrain.html>EIA - Country
Information on Bahrain
<http://www.eia.doe.gov/emeu/international/iran.html>EIA - Country
Information on Iran
<http://www.eia.doe.gov/emeu/international/iraq.html>EIA - Country
Information on Iraq
<http://www.eia.doe.gov/emeu/international/kuwait.html>EIA - Country
Information on Kuwait
<http://www.eia.doe.gov/emeu/international/qatar.html>EIA - Country
Information on Qatar
<http://www.eia.doe.gov/emeu/international/saudi.html>EIA - Country
Information on Saudi Arabia
<http://www.eia.doe.gov/emeu/international/uae.html>EIA - Country
Information on the United Arab Emirates

Links to other U.S. government sites:
<http://www.odci.gov/cia/publications/factbook/index.html>2001 CIA World
<http://www.fe.doe.gov/international/sa-ne.shtml>U.S. Department of
Energy's Office of Fossil Energy's International section (Near East and
South Asia)
<http://www.state.gov/p/nea/>U.S. State Department Bureau of Near Eastern

The following links are provided solely as a service to our customers, and
therefore should not be construed as advocating or reflecting any position
of the Energy Information Administration (EIA) or the United States
Government. In addition, EIA does not guarantee the content or accuracy of
any information presented in linked sites.

<http://gulf2000.columbia.edu/>Columbia University Gulf/2000 project
<http://gulf2000.columbia.edu/reference/gulfregion.html>Columbia University
Gulf/2000 project: Persian Gulf map
<http://www.planetarabia.com/>Planet Arabia.com
<http://www.middleeastwire.com/gulf/>Middle East News Online -- Persian Gulf
<http://www.arabialink.com/GulfWire/GULFWIRE.htm>Gulf Wire
<http://www.gulfdaily.com/>Persian Gulf News

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File last modified: March 13, 2002


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