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Royal prerogative: Is Saudi Arabia's King right?

by Daniel Canty on Jul 6, 2010

20 Comments

Exploration will reveal whether The Empty Quarter lives up to its name

Saudi Arabia's King Abdullah has been quoted in newswires ordering a halt to oil exploration operations, in order to save the hydrocarbon wealth in his Kingdom for future generations.

But exploration itself is all about learning more, investigating the resources and reservoirs, and looking for new finds. The "E" in E&P doesn't necessarily drive the "P", or does it?

On the one hand, exploration activity conducted now might represent something of a bargain, still way below the crazy costs which materialised when oil was $147 a barrel, when every man and his dog wanted to know whether there was oil beneath his feet.

However, once a resource is known about, there will be the overwhelming temptation to start pumping it out the ground, flooding national coffers with petro dollars, which in turn can stimulate massive public spending projects, but at the same time depleting a reserve which cannot be replaced.

Rumours abound that Saudi Arabia will be boosting its operational drilling rig count significantly by year-end, but the Royal request may put the brakes on further development this year. I guess we'll find out in the next couple of months.

We're interested to hear you views on whether now is a great time to explore, or whether its, sometimes better not to know. Post your thoughts here, and we'lll see what the general consensus is.

To drill, or not to drill? That is today's question.

FEATURED COMMENT

CUT DOWN IS A POSITIVE APPROACH TO WORLD ENERGY. LONG LIVE RULE THE CUSTODIAN OF THE TWO HOLY HARAMS.

20 Comments

Readers' Comments

sayed mahmood g. (Mar 29, 2011)
alkhobar ksa
Saudi Arabia

exploration of oil cutdown suggest by Kind King Abdullah
CUT DOWN IS A POSITIVE APPROACH TO WORLD ENERGY. LONG LIVE RULE THE CUSTODIAN OF THE TWO HOLY HARAMS.

Milind K (Jan 3, 2011) United Arab Emirates

Future generations...
The key word here is future generations... we must not forget that there are many more generations who will live on this planet after we go..If we want them to live the luxurious life that we have lived, we must save for them and use our resources moderatley.

Balachandran T.N. (Nov 30, 2010)
Muscat
Oman

To drill or not to drill?
It is indeed been a quite a wise thought. A country like the KSA must spend on developing alternate source of energey and reserve their existing oil wealth for the future generations.

Aamir Bilal Sheikh (Nov 3, 2010)
Lahore
Pakistan

To Drill or Not To Drill
All said and done moderate aspects be fellowed , oil is need of the time if solar can be conveniently introduced within respectable price levels one can desire to reduce drill

jun campos (Sep 15, 2010)
Baguio City
Philippines

Is the Saudi King Right?
I believe the Saudi King has made the best decision for stopping the oil exploration. Perhaps the reason is that he seriously considering the worsening environmental impact from the continued use of fossil fuel. He is right because there is no amount of money that could compensate global destruction.Besides, existing wells are sufficient enough to sustain the Kingdom's economy. I salute the King of Saudi Arabia for his decision.

Hesham Mustafa (Sep 13, 2010)
Dubai
United Arab Emirates

Yes I AGREE
Yes I agree. Too much of a good thing is never any good.

vasanth (Sep 13, 2010)
New York
USA

He is right.
Good decision. Saudi Arabia has a vast resources for solar power. It is better to invest in solar energy thus preventing globar warming. Even after the entire oil becomes dry Saudi Arabia will still be the largest energy producer.

abuyaser (Sep 12, 2010)
Doha
Qatar

Is the king right
i think he meant production. this is true even if alternative energy sources were developed we need to leave some of that wealth to next generation saying otherwise is selfish

Sman (Aug 24, 2010)
Hyderabad
India

There is enough for every bodys need , not for greed
Save earth and allow new generations also to live here! It is very much admirable on kings human kind of attitude against to control greed and exploitation.

hanley thomas (Aug 17, 2010) Bahrain

the king doing his role
Well the saudi King is not technologist or economist, so i am not sure what he said should be scrutinize at a very deep level.He made that statement to connect to his people which the Al- Saud family was doing a great job at. To drill or not to drill will be Aramco's choice, although the royal family is a big influencer but not the end game when such high end issues are concerned.

J. Treurniet (Aug 16, 2010)

Financial gain?
By ceasing exploration for some time, the price of oil will rise to the levels of several years ago. Once they are high enough, it would be a good reason to resume drilling....

Tarrooq (Jul 23, 2010)
Manama

Complex Business
Oil industry is a very complex business from exploration (upstream) upto production. King Abdullah has a simple and straight mind and my reading for his statement is that he meant production activities only and keeping the upstream AS IS !!. Many thanks

Leslie McCune (Jul 21, 2010)
London
United Kingdom

Royal prerogative - is the King right?
The King will have had a very specific reason for making this statement. The reason will probably not be publicly known for some time, if ever. It is certainly not for populist reasons, or to create a short-term spike in the oil price.

Joe Krummenacker (Jul 21, 2010)
New York
USA

value of oil
It will be a long long time before a replacement for oil is found and it is the the primary component of the world economy but at the same time it may be a wise move to step back, slow down, and take a fresh look at how oil has evolved and where it is going. Too much of a good thing is never any good.

sam (Jul 13, 2010)

it is irrelivant
The most important question where oil goes? and is E halted or they make fun of us?

Abdulrahman JT (Jul 7, 2010)
Manama
Bahrain

King's prerogative
This is not good idea. Exploration includes more than drilling and can be non-invasive. Seismic research should carry on and production should be capped just under OPEC controlled limits. This way, when the time is right they can access most fields in a couple of weeks drilling. Much more sensible I think.

Hazim Al Umari (Jul 6, 2010)

Very good move..
It is a very wise action. USA banned all oil exploration offshore coast to coast (excluding New Mexico) in 1990 for 10 years, then in 2000 they renewed for another 10 years. I think in 2010 it was lifted.. Furthermore, Iraq continued with exploration and never stopped (Baath party). I believe that if they were wise they wouldn't continue with unnecessary exploration, even when the country was under severe sanctions (1992-2003), which possibly created one of the main reasons for the the country to be occupied.

Quicksmiler (Jul 6, 2010) Bahrain

Is the King right...
Whether the king is right or not is in fact irrelevant... Rather, the King is smart... His statement is a populist one that will appeal to the Kingdom's population (his constituents) and at the same time, spook the markets, driving the price of oil up. In both instances, the statement had the desired effect and it reality it cost the country nothing.

Terry Harwood (Jul 6, 2010)
Dubai
United Arab Emirates

Is the Saudi King right?
His intentions are admirable and his actions over the past few years have demonstrated, under difficult circumstances, a real desire to educate and enlighten his people in order that they can find a way to overcome the serious problems that KSA faces in the near future. However, in order to give his young subjects confidence in the future he should continue the emploration for oil even if he stops pumping it out of the ground. This will acheive his aim of saving wealth for future generations but at the same time give the young Saudis confidence in their future.

Houssam Altuk (Jul 6, 2010)
Jeddah
Saudi Arabia

Drill
We should be drilling since soon the world will be finding an alternative and this oil field will have no value any more. We should focus on developing the people and pass on civilization to the generation not oil.

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