Saudi Arabia's sweltering summer may complicate the kingdom's pledge to deepen oil production cuts.
DUBAI - Saudi Arabia’s sweltering summer may complicate the kingdom’s pledge to deepen oil production cuts.
While industry sources do not question Saudi Arabia’s ability to deliver on the cuts and note that opening and shutting oil wells is technically easier for OPEC’s biggest producer than in other parts of the world, balancing the supply and demand of gas for the residential sector and industry is a delicate process.
Because Saudi oilfields pumping lighter crude tend to produce more associated gas than fields with heavier and sour grades, where the cost of production is also higher, the Kingdom’s oil output will likely drift more towards these lighter quality grades, analysts and experts say, potentially worsening the current global glut of such barrels.
“There are no technical impediments to start-ups and shut downs but there are costs,” said Sadad al-Husseini, a former senior executive at national oil company Saudi Aramco and now an energy consultant. For example, a barrel of Arab Light may have an associated 500-600 cubic feet of gas, while a heavy crude from Manifa may have as little as 90 cubic feet, he said.
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