Sadad al-Huseini says that global production has reached its maximum sustainable plateau and that output will start to fall within 15 years, by which time the world’s oil resources will be “very severely depleted”.

In an exclusive interview with, the former head of exploration and production at Saudi Aramco, said that oil production had reached a structural ceiling determined by geology rather than geopolitics, and that the technical floor for the oil price will rise by $12 annually for the next 4 to 5 years as new fields become increasingly costly to exploit.


According to al-Huseini the technical floor – the basic cost of producing oil excluding factors such as geopolitical risk and hedge fund speculation – is currently about $70 per barrel, meaning the minimum oil price could hit $106 in 2010 and $130 by 2012. Actual crude prices, including financial market factors, could be be as much as $125 by as early as 2010.

Al-Huseini said that Saudi Arabia’s plans to raise production capacity to 12 million barrels per day by 2012 represented “an achievable number”, as the country had announced oil investments of $55 billion between 2003 and 2011. But he cautioned that since some of the new production will come from entirely new fields “how the reservoirs will respond will be determined as they start producing”.

However, al-Huseini disparaged Western expectations that the Kingdom would produce significantly more than 12 mb/d. It was unfair, he said, to expect Saudi to “pull everybody’s chestnuts out of the fire”.



  • Tony

    Great interview – maybe the EIA and IEA will take notice of al-Husseini’s comments!

    I agree with al-Husseini that global production is on a plateau now. However, the forecast below shows that world production of total liquids will last only for about two years, until 2009, followed by falling output and rising prices.

    The Oil Drum

    The important point is hat production is highly likely to be on plateau and consequently it is also highly likely that supply will be unable to meet increasing demand. Prices will continue rising and the IEA, EIA and USGS need to make more realistic statements about their risks of overoptimistic production forecasts being too high. Their forecasts need to be partly driven using a bottom method of forecasting by field/project and not just assume that the supply forecasts will be equal to demand forecast.

  • Intresting on how hard it is to find any news report on “post-peak-oil” throughout the USA.As oil prices continue to soar,they make up every other excuse for that spike,except demand is exceeding production,and its that production and those “known” reserves that we’re suppose to believe in,heh? Here we are in the 1st part of the 21st Century,still living as if,”we have infinite growth on a finite planet”! Only In America can anyone think like that,heh? Best! Norm Ezzie of “its all there,every damn bit of it”!!

  • Robin, read the article again, or listen to the audio. Al-Huseini is talking about the technical floor, not the market price, which is clearly explained and defined.

  • Richard Miller

    Sadad al-Huseini has shocked me, shocked, with the $70/barrel cost number. In early 2002, the oil price was $20 and we were profitable. That implies that the sum of all finding and production costs, refining, marketing, distribution, tax and royalties was under $20 even for the marginal barrel (or the marginal barrel would have been left in the ground in most cases).

    I’m still thinking out loud here, but if the built-up cost has now hit $70, then one of the following seems to apply: either costs in general have risen by about 25% p.a., or
    Al-Huseini has been slightly misunderstood and is saying that the marginal barrel costs $70, but implicitly most main-line barrels are still a lot cheaper.

    The former is difficult to believe for Saudi Arabia, Venezuela, Russia or even Norway barrels. If it is true, then we’re into a spiral. I believe that most of the cost of most things is the energy required to make or do them. Hence the oil price rise itself has made the cost of exploiting oil rise too, and costs and price are feeding off each other. Are we really exploiting fields with a break-even price anywhere close to $70?

    If the latter, then it is difficult to see how the oil price can drop significantly. There would have to be a significant drop in demand to knock off the marginal barrels and bring average costs down. The global field decline rate is about 4%, or 3 million b/d per year; if Skrebowski’s big projects come aboard as scheduled in 2008/9/10, at 2 million b/d per year, that still leaves a slight overall production decline. The drop in demand would have to be several million b/d in order to knock off the marginal barrels. Is that plausible?

    I suppose what shocks me is that, if he is right, then I can’t see much chance of oil prices ever falling below roughly current levels before the great depression strikes. Or even when the great depression strikes.

  • Bernd Ohm

    It’s interesting to note that Mr. al-Huseini wrote something quite different 3 years ago: “Based on these considerations, the Kingdom can certainly increase its production to 15 million barrels per day based on its existing reserves base. […] In the long-term, the real issues in the oil industry are not the technical questions of Saudi Arabia’s reserves or oil production capacity. Both of these issues have been managed well in the past and will continue to be addressed effectively in the future through advances in technology and engineering practices.” (source:

    I wonder what made him change his mind? Maybe the Saudis have decided they would rather keep a substantial portion of the stuff for the future, so they are in no hurry to overexploit now. Just so they don’t end up with empty hands when the whole thing is more or less going down the far side of the Hubbert curve. He could be some sort of a “test balloon”, launched to see what kind of reaction is provoked by such news.

  • sal

    Why are corporates and politicians trying to hide this from us? Why are we waiting the last moment to act? What options do we have? Will we witness ¨energy wars¨, like China invading Indonesia or the US invading Mexico?

  • Daniel Hazelton Waters

    We have to start making oil out of biomass. But it’s too late to save us from global depression of some sorts. Yes oil can be made from biomass in a process known as thermal conversion or originally known as thermal depolymerization. Just look up changing world technologies.

  • Stu

    So even the Saudis are now conceding that oil production has limits far less then they previously stated. And they have the largest oil reserves in the world, where does that leave all the rest. Yet forcasts for economic growth in every western country are based on an assumption of endless oil being available for that growth, there is no back up plan for this either, except resession and depression. To top it off, the ever increasing amounts of oil that have to be available also have to be relatively cheap. Seems like we have ourselves the biggest house of cards in the world and there is one big earthquake coming.

  • The world will keep needing oil for the years to come, but in the end more natural resources will take over. That is a trend that will keep moving ahead. It is comparable to the depression of the world: lift the ‘old emotions’, the old ways and move into the new way of being.

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