I just don’t buy the 5-10 USD production cost any more. And I am not talking about the needs of the government. I am talking about raw production cost at the wellhead. Most of their producing fields are old, some of them are ancient. And EOR is a reality pretty much everywhere. EOR does not come for free. There is a reason why Saudis are nervous below a certain oil price level and it’s not government spending. Their problems are just beginning.
Verisk Maplecroft’s near term view of Saudi Arabia’s oil and gas industry is “cautiously optimistic,” according to Torbjorn Soltvedt, Verisk’s principal analyst for the Middle East and North Africa. “This owes a lot to the current oil price environment and more to Riyadh securing a highly favorable OPEC agreement in June,” Soltvedt told Rigzone.