1. Saudi Arabia Can It Deliver ? by Jack Zagar MHA Petroleum Consultants ASPO Conference – Lisbon, Portugal – May 19-20, 2005 Explanatory text is the Notes section of each slide

2. Three Key Factors Political Will and Economic Incentive  10 MM/d capacity for last 30 years  Internal needs supersede rest of the World  Complex market Security and Access to Technical People  “Easy oil” already developed  Serious internal problems threaten stability  Anti-Western sentiments Valid Reserves ???

4. OIIP – Oil Initially In Place 16 Produced Fields – 83% of OIIP 10 Producing Fields – 64% OIIP 65 Static Fields – 17% of OIIP ARAMCO OIIP Growth CICS 2/04

6. source: Saudi Aramco 2/2004

7. Abqaiq Field Oil Recovery 12 Gb Ultimate Recovery 20 Gb OIIP

8. J. Laherrere, 1997 Abqaiq and Ain Dar / Shedgum better than 97% ~35

9. source: Saudi Aramco 2/2004

10. Depletion Timing Statfjord Field - North Sea “First 70% produced quicker and easier than last 30%” Forecast

11. Exploration Wells in Saudi Arabia source: Saudi Aramco 2/2004

13. source: Saudi Aramco 2/2004

14. OIIP Hyperbolic Creaming Curve Saudi Arabia 1974 2000

15. Saudi Arabia Oil Reserves 105 260 165 35 30 70 90 455 255 Aramco Perception ??? Most Likely ???

16. 10 Million Barrels / Day Capacity 50-Year Scenario Proved Reserve Decline Point 2042 2025 5 Gb of Prob. & Pos. Reserves 48 Gb of Prob. & Pos. Reserves

17. 12 Million Barrels / Day Capacity 50-Year Scenario Proved Reserve Decline Point 20332020 19 Gb of Prob. & Pos. 73 Gb of Prob. & Pos. & Disc. 2014

18. Saudi Spare Capacity Govt policy goal of maintaining 2 MM/d of spare capacity  (only country to do so)  Now repeatedly stretched and used March 14, 2005 stated prepared to meet increased demand forecast for late 2005 which would use all spare capacity Twice in last two years  March 2003 to compensate for loss of Iraq oil  2004 to offset USA hurricane losses

19. Saudi’s Ability to Increase Production... Does it Matter?

20. Meeting the Challenge Industry Outlook - Oil & Gas Demand/Supply MOEBD ‘80 ‘85‘90‘95‘00 ‘05 ‘10‘15‘20 0 40 80 120 160 200 Required New Production Required New Production Existing Production Existing Field Decline ~ 4 - 6% Existing Field Decline ~ 4 - 6% World Demand

21. Real Discovery Trend

22. World Liquids Production Outlook

23. Conclusions Published critical data is sparse. Many uncertainties abound Best in class in terms of quality of fields and operation of field  If successful will have the highest reserves and highest recovery efficiency of any oil producing country on the planet  It is prudent to be skeptical Saudi Aramco has no obligation to try and meet wildly optimistic forecasts by the EIA and IEA of Saudi production increases Verifiable production forecasts from exporters would allow for orderly transition to alternative energy forms with fewer oil shocks