According to the Oil and Gas Journal, Saudi Arabia contains approximately 264 billion barrels of proven oil reserves (including 2.5 billion barrels in the Saudi-Kuwaiti shared "Neutral" Zone), amounting to around one-fifth of proven, conventional world oil reserves. Although Saudi Arabia has around 100 major oil and gas fields (and more than 1,500 wells), over half of its oil reserves are contained in only eight fields, including the giant 1,260-square mile Ghawar field (the world's largest oil field, with estimated remaining reserves of 70 billion barrels). The Ghawar field alone has more proven oil reserves than all but six other countries.

Saudi Arabia is the largest oil consuming nation in the Middle East. In 2008, Saudi Arabia consumed approximately 2.4 million bbl/d of oil, up 50 percent since 2000, due to strong economic and industrial growth and subsidized prices. According to independent analysis quoted in industry reports, demand is expected to rise by eight to 10 percent through 2010, mostly in the area of electricity and NGLs for petrochemical production. Saudi Arabia also does direct burn of crude oil for power generation during summer months.

Saudi Arabia maintains the world’s largest crude oil production capacity, estimated by U.S. Energy Information Administration (EIA) to be around 11 million bbl/d, at mid-year 2009. In 2005, Saudi Arabia’s Ministry of Petroleum and Mineral Resources announced the details of a plan to increase this capacity to 12.5 million bbl/d by 2009, the detail of which are outlined below, although the oil price collapse the end of 2008 led to delays in net capacity additions.

For 2008, the EIA estimates that Saudi Arabia produced on average 10.8 million bbl/d of total oil, comprising crude oil, lease condensate, natural gas liquids, and other liquids (including half of the Saudi-Kuwaiti Neutral Zone's 600,000 bbl/d). In addition to 9.3 million bbl/d of crude oil, Saudi Arabia produced around 1.5 million bbl/d of natural gas liquids (NGLs) and other liquids, which are not subject to OPEC quotas. Saudi Arabia, a leading world producer of NGLs, has experienced a rise in demand for NGLs from developing countries, including India (the leading export destination), where it is used for cooking and transportation.

Saudi’s main producing fields in 2008 included:

Source: Saudi Aramco

Saudi Arabia produces a range of crude oils, from heavy to super light. Of Saudi Arabia's total oil production capacity, about 65 to 70 percent is considered light gravity, with about 25 percent considered medium gravity, and the rest heavy. The country is moving to reduce the share of the latter two grades. Lighter grades generally are produced onshore, while medium and heavy grades come mainly from offshore fields. Most Saudi oil production, except for "extra light" and "super light," is considered "sour," containing relatively high levels of sulfur.

Saudi Arabia's long-term goal is to further develop its lighter crude. Although the Ministry has only committed to increasing capacity to 12.5 million bbl/d, potential increases to 15 million bbl/d capacity (post-2011) were discussed at a summit in Jeddah in June 2008.

Saudi Aramco continues aggressive plans to increase crude oil production capacity despite some recent delays. Key projects are:

One challenge the Saudis face in achieving their strategic vision to add production capacity is that their existing fields experience 6 to 8 percent annual "decline rates” on average (as reported by Platts Oilgram in 2006) in existing fields, meaning that the country needs around 700,000 bbl/d in additional capacity each year just to compensate for natural decline. Decline estimates for Saudi Arabia vary widely, however. The Ministry of Petroleum maintains that decline rates in Saudi Arabia are around 2 percent annually. Saudi Aramco has stated that it will also conduct additional drilling at existing fields in order to help compensate for the natural declines from the mature fields.

Saudi Aramco, Saudi Arabia’s national oil company, estimates that the average total depletion for Saudi oil fields is 29 percent, with Abqaiq (the oldest) 74 percent depleted, the giant Ghawar field having produced 48 percent of its proven reserves and the younger Shaybah, just 5 percent depleted. Aramco also reports that Saudi oil reserves are likely underestimated, not overestimated, although some analysts have disputed Aramco's optimistic assessments of Saudi oil reserves and future production. Minister Al-Naimi has refuted these contrarian arguments, and stated that Saudi Arabia could add as much as 200 billion barrels of oil to proven reserves after an extended period of investment and exploration.

The Saudi-Kuwait Divided Zone or the “Neutral Zone”, 2230 square miles between the borders of Saudi Arabia and Kuwait that was left undefined in 1922, contains an estimated 5 billion barrels of proven oil reserves, shared between the two countries, from which approximately 600,000 bbl/d is produced. (See map)

In February 2008, The Kuwait Gulf Oil Company announced that the two countries were set to increase capacity in the Divided Zone to about 630,000 bbl/d by 2009. The increases are expected to come from the offshore area where steam injection technology will be employed.

Within the Neutral Zone, Japan's Arabian Oil Co. (AOC) traditionally operated the two offshore fields of Khafji and Hout with 300,000 bbl/d in production, but in February 2000, AOC lost the concession. Efforts to negotiate an extension of the operating contract with Saudi authorities failed when Japan refused to commit to investment in development projects desired by the Saudis, and Aramco took over operation of the former AOC fields (in January 2003, AOC reached an agreement with Kuwait on the right to purchase at least 100,000 bbl/d of crude for the next 20 years from Khafji). ChevronTexaco operates three onshore fields (Wafra, Humma, and South Umm Gudair) in the Divided Zone under a 60-year license that was renewed in July 2008. These fields have 2 billion barrels of proven reserves and total production of about 260,000 bbl/d of Arab Heavy oil. Finally, Bahrain and Saudi Arabia share the 300,000 bbl/d production of the Abu Safah offshore field.

Saudi Aramco operates the world’s largest oil processing facility and crude stabilization plant in the world at Abqaiq, in Eastern Saudi Arabia, with a crude processing capacity of more than 7 million bbl/d. The plant processes the majority of Arabian Extra Light and Arabian Light crude oils, as well as NGLs. The facility’s infrastructure includes pumping stations, Gas Oil Separation Plants (GOSPs), hydro-desulphurization units, and an extensive network of pipelines that connects the plant to the ports of Ras al-Juaymah, Ras Tanura and Yanbu (for NGLs). Nearly two-thirds of Saudi crude is processed at Abqaiq before export or delivery to refineries. The facility was the target of a terrorist attack in 2006 (see Security Issues Section).

According to Oil and Gas Journal, Saudi Arabia has seven domestic refineries, with a combined crude throughput capacity of around 2.1 million bbl/d (of which Aramco’s share is approximately 1.5 million bbl/d). The Saudi Aramco development plan calls for a $70-billion investment in the sector, increasing domestic refining capacity to 3 million bbl/d and international holdings by at least 1-2 million bbl/d by 2011, particularly in an effort to meet requirements of the fast-growing Asian market. Several of these new refineries will be integrated with large petrochemicals complexes, in what has been described as the creation of petrochemical cities.

Saudi Arabia has approximately 2 million bbl/d interest in refining overseas in five main facilities in the United States, China, South Korea, Japan and the Philippines.

In the United States, Saudi Aramco and partner Royal Dutch/Shell own three Motiva joint-venture refineries in Louisiana and Texas. The three facilities currently have a total capacity of around 740,000, or approximately 5 percent of the U.S. refining market. Saudi Aramco owns 50 percent of Motiva though a subsidiary, Saudi Refining. Plans to more than double the capacity at the Port Arthur facility will make it the largest refinery in the United States.

The Saudi petroleum pipeline and export network (and energy sector in general) was a terrorism target. In February 2006, Saudi security prevented an attempted suicide bomb attack at the Abqaiq petroleum processing facility, after Al-Qaeda leadership called for renewed attacks against the country’s economic backbone. Nevertheless, energy infrastructure remains well-protected. Following the 2006 incident, the government increased the National Guard and military security force to approximately 20,000, in addition to the 5,000 guards employed directly by Aramco. In addition to direct security, Saudi Arabia is known to ensure export security by maintaining "redundancy" (i.e., multiple options for transportation and export) in its oil system, in part as a form of indirect security against any one facility being disabled.