Arabian Gulf Petroleum Geopolitics&Geology

Hydrocarbon Potential of Middle Eastern Basins of the Gulf Geology & Geopolitics mix!
Spring 2008
A case that demonstrates that Professor Christopher G. St. C. Kendall Actions Speak Louder than Words
kendall@sc.edu 803-777803-777-2410
Christopher G. St. C. Kendall Arabian Gulf
Outline of Presentation
Data Sources - Texts Who has all the oil? Countries & Reserves Geological Setting of the Middle East Oil Reserves Recent Oil History of Middle East Conclusions
Data Sources - Texts Who has all the oil? Countries & Reserves Geological Setting of the Middle East Oil Reserves Recent Oil History of Middle East Conclusions
Texts on History of Petroleum Exploitation

3 books set Middle East petroleum scene: "The Prize : The Epic Quest for Oil, Money & Power" by Daniel Yergin Records history of petroleum Industry in USA, Baku, & Middle East. "Sowing the Wind: The Seeds of Conflict in the Middle" by John Keay. Chronicles activities of British & their allies... "A Peace to End All Peace: The Fall of the Ottoman Empire and Creation of the Modern Middle East" by David Fromkin. Records why British decided to move on Ottoman Empire and results..... These are well written, easy to read informative histories! histories!

3 books set Middle East petroleum scene: "The Prize : The Epic Quest for Oil, Money & Power" by Daniel Yergin Power" Records history of petroleum Industry in USA, Baku, & Middle East. "Sowing the Wind: The Seeds of Conflict in the Middle" by John Keay. Chronicles activities of British & their allies... "A Peace to End All Peace: The Fall of the Ottoman Empire and Creation of the Modern Middle East" by David Fromkin. Records why British decided to move on Ottoman Empire and results..... These are well written, easy to read informative histories!

3 books set Middle East petroleum scene: "The Prize : The Epic Quest for Oil, Money & Power" by Daniel Yergin Power" Records history of petroleum Industry in USA, Baku, & Middle East. "Sowing the Wind: The Seeds of Conflict in the Middle" by John Middle" Keay. Chronicles activities of British & their allies... "A Peace to End All Peace: The Fall of the Ottoman Empire and Creation of the Modern Middle East" by David Fromkin. Records why British decided to move on Ottoman Empire and results..... These are well written, easy to read informative histories!

3 books set Middle East petroleum scene: "The Prize : The Epic Quest for Oil, Money & Power" by Daniel Yergin Power" Records history of petroleum Industry in USA, Baku, & Middle East. "Sowing the Wind: The Seeds of Conflict in the Middle" by John Middle" Keay. Chronicles activities of British & their allies... "A Peace to End All Peace: The Fall of the Ottoman Empire and Creation of the Modern Middle East" by David Fromkin. Records East" why British decided to move on Ottoman Empire and results..... These are well written, easy to read informative histories!
Data Sources - Texts Who has all the oil? Countries & Reserves Geological Setting of Middle East Oil Reserves Recent Oil History of Middle East Conclusions
Current Middle East Reserves of Cheap Oil

Crude Oil(BB) - Natural Gas (TCF)
Saudi Arabia Iraq UAE Kuwait Iran Oman Yemen Qatar Syria Bahrain TOTAL
263.5 bbls 204.5 Tcf 8 Years 112 bbls 109 Tcf 97.8bbls 212 Tcf 96.5 bbls 52.7Tcf 89.7 bbls 812.3Tcf 5.3 bbls 28.4 Tcf 4.0 bbls 16.9 Tcf 3.7 bbls 300.0 Tcf 2.5 bbls 8.5 Tcf 0.1 bbls 3.9 Tcf 675.1 bbls 1,748.2 Tcf Christopher G. St. C. Kendall
Arabian Gulf
Most of these countries oil is in carbonates
Arabian Gulf Fields & the age of their Reservoirs
AfterChristopher G. St. C. Kendall Al Sharhan

Arabian Gulf
Iraq's Role?
Thomas Homer-Dixons Conflict Model HomerEnvironmental Scarcity ---> Social Effects ---> Violent Conflict ---> --->
U.S. War Against Terrorism in a deadly phase spreading across Middle East Middle East a geopolitical cauldron - Caspian States on eastern flank & Mediterranean on western flank; bridge between Europe, Africa & Asia Important current battlefields within region include Iraq & Iran, West Bank, Somalia, Sudan & Afghanistan
World Petroleum Exploitation

NonNon-OPEC countries produced 60% of world's oil in 2008 with a steady increase since 1993 Currently only 4 (Saudi Arabia, Iran, UAE, & Venezuela) of top 10 oil producers are OPEC Most prolific producers are Russia 12.6, Saudi Arabia 12.6, 10.6, 10.6, USA 8.4, Iran 4, Mexico 4, China 4, Canada 3, 8.4, 2.4, Norway 3, UAE 3, Venezuela 3, Kuwait 3, Nigeria 2.4, Algeria 2, Brazil 2 NonNon-OPEC countries have most of world's capacity for refining crude oil into gasoline & heating oil

As of January 2004, OPEC countries hold 77% of world's proven oil reserves Most major non-OPEC oil producers are very large nonconsumers, & low exporters World 84 - USA consumes 20.73, imports 13.15 & 20.73, exports 1.048 million bbl/day Todays price$91.45 price$91.45 Persian Gulf OPEC has the world's lowest oil finding & lifting costs Non OPEC oil liable to price collapse e.g. Russia Consumption grows 3% annually
Commodity Scarcity
Exploration potential Gulf coast & West Texas for small US companies Oil shales of Western USA & Athabaska tar sands Employment in exploration & builders of exploitation models of current oil fields in Secondary & Tertiary recovery mode! At least 1% of you in this room should be millionaires before you retire!
Arabian Basin
Traces a polyhistory of plate tectonic & sedimentary fill: Pre Cambrian to Infra-Cambrian - Continental interior InfraSilurian and Ordovician clastics Continental interior Permian clastics & carbonates Trailing margin Upper Jurassic Carbonates Trailing margin Lower Cretaceous Carbonates Trailing margin Middle Cretaceous Compression & Zagros Mts initiated Tertiary Carbonates and Clastics - Compressional margin
Oil Production - Arabian Gulf

Productive hydrocarbon section older to West [Paleozoic] [Paleozoic] Tertiary]. & younger in East in the Zagros Mts [ Upper Tertiary]. West to East production includes: InfraInfra-Cambrian Salt Silurian and Ordovician clastics Unaizah Permian clastics & carbonates Khuff Upper Jurassic Carbonates - Arab & Tuwaik Mt Group Lower Cretaceous Carbonates Shuaiba & Thammama Middle Cretaceous Mishrif Tertiary - Asmari
Zagros Mountain Chain
After Dennis Tassa

Structural Provinces - Arabian Gulf
Mesozoic to Tertiary Foreland Basin

Pre-Cambrian Shield
Nasa Image
Arabian Gulf tracks the Wilson Cycle

The Wilson Cycle records plate motion opening & closing of ocean basins and the Arabian cycle is:
Interior Cratonic sag & fracture basins of Arabia Plate rift & divergence with formation of new ocean basin, the Tethys Plate motion reverses & convergence enables collision, & mountain building, the Zagros Mountain chain
Arabian Gulf
Compressional Margin Extensional margin
Extensional & Compressional Margin
Extensional margin
Evolution of Arabian Gulf

Foreland Basin
Compression & Foreland Basin Extensional margin Extensional margin

Interior Sag
After Kingston et al, 1983
Oil
Gas
Arabian plate stratigraphic section with Arabian Gulf hydrocarbon production
Christopher G. St. C. Kendall
Pre-Cambrian
Silurian
Extensional margin
Permian
Restricted Entrance To Sea Permian Khuff Saudi Arabia Oman & UAE Arid Tropics Air System
Christopher G. C. Kendall Wide Shadow fromSt.Adjacent Continents Arabian Gulf
Structural & Depositional Barrier over Hercynian Horst Blocks
Extensional margin
Jurassic
Extensional margin
Jurassic
Restricted Entrance To Sea Upper Jurrassic Saudi Arabia Kuwait, Iran & UAE Tropical Air System !
C. Wide ShadowChristopher G. St.Adjacent Continents from Gulf Kendall Arabian
Depositional Barrier over Hercynian Horst Blocks
Compression & Foreland Basin
Cretaceous to Tertiary
After Dennis Tassa
Zagros Fold Mountains - Iran
Compression & Foreland Basin
Nasa Image
Zagros Fold Mountains Iran

Nasa Image
Zagros Fold Mountains - Iran
After Murris
After Murris
From International Petroleum Encyclopedia
Arabian Gulf Factory producing carbonates & storing products of cyanbacteria since Permian
Nasa Image
A big day for a bloom!!
Nasa Image
Ramp Open Shelf
Basin
Restricted Shelf
Sedimentary Section is Source

Collister, James, Robert Ehrlich, Frank Mango, and Glenn Johnson (2004), Modification of the petroleum system concept: Origins of alkanes and isoprenoids in crude oils AAPG Bulletin, v. 88, no. 5 pp. 587611 587 Establish that the source of petroleum was once dispersed through much of the sedimentary sections and not necessarily from classic organic rich source rocks.
After Baum, & Kendall Gulf Arabian
Christopher G. St. C. Kendall
Geological Setting of Jurassic Oil

Seal Reservoir Seal Reservoir
Intrashelf Basin Intrashelf Basin
The Hanifa Formation Oil Fields
Hanifa Formation - Berri Field
Lower Cretaceous - Barremian
Barremian Paleogeography in Gulf Region (Murris1980)

Lower Cretaceous
Stratigraphic cross-section of Cretaceous crossEastern Arabia (Alsharhan & Nairn 1986)

Zakum Field - UAE
Pittet et al, 2002
Note fining upwards cycles

Zakum Field - UAE
Pittet et al, 2002
Anticlinal shape of field

Geologic Cross-Section - Arabian Gulf
Oil fields become younger from west to east

Arabian Basin
Traces a polyhistory of plate tectonic & sedimentary fill: Pre Cambrian to Infra-Cambrian - continental interior InfraSilurian and Ordovician clastics continental interior Permian clastics & carbonates trailing margin Upper Jurassic Carbonates trailing margin Lower Cretaceous Carbonates trailing margin Middle Cretaceous compression and collision starts Tertiary Carbonates and Clastics- compressional margin ClasticsChristopher G. St. C. Kendall Arabian Gulf
Oil Production - Arabian Gulf

Productive hydrocarbon section older to West [Paleozoic] [Paleozoic] Tertiary]. & younger in East in the Zagros Mts [ Upper Tertiary]. West to East production includes: InfraInfra-Cambrian Salt Silurian and Ordovician clastics Unaizah Permian clastics & carbonates Khuff Upper Jurassic Carbonates - Arab & Tuwaik Mt Group Lower Cretaceous Carbonates Shuaiba & Thammama Middle Cretaceous Mishrif Tertiary - Asmari
Recent History of Middle East Oil
"War is the unfolding of miscalculations." Barbara W. Tuchman
Oil Time Line Important Events

1850 - 1910: Kerosene the fuel of choice 1869: Suez Canal opens 1878: Electric Light 1908: Auto Boom starts 1912: UK Navy uses Oil 1914 1918: WWI 1920: 9 million vehicles U.S 1938 1945: WWII 1948: Israel born 1948: 1st Arab Israeli War 1948: US Net Oil Importer 1952: Iran Oil Nationalized 1956: Suez Nationalized 1956: 2nd Arab - Israeli War 1960: OPEC founded 1967: 3rd Arab - Israeli War 1969: Qaddafi coup 1978: Khomeini coup 1980: Iraq Iran War 19901990-91: 1st US - Iraq War 2003 - : 2nd US - Iraq War

"When war is declared, truth is the first casualty." Arthur Ponsonby
Recent History of Middle East Oil

Paraffin no longer hydrocarbon of choice & Baku lost as a source of oil Western oil exploitation of Middle East driven by
Loss of Russian Sources Demands of naval shipping Advent of the motor car
Iran explored by British before First World War After this war & break up of Ottoman Empire exploration extended to Iraq
Initially the British and French were involved & US became equal partner Then US, in connivance with Gubenkian, acquired the Saudi Arabian oil concessions
Increased military & civilian needs of West caused conflict with Middle East countries with the immense cheap oil reserves
Israel - 1948 Iran - 1952 OPEC - 1960
Now the world consumes 85 million barrels (plus) of oil a day these confrontations continue today
Joseph Stalin
1893 1903
1879: December 9 - born in Gori, Georgia. 1894: Arrives Tiflis Theological Seminary. 1895: Works with Russian Marxists exiled to Transcaucasia by Tsarist government. 18961896-1898: At Tiflis Theological Seminary gathers Marxist students to study Marx, Engels, & Lenin. 1898: January formed workers' Marxist circle in Central Railway Workshops of Tiflis. 1899: May 29 Stalin expelled from Tiflis Theological Seminary for propagating Marxism. 18981898-1904: Organized, directed revolutionary activities, writes leaflets, lead strikes & sent toG. St. C. Kendall received letter from Lenin Siberia; Christopher & escaped back to Baku to lead general strike of Baku workers. workers. Arabian Gulf
Baku Oil Monopoly Dies

1903 & 1904: Oil worker strikes common against Tsar 1904: Baku kerosene supplied 47% of needs of UK & 71 % of France 1905: Oil worker strikes halt Baku production; Stalin exiled to Siberia 19141914-18: Baku oilfields & refineries control by Shell & Nobel Brothers, supply Russian Army. UK interest in Transcaucasia & oil-rich area oil1917: Armed intervention against Bolsheviks in Transcaucasia & East for control of Baku's oil, discussed in London. Henri Deterding, Shell president, buys shares of largest oil producers who fled Baku after Oct revolution. Sets up military-political mission in Iran with General militaryDunsterville 1918: March pogroms against Azerbaijanis by Armenians & Bolsheviks in Baku. Declaration of Baku Commune establishes links with Moscow & recognizes role of Russian Federation . 1920: April 28, Bolsheviks seize power at Baku & Nobels sell most of Russian holdings to Standard Oil (NJ) by 1923 inflow of Western funds help Russian oil production back to pre-revolutionary levels. pre1920: Roughly 9 million gas-burning vehicles now in U.S gasChristopher G. St. C. Kendall Arabian Gulf
18501850-1920
Batum 1927 Kirkuk Suez 1869
Baku
1908 Dammam 1938
Central Asian & Middle East Oil

Fisher
British Navy & Petroleum
Churchill
John Arbuthnot Jackie Fisher: 1st Baron Fisher (Jan 25, 1841 July 10, 1920), joined Navy in 1854 & as 3rd Sea Lord built 1st destroyers, 1902 2nd Sea Lord, in 1905 1st Sea Lord when Germany & Britain in naval arms race. Preferred battlecruiser with speed not amour, introduced submarines & converted from coal to oil fueling Winston Churchill: After career as journalist, in army and then parliament, in 1912 became 1st Lord of Admiralty & ordered conversion from coal to oil 1901: Spindletop's discovery lead to Shell Transport & Trading needing sales
Oil & Fords Automobile

1896: Ford constructed his first horseless carriage; sold in order to finance work on an improved model. 1908: Ford T in production, price as low as $280. Nearly 15,500,000 sold in USA. Model T heralds beginning of Motor Age and car evolved from luxury item for well-towell-todo to essential transportation for ordinary man. 1920: Roughly 9 million gas-burning vehicles in the U.S gasChristopher G. St. C. Kendall Arabian Gulf
Zagros Mountains
Abundant Oil Seeps Abundant Anticlines
Iranian Negotiations Begin

Jacques de Morgan: Archeologist identified oil seeps in western & SW Persia. 1901: Antoine Kitabgi, friend of Persian grand vizier, Persian commissioner-general of Paris Exposition 1900, commissionerwants local oil industry to develop. Helped Baron Julius de Reuter with Iranian government concessions that failed. 1901: Asked Sir Henry Drumond Wolff, once UK minister in Tehran, to locate UK investor for oil concession. 1901: British William Knox D'Arcy (with Australian gold mining fortune) acquires 60 year oil concession for whole Persian Empire except Russian border.
Masjid-i-Suleiman
1905: Burma Oil Comp finances D'Arcy 1907: Royal Dutch Shell incorporated (60%RD - 40%Sh) 1908: Oil struck at Masjid-i-Suleiman Masjid1909: Anglo-Persian Oil Company forms to develop field Anglo1911: 138 mile pipe Masjid-I-Suleiman - Abadan refinery Masjid1912: Anglo-Persian 10-year contract with Royal Dutch-Shell as Anglo10Dutchoutlet for crude & oil products 1914: Anglo-Persian contract to supply Navys ships & UK Anglogovernment invest 2 million & becomes major shareholder 1915: Anglo-Persian forms British Tanker Company & at end of WW I Angloowns a shipping fleet 1917: Anglo-Persian buys British Petroleum Company, acquiring a Anglomarketing organization for products & founds a research centre at Sunbury-onSunbury-on-Thames in UK Christopher G. St. C. Kendall
Arabian Gulf
D Arcy
Oil & British Fleet - Iraq

1908: Discovery of giant Masjid-I-Suleiman by Anglo-Persian Oil Co 1908: Mosul Vilayet now has potential & Gulbenkian (Mr. 5% 5%) organizes Turkish Petroleum Co. with UK & Dutch Oil Cos 1909: Sultan deposed within 24 hours of Anglo-Persian signing concession for Mosul Vilayet 1912-1913: UK Government proposes Royal Navy be oil powered & so needs own source 1914: Government has Anglo-Persian join TPC with 50% interest while buying controlling interest of Anglo-Persian
Calouste Sarkis 5% Gulbenkian

1869. March 29th: Wealthy Armenian family in Istanbul, Banker father imported Russian kerosene to Ottoman empire. Educated in Turkey, & France 1897: Engineering degree, London Kings's College 1898: Financial & oil advisor to Turkish embassies Paris & London 1902: Becomes British Citizen 1907: Helped form Royal Dutch Shell (60%RD - 40%Sh) 1908: Organized UK & Dutch Oil Cos as Turkish Petroleum Co. Called Mr. 5% from holdings 1910: Consultant to Turkish National Bank pushing Oil exploration in Iraq & opening up Middle East St. C. Kendall Christopher G.
Arabian Gulf
Calouste Sarkis 5% Gulbenkian

1928: Post WWI architect of Red Line Agreement with British (Persian Oil), Anglo-Dutch (Shell), French (CFP) & US (Exxon & AngloMobil) joint venture in former Ottoman empire producing areas except Kuwait & Iran for 5% of all oil found. Oil in Iraq & Saudi Arabia made him one of world's richest men. Avoided taxes by shuttling between Ritz Hotel in London & Ritz in Paris. Diplomatic status as accredited to Iraqi embassy of London exempting from taxation Formed Gulbenkian Foundation in Portugal and supported the Arts Christopher G. St. C. Kendall
Arabian Gulf
Red Line Map of Gulbenkian
Iraq Exploration - Events

28 June 1914: Grand Vizier sends letter to UK & German Governments proposing to issue concession to TPC 1920: Treaty Of Sevres German interests in TPC assigned to France Government of Iraq promised 20% of TPC US Government objects to exclusion of American Companies 1923: Treaty of Lausanne Iraq becomes British Mandate but status of Mosul Vilayet unresolved 1923: TPC Starts Negotiations with Government March 1925: Signing of Concession with TPC, later Iraq Petroleum Company but with no Iraqi direct interest
Iraq Petroleum Company (IPC) Shareholders

Shell (Anglo-Dutch) (AngloBP (British) CFP (French) Exxon (US) Mobil (US) Gulbenkian 23.75% 23.75% (Anglo-Per & Anglo-Iranian) (AngloAnglo23.75% (now Total Fina Elf) 11.875% (now Exxon-Mobil) Exxon11.875% (now Exxon-Mobil) Exxon5% (Independent)
Companies also agreed not to compete with each other through most of previous Turkish Empire, including Saudi Arabia : Exxon & Mobil reneging on agreement when they formed Aramco in Saudi Arabia in 1930s.
The Way it was! Results of 1920 Treaty of Sevres

Iraq First Major Discovery

14th Oct 1927 Baba Gurgur 1 (Kirkuk #1) The 6th Exploration Well Spudded after Concession granted in 1925 Well blew wild at 90,000 bbls/Day Reserves of approx 17 Billion barrels in Tertiary & Cretaceous 13th October 1927, Qaiyarah-1, G. St. C. Kendall QaiyarahChristopher Arabian Gulf 4,000 Bpd, 120 API
History of Petroleum Exploration

1933: Chevron acquire lease to explore in Saudi Arabia 1938: Steineke found oil at Dammam dome 1938: Oil was first discovered in Kuwait 1939: Chevron production & exported 1st oil 1939: Oil is discovered in Qatar The start of the golden age of US involvement with exploration for foreign cheap oil
Max Steineke
History of Middle East Oil Exploration

War does not determine who is rightonly who is left right Bertrand Russell
Oil Time Line Important Events

1850 - 1910: Kerosene the fuel of choice 1869: Suez Canal opens 1878: Electric Light 1908: Auto Boom starts 1912: UK Navy uses Oil 1914 1918: WWI 1920: 9 million vehicles U.S 1938 1945: WWII 1948: Israel born 1948: 1st Arab Israeli War 1948: US Net Oil Importer 1952: Iran Oil Nationalized 1956: Suez Nationalized 1956: 2nd Arab - Israeli War 1960: OPEC founded 1967: 3rd Arab - Israeli War 1969: Qaddafi coup 1978: Khomeini coup 1980: Iraq Iran War 19901990-91: 1st US - Iraq War 2003 - : 2nd US - Iraq War

Oil became commodity of military success In Second World War Germany controlled the oil of Romania Wanted to acquire Baku (Russian) & Persian Gulf (British Empire) BP active in Middle East & controlled Persian Gulf until USA acquired exploration concessions in Saudi Arabia (5%) Cheaper oil for all!!!
Center of Gravity
1944
De Golyer:
The center of gravity of world oil production is shifting to the Middle East 1945 - Ras Tanura Refinery Saudi Arabia begins operations to become largest refinery in World
Petroleum What to do in the Middle East?
US government to acquire direct ownership US government to negotiate agreement with British Allow private companies to conduct the business
Yalta
1st Option: Ruled out 2nd Option: Before going to Yalta, Roosevelt withdrew it from Senate 3rd Option: Won
Growing Demand & Rising Production
1945: 26 million cars 1950: 40 million cars USA 1948 Net exporter
Many new discoveries
Net importer
History of the Oil Price
March 12th, 1947 Truman Doctrine
New Aramco: Socol, Standard Oil of NJ, Texaco, Socony Gulf Oil Shell in Kuwait Iranian contract between Anglo Iranian & Standard Oil, Socony
Europe in crisis Marshall Plan
Birth of Israel
1946 June
- Oil giant Burgan field discovered
1948 May 14 - First Arab - Israeli war 1951 May - 1st shipment of Kuwait crude oil
King Ibn Saud
Ibn Sauds Dilemmas: Birth of Israel US guarantee of Saudi Arabian independence Soviet threat
Advancement in Technology
PostPost-war petroleum order

Center : Middle East Market : USA, Western Europe, Japan Technology : Huge development Problem : Large surplus of oil How to divide profit?
Stress on Seven Sisters or Big Oil
5050-50 Deal, December 1950 But producing countries wanted more money and power!
Korean War Iranian Card

Iran: 40 % of Middle Eastern oil Weak Shah US interest Korean war British hatred Nationalization, May 1951, Mossadegh (Mossy)

World events, 1947-1973 1947-

"What a country calls its vital economic interests
are not the things which enable its citizens to live, but the things which enable it to make war. Petrol is much more likely than wheat to be a cause of international conflict." Simone Weil
Dr. Mohammad Mossadegh
King Reza Pahlavi
Expropriation vs. economic warfare, 1952 No oil export, no money, economic trouble Law and order collapsing Mossadegh turned to Moscow U.S. and British assisted coup Shah regains power Oil consortium: Jersey, Socony, Texaco, Standard of California, Gulf; Shell; Anglo Iranian Result: USA becomes major player in Middle East, 1954
Suez
Suez represented post-war petroleum order: post 2/3 of Europes oil passed through Suez 2/3 of traffic in Suez was oil
Gamal Abdel-Nasser
1952 1954
A coup removed King Farouk Colonel Gamal Abdel Nasser became dictator Rejected Western involvement PanPan-Arabism Greatest international crime the creation of Israel Acquired weapons from the Soviet block
Aswan
Whether to build the Aswan dam?

US rejected providing the finance Revenge: expropriation of Suez Canal, July 26, 1956 The French and British wanted military action! Eisenhower did not want war!

"An inglorious peace is better than a dishonorable war." Mark Twain
2nd Arab Israeli War

October 29, 1956 War plot against Egypt: France, UK, & Israel Eisenhower was furious Soviet Union threatened by rocket attacks Revolution in Hungary Result: Nasser became a hero and leader of Arabs 1956 - Aramco confirms scale of Ghawar and Safaniya 1958 - Oil found in Abu Dhabi
1948 World oil production 8.7 million barrels Middle East 1.1 million barrels U.S. production share 64% U.S. reserves share 34%
1972
42 million barrels
18.2 million barrels
22%
7%
Stress on Seven Sisters or Big Oil

5050-50% is not enough any more Nasser ascendant
Soviets build Aswan Syria joins Egypt: United Arab Republic Nasser controls oil: Suez and pipelines
Producing countries wanted more money and power

Middle East and OPEC events, 1947-1973 1947-

September 1960, Organization of Petroleum Exporting Countries (OPEC) founded in Baghdad, Iraq OPECs proposed to unify & coordinate members' petroleum policies OPEC members' national oil ministers meet regularly to discuss prices Since 1982 set crude oil production quotas

Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, & Venezuela Between 1960 & 1975, expanded to include Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), & Nigeria (1971) Ecuador & Gabon were members of OPEC, but Ecuador withdrew in December 1992, & Gabon followed suit in January 1995

Current 11 OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, & Venezuela Produce some 40% world's oil Have more than 77% world's proven oil reserves OPEC also holds most of world's excess oil production capacity
OPEC
End of 1950s: Soviet Union second largest oil producer Oil companies cut prices OPECs aim in 1960: Build national refineries National integrated oil companies Stabilize market for themselves, 60-40 % share 60Christopher G. St. C. Kendall Arabian Gulf
Six Day War
1960s: more discoveries in Africa, large oil surplus Nassers prestige declining He wanted to gain recognition: liquidation of Israel Blockade against Israeli shipping, Military buildup with Syria, Jordan, Iraq June 5, 1967: 3rd Arab-Israeli war, 6 day war ArabOccupation of Sinai, Gaza, West Bank, East Jerusalem
Oil embargo against Israels friends

Arab oil decreased by 60% No effect oil is abundant, cheap Embargo lifted in September
Richard Nixon
End of 1960s, early 1970s Recession in US and British power Vietnam war AntiAnti-Americanism becomes a great fashion NixonNixon-doctrine 1971: collapse of Bretton Woods, replaced by floating exchange rates Demand in oil was catching up with supply end of surplus Huge economic growth fueled by oil US oil production: 11.3 million barrels per day, the peak Christopher G. St. C. Kendall Arabian Gulf More dependency on Middle Eastern oil
Muhammar Qaddafi
Occidental Petroleum discovered oil in Libya in 1966 Qaddafi coup, 1969 Increase in oil price All the countries increased their profit share
Anwar Sadat Yom Kippur War
Egypt was bankrupt when Nasserism ended Sadat wanted to restore order & make peace with Israel Israel disinterested because of its 1967 success
1973 Yom Kippur war

Watergate
The Soviet Union supported Egypt and Syria The USA supported Israel World War conflict was imminent Oil exporters increased oil prices 100% Arabs cut oil supply and eventually stopped exporting to USA A weak president in the Watergate agony contributed to the oil crisis
History of World Petroleum Exploration
"The best way to destroy an enemy is to make him a friend." Abraham Lincoln
Ayatollah Ruhollah Khomeini
Iran: too much money corruption, chaos, political tensions Shah represented modernization Shiite fundamentalists hated US as main ally of Shah Escalating chaos in oil industry By December 1978 no oil exports from Iran Shah escapes February 1, Khomeini returns to Tehran
Jimmy Carter
Second Shock
Panic in the world market: price went up from $13 to $34 From March 1979, Iranian export started to come back Shortage in oil: long lines at gas stations Peace accord: Camp David
Hostages
November 4, 1979 : Hostage crisis Shah allowed into USA for medical treatment West, especially USA seemed very weak Soviets invaded Afghanistan Price: $45
No Stress on Seven Sisters or Big Oil
Boom times Alaska, Mexico discoveries North Sea: the biggest play of all
The History of Prices
Iran Revolution
Saddam Hussein of Iraq
September 22, 1980: Iraq attacks Iran Early 80s: Two drastic changes: Huge investment in exploration Decreasing demand Result: oil surplus June 1982: Lebanon war Golden age for oil geologists

Cheap oil: financial crisis in some oil exporters Mukluk dry hole: end of exploration boom
End of pessimism of the 70s Economy is booming, but not because of oil fuel Oil is not that dangerous as before
Desert Storm
August 2, 1990: Iraqi invasion of Kuwait New oil shock, supply decreased Loss had been compensated by December from other sources January 17, 1991: Desert Storm February 28, cease fire

OPEC suspended price band after Sept 11 believing stability of market more important than OPEC price target. Officially suspended Jan 2002 but basket price again within band, & OPEC members speak again of keeping prices within $22-$28/barrel range $22-
Cheap transportation in USAKendall essential to maintain Christopher G. St. C. Arabian Gulf even the most rural subsistence economy!
World Petroleum Reserves
Iraq's Role
"By 2010 we will need [a further] 50 million barrels a day. The Middle East, with two-thirds of the oil twoand the lowest cost, is still where the prize lies." US Vice President Dick Cheney, as Halliburton chief executive officer, London, fall 1999 Cynics perspective is that Bush & Cheney's Iraq war is over & its Mission Accomplished Costs may reach over trillion dollars, & anywhere from 50,000 to 500,000 Iraqis & 3,941 US military dead Paid for by the US Treasury printing more dollars, or deficit spending [$250 Billion in the red]!
Iraq's Role
Saddam Hussein of Iraq
March 19, 2003: US & UK attack Iraq Events of 2000s produce two drastic changes: Huge increases in oil prices Price of dollar falls Result: Economic recession begins in US
Golden age for oil shale and gas begins

Iraq's New Petroleum Laws

1972 - 1975 Iraqi resources Nationalized. New Law drafted by US consultants hired by US administration; vetted US Oil, International Monetary Fund, former US deputy defense secretary Paul Wolfowitz' World Bank, & US Agency for International Development replacing nationalization. Production sharing agreements (PSAs) has Operating Companies getting up to 75%. SixtySixty-five of Iraq's roughly 80 oilfields open for bid. National revenue distribution Kurds to north, Shi'ites to south & Sunnis in center. Most of reserves in Shi'ite-dominated south, Shi'iteKurdish north holds best exploration prospects Iraqi oil controlled by "Federal Oil & Gas Council", oil experts from inside & outside Iraq, includes US executives. Iraqi public & overwhelming majority of Parliament members out of loop. Christopher G. St. C. Kendall Original language English, not Arabic.
Arabian Gulf
The History of Prices
Iran Revolution
Data Sources - Texts Who has all the oil? Countries & Reserves Recent Oil History of Middle East Geological Setting of the Middle East Oil Reserves Conclusions
Effect of Iraq?
A Response To Increased Consumption, Weak Dollar & War
A Response To Mortgage Collapse & Weak Dollar Misguided, Misconceived Paternalistic Objectives Christopher G. St. C. Kendall To Stabilize Oil Prices Arabian Gulf
China Effect
Wall Street Journal Jan 3, 2008
Demand for Oil
The Global Picture
LongLong-term Conclusions
Oil is a depleting finite resource Political & geological factors conspire to control fluctuating but increasing prices Oil industry unable to control oil price speculation price influenced by short-term events including increasing shortconsumption, weak currency, weather, speculator trading tactics, or war Though non-OPEC oil producers could maintain huge, nonlonglong-life reserves by reduced production, production of cheap oil of West continues to peak & go into decline Small oil companies in USA uniquely positioned to make more profit from their assets
Conclusions
Burn it in transport or use it for petrochemicals?
Conclusions
Now for a Beer!
Lecture Ends!!

Arabian Gulf Petroleum Geopolitics&Geology

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Hydrocarbon Potential of Middle Eastern Basins of the Gulf Geology & Geopolitics mix!

Texts on History of Petroleum Exploitation

Christopher G. St. C. Kendall Arabian Gulf

Texts on History of Petroleum Exploitation

Christopher G. St. C. Kendall Arabian Gulf

Texts on History of Petroleum Exploitation

Christopher G. St. C. Kendall Arabian Gulf

Texts on History of Petroleum Exploitation

Christopher G. St. C. Kendall Arabian Gulf

Current Middle East Reserves of Cheap Oil

Most of these countries oil is in carbonates

Arabian Gulf Fields & the age of their Reservoirs

AfterChristopher G. St. C. Kendall Al Sharhan

World Petroleum Exploitation

World Petroleum Exploitation

Oil Production - Arabian Gulf

Zagros Mountain Chain

After Dennis Tassa

Structural Provinces - Arabian Gulf

Mesozoic to Tertiary Foreland Basin

Arabian Gulf tracks the Wilson Cycle

Extensional & Compressional Margin

Evolution of Arabian Gulf

Compression & Foreland Basin Extensional margin Extensional margin

Arabian plate stratigraphic section with Arabian Gulf hydrocarbon production

Christopher G. St. C. Kendall

Christopher G. St. C. Kendall Arabian Gulf

Christopher G. St. C. Kendall Arabian Gulf

Christopher G. St. C. Kendall Arabian Gulf

Structural & Depositional Barrier over Hercynian Horst Blocks

Christopher G. St. C. Kendall Arabian Gulf

Christopher G. St. C. Kendall Arabian Gulf

Depositional Barrier over Hercynian Horst Blocks

Compression & Foreland Basin

Christopher G. St. C. Kendall Arabian Gulf

After Dennis Tassa

Zagros Fold Mountains - Iran

Compression & Foreland Basin

Christopher G. St. C. Kendall Arabian Gulf

Zagros Fold Mountains Iran

Christopher G. St. C. Kendall Arabian Gulf

Zagros Fold Mountains - Iran

Christopher G. St. C. Kendall Arabian Gulf

Christopher G. St. C. Kendall Arabian Gulf

From International Petroleum Encyclopedia

Christopher G. St. C. Kendall Arabian Gulf

Christopher G. St. C. Kendall Arabian Gulf

A big day for a bloom!!

Christopher G. St. C. Kendall Arabian Gulf

Ramp Open Shelf

Christopher G. St. C. Kendall Arabian Gulf

Sedimentary Section is Source

After Baum, & Kendall Gulf Arabian

Christopher G. St. C. Kendall

Geological Setting of Jurassic Oil

Intrashelf Basin Intrashelf Basin

Christopher G. St. C. Kendall Arabian Gulf

The Hanifa Formation Oil Fields

Christopher G. St. C. Kendall Arabian Gulf

Hanifa Formation - Berri Field

Christopher G. St. C. Kendall Arabian Gulf

Lower Cretaceous - Barremian