Joint development of offshore petroleum resources: The Persian Gulf experience

Abstract

The Persian Gulf region is one of the richest parts of the world in terms of oil and gas resources (Fig. 1). In 1979, proven oil reserves in the Persian Gulf amounted to 365 billion barrels, equal to 82% of OPEC’s and 53% of the world’s proven reserves. In terms of proven gas reserves, the Persian Gulf nations’ reserves amounted to 20.4 trillion m3 or 75% of OPEC’s and 29% of the world’s proven gas reserves. In 1979, Persian Gulf exports accounted for nearly 60% of the world trade in petroleum. Six of the major oil producers within OPEC border the Persian Gulf (Saudi Arabia, Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates [UAE]). Despite its importance, the Persian Gulf region is a highly politicized and unstable region. Kuwait, Oman, and the UAE (comprised of seven tiny sheikdoms) are city states or emirates with very small populations. Iran still suffers from the after-shocks of its 1979 revolution and Saudi Arabia and Iraq suffer from domestic political problems. The nations of this region belong to different ideological camps. Border conflicts, claims to each other’s territories and internal political pressures make another political flare-up in the area with consequent impact on oil production and exports a dangerous possibility. Notwithstanding the differences and instabilities, the oil nations of the Persian Gulf have, in most cases, resolved their differences in matters related to oil. In some cases, where diplomatic relations were at the breaking point, the oil ministers, within the OPEC framework, coordinated their policies in a mutually beneficial manner. However, difficulties were a little greater where offshore joint developments of oilfields were concerned.