Madrid (Platts)--4Jul2008

Saudi Arabian oil minister Ali Naimi said Thursday that as much as 5-7
trillion barrels of conventional and non-conventional oil remained to be found
and any constraints on future oil supply were linked more to politics than to
geology and the availability of resources.

Oil will continue to be an essential part of the global energy mix for
years to come, he said, warning that it was dangerous to assume that unproven
technologies could replace oil on a large scale.

"The limits to future petroleum supplies have more to do with politics
than with geology and resource availability," he told the World Petroleum
Congress in Madrid.

"For example," he said, "the most promising acreage remaining in the US
is located offshore, most of which is off limits to the industry."

Addressing the World Petroleum Congress in Madrid, Naimi said petroleum
was "unrivalled" in providing safe, efficient and cost-effective
transportation and that he saw little to change this in the foreseeable
future.

"It is highly risky at this early stage to assume that unproven
technologies could quickly replace petroleum on a large scale," he said.
Naimi said carbon-based fossil fuels were still "the cheapest, most
efficient and most reliable energy sources for our mobile societies," he said.

He said that although it was "politically popular" to extol the virtues
of "so-called alternative fuels" because of their lower carbon emissions,
claims of a reduced carbon footprint for some biofuels "do not always hold up
under closer scrutiny."

"While we welcome these supplements, they are not replacements at scale
for petroleum and they will have drawbacks and challenges," he said.

The world will need "more and more BTUs from all sources" to meet
expected future demand for energy, Naimi said, adding that expanding economic
prosperity in the coming decades would require increased production of all
fuel sources, including oil, gas, coal and alternatives.

WORLD NOT RUNNING OUT OF OIL

Naimi said the world was not running out of oil, and that as much as 5-7
trillion barrels of conventional and non-conventional oil -- both in mature
and frontier areas -- remained to be found.

"The issue is not whether it is there. We know it is. We only have to
look at the recent extraordinary deepwater discoveries off Brazil, the Gulf of
Mexico and the west of Africa for evidence that there are significant volumes
of oil yet to be found," he said.

In the US, for example, recent estimates indicated that the Bakken
formation spanning North Dakota and Montana might contain as much as 500
billion barrels of oil in place, he said.

"I am just as confident that significant quantities of oil remain
undiscovered and unproduced in both 'mature' and frontier areas around the
world," he said. "Armed with new technologies and the power of innovation the
petroleum industry will find this oil and produce it. Of this I am sure."
"Cutting-edge technologies," he said, had enabled Saudi Aramco "to
increase recovery rates in some fields to 70%."

The kingdom's goal, he said, "is to reach similarly high recovery rates
in as many of our fields as possible."
--staff, newsdesk@platts.com