Saudi Arabia to Expand Oil Production: Minister

Saudi Arabia to expand oil production: minister

JOHANNESBURG, Sept. 27 (Xinhua) — Saudi Arabia, the world’s leading oil producer, plans to expand its production capacity from the current 11 million barrels per day (bpd) to 12.5 million bpd by 2009, the country’s Petroleum Minister Ali Al-Naimi said on Tuesday.

Saudi Arabia will also maintain spare capacity of at least 1.5 to 2 million barrels per day, while expanding and upgrading refineries and adding additional tankers to its fleet, as part of efforts to expand capacity across the supply chain and build itself a “preeminent reliable supplier of energy,” he said.

“By 2009, Saudi Arabia’s maximum sustainable capacity will reach 12.5 million barrels per day,” Al-Naimi told delegates to the 18th World Petroleum Congress in Johannesburg.

He said “turbulent times” experienced by the world oil market at present was not the problem of oil availability, but rather one of deliverability, or the capacity to explore, produce, transport, refine and deliver oil.

“Prices are under pressure because the petroleum industry’s infrastructure is stretched thin,” he said, adding that the tightness in supply chain was caused by rising demand, insufficient investment in capacity, and a mismatch between crude quality and the existing refining base.

“Hurricane Katrina (in the United States) and its aftermath and now Hurricane Rita and its havoc and disruption are the recent and visible example of the fragility of our energy delivery system,” he said.

Al-Naimi expressed his optimism and confidence to the delegates, saying the resource base is more than sufficient to meet demand.

By using the latest technology, Saudi Arabia will soon be able to boost its proved oil reserves by 200 billion barrels and “we are further encouraged by the fact that there are vast areas of the Kingdom that have yet to be explored,” he said.

Although believing both very low prices and very high prices are not sustainable, Al-Naimi said the current oil price level is providing the returns needed to attract adequate investment and over the next several years significant new capacity will begin to come on-stream.

“We believe spare crude oil production capacity will grow sufficiently in the next 3-4 years to restore some margin of safety to world crude markets,” he said.

The minister also said the quest for cleaner sources of energy would not pose a threat to oil dominance.

Energy sources, such as solar, wind or nuclear power, would not replace petroleum as there were currently no competitive alternatives to petroleum-derived fuels, he said.