Saudi Arabia to Cut Drilling Rigs Amid Lower Oil Demand

Saudi Arabia, the world’s largest oil exporter, is expected to cut the number of oil rigs by as much as 20% until year-end amid lower crude output, people familiar with the situation said.

Last year, Saudi Arabian Oil Co., or Saudi Aramco, the state-run oil company, had about 130 offshore and onshore rigs in operation at peak times, a number that is set to fall by up to a fifth throughout 2009, the people said.


“They haven’t announced any specifics but they are saying there will be a reduction in the number of rigs by 20%,” one Gulf-based oil industry official told Zawya Dow Jones.

Aramco has been expanding its drilling rig fleet in the past few years as part of plans to boost its oil production capacity amid rising energy demand. However, the global economic crisis has led to falling rig requirements as global oil demand has weakened and major oil expansion projects are being completed.

Dow Jones Newswires