Saudi cuts oil drilling as demand slows

Top oil exporter Saudi Arabia plans to release 15 oil rigs by the end of the year as it reduces drilling activity with slowing global demand, oil industry sources in the kingdom said on Monday.

“We feel we have huge extra capacity,” said one. “Why do we need to drill?”

By the end of 2009, the number of rigs working in Saudi Arabia would fall to around 100, down from 115 currently in operation, he said.

State oil firm Saudi Aramco had already released 15 rigs from the 130 operating in October 2008, he added.

The total fall in rigs would be similar in magnitude to the oil supply cuts Saudi has made since last summer as the recession eats into demand. The kingdom has cut output to under 8 million barrels per day (bpd) from around 9.7 million bpd.

Maktoob