Saudi launches massive Khurais oil field

Saudi Arabia has begun production at its massive Khurais oil field, a milestone venture raising output to its highest levels ever in the country that is home to the world’s largest proven oil reserves.

The Khurais field in the eastern part of Saudi Arabia can produce 1.2 million barrels per day, boosting to 12.5 million barrels per day the OPEC powerhouse’s overall output capacity. The addition comes at a time when world oil prices are on the rebound, pushing past $70, after months of being hammered by the demand erosion fueled by the global economic meltdown.
Khaled al-Faleh, chief executive of state-run oil giant Saudi Aramco, said the Arab light crude from the field is currently being stored in tanks and has yet to be exported, the daily Al-Ektisadiya newspaper reported Thursday.

Al-Faleh said given the current economic climate, Saudi Arabia does not yet need the current spare capacity.

But Saudi officials have for months cautioned that a recession-prompted curtailment of investments in the global energy sector could cause another price spike in oil as available supply outpaces demand.

The start of production from Khurais — that also includes output from two other fields, gives Saudi Arabia a spare capacity of roughly 4 million barrel per day from its current production levels.

Officials in the kingdom have said the project is the single largest expansion of light oil production capacity in history.

Business Week