Saudi pursues plan to raise output

Saudi Arabia is pushing ahead with mega projects to lift its sustainable oil production capacity to 12.5 million barrels per day at the end of 2009 but it appears to have suspended long-term plans, a Saudi group said yesterday.

The kingdom, which sits atop a quarter of the world’s recoverable crude deposits, is pumping nearly $60 billion (Dh220.38bn) into five major projects to expand output capacity from its present level of about 11.3 million bpd.

“The five capacity expansion projects will cost nearly $60bn. They will bring on-stream 2.95 million bpd of oil. This is equivalent to three per cent of global oil supply and greater than the total production of Kuwait,” the Riyadh-based Jadwa Investment Company said in a study, citing government data. “Total production capacity will increase by less than this as Saudi Aramco assumes some production declines elsewhere. The net addition lifts capacity by about 12.5 million bpd and the bulk of the capacity to come on-stream over the next couple of years is light crude.”

Buoyed by a surge in its petrodollar income, Saudi Arabia kicked off the world’s largest capacity-building programme five years ago to expand its sustainable output and maintain existing capacity by offsetting a decline in some fields. Opec’s de facto leader has set a target of 12.5 million bpd by the end of 2009 and 15 million bpd in the following years. But the Saudi Oil Ministry has said recently the extra capacity would not be needed at least at present.

“It will be some time before the decision is made as to whether to go ahead with the new capacity but by providing the basic details, the kingdom has reassured the oil market that additional supply will be forthcoming if required,” Jadwa said.

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