JEDDAH - Saudi Arabia is investing in “all petroleum value chain on a scale never before seen in the history of our industry,” President and CEO of Saudi Aramco, Khalid A. Al-Falih said on Wednesday. Underlining the Kingdom’s commitment and sense of responsibility at being the world’s largest energy supplier, he said “we are continuing our efforts to locate additional resources across Saudi Arabia, including new frontier areas both on land and offshore, despite the large resource base we already possess.”
Speaking at the Center for Strategic and International Studies in the US capital Washington, DC, Al-Falih reinforced the need to keep investing in the oil and gas industry.
Being bullish on the propects, he said “we believe there is tremendous potential to locate substantial new hydrocarbon resources in various regions of the Kingdom.”
In a copy of his speech furnished to the Saudi Gazette, Al-Falih said “some people ask us why we continue with these projects even in a challenging business environment and at a time when oil consumption has fallen for two consecutive years, for the first time in 25 years.” “Certainly we are well aware of the state of the global economy, and have felt the impact the present downturn along with the rest of the petroleum industry.”
“But we are investing throughout the business cycle, consistent with our long-term focus,” he added.
Al-Falih said that as the global economy rebounds, demand for petroleum will also grow and without further investment the “vicious cycle of price spikes” will return.
The Aramco also talked about the completion of the $10 billion Khurais oilfield project which will add a further 1.2 million barrels per day of oil to Saudi Arabia’s output capacity.
“Just a few weeks from now we will attain our goal of putting in place a 12 million-barrel-per-day crude oil production capacity, once we complete our Khurais oil field program,” Al-Falih said.
“This massive project, the largest single crude oil increment ever commissioned, will be capable of producing as much oil as the entire state of Texas,” he added.
Al-Falih also mentioned Aramco’s massive refinery expansion plans telling the assembled guests that the company will account for more than half of the grassroots crude oil production capacity brought onstream worldwide during the current decade.
“Saudi Aramco is behind one out of every three barrels of firm commitments to new refinery capacity to be built between now and the year 2015,” Al-Falih said.
Aramco have delayed a number of projects, including the offshore $9 billion Manifa oilfield project. Reasons for the delays include the low oil price, a strategic move to take advantage of the current low cost of raw materials and to fall in line with agreed OPEC production cuts.
Moreover, in Houston, Saudi Arabia will meet an end-of-June target for raising its oil output capacity to 12 million barrels per day (bpd), Amin Nasser, Saudi Aramco’s senior vice president for exploration and production said on the sidelines of the Offshore Technology Conference.
Nasser said all oilfield development projects scheduled for completion in June are on target, including Khurais, Nuayyim and Shaybah, which will add a total of 1.45 million bpd of capacity. Khurais alone is set to add 1.2 million bpd.
“We don’t use all of it for expanding our capacity. Some of it’s being utilized for maintaining potential. It’s a combination,” he said.
Nasser said marginal world oil production, such as output from deep offshore waters or tar sands, needs a price in the range of $70 a barrel to continue expanding.
Saudi Arabia can keep expanding at “much lower” prices because its costs are lower, he said.
“It all depends on the markets. We don’t dictate the prices in the market,” Nasser said. “We let the market dictate what prices we will sell our crude at.”
As to other projects, the Moneefa will come on line in 2013, not 2012 as earlier planned, mainly because Saudi Arabia does not expect to need the additional capacity, Nasser said.
“We continue to invest across the cycle, in good times and bad, because we are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” Al-Falih further said. “We build with confidence today, knowing that tomorrow we will be able to meet our commitments to all our various stakeholders,” he added.
Saudi Aramco is particulary active in cutting-edge upstream technologies, including the first development of giga-cell reservoir simulators “which allow us to optimize production strategies to ensure sustainability.”
“This is a duty that we have embraced,” he added.