JEDDAH — Saudi Arabia has stopped $100bn expansion of its oil production capacity after reaching a target of 12m barrels a day, the Financial Times said on Thursday.
The Times said in an online story that the Kingdom believes new oil resources like Libya will meet rising demand. Libya has resumed oil production after the ouster of former dictator Muammar Gaddafi.
The Times quoted Khalid Al-Falih, chief executive of the state-owned Saudi Aramco, as saying that pressure on the Kingdom to raise its output capacity had “substantially reduced.”
It said the comment was an indication that Saudi Arabia is not pushing ahead with “with an assumed expansion plan” to produce 15 million barrels a day by the end of 2020.
Including the oil fields in the neutral zone between Saudi Arabia and Kuwait, Riyadh can produce up to 12.5 million barrels a day, the Times said.
“The comments put a cap at least temporarily on a $100bn expansion program that started in the early 2000s when Saudi was able to produce about 8.5m b/d,” the Times said. “The halt comes in spite of tightness in the oil market due to ongoing production disruptions in Libya, Syria and Yemen.”
Riyadh boosted its oil output to 10 million barrels a day earlier this year, the highest in 30 years, to compensate for the loss of production in Libya, the Times said.
“There was pressure on the Kingdom and Saudi Aramco to raise production [capacity]. That pressure, I think, has been substantially reduced,” it quoted Al-Falih as saying.
Citing estimates by the International Energy Agency, the Times said Iraq is coming out as the biggest contributor to the global oil supply growth between 2010 and 2035, adding more than 5 million barrels a day.
Saudi Arabia would remain second, but closely followed by global biofuel production, and oil supplies from Brazil, Canada and Kazakhstan.
Falih told the Times and Saudi Aramco was shifting its spending priorities from oil production into natural gas, refining and the chemicals business. “The downstream [refining] is increasingly growing in scale to equal, and sometimes eclipse, the level of spending we are doing in upstream [oil production],” he said. — SG