VIENNA – Saudi Arabian Oil Minister Ali Al-Naimi said the Kingdom would have 4.5 million barrels per day (bpd) of spare capacity by June this year.
He also said the cost of maintaining spare output capacity was very high but worthwhile, in remarks to reporters at a meeting of the Organization of the Petroleum Exporting Countries here Sunday.
“It is very high, but it is worth it. The world appreciates it,” Al-Naimi said.
The Shaybah and Nuayyim projects to bring on new supplies of Arab Extra Light crude were completed, Al-Naimi said, but there were no customers for more supply for now.
“They are there, but where are the customers?” he asked.
Saudi Arabia has a policy of maintaining a cushion of spare capacity of around 1.5 to 2 million bpd, but the margin has grown as the leading exporter has lowered production to roughly 8 million bpd as demand has fallen. Saudi Arabia’s overall capacity stands at 11.3 million bpd now and should rise to 12.5 million bpd in June, the minister said, as new oil comes onstream and older fields dwindle.
The next project to come online is Khurais, which is expected to produce Arab Light oil from June. The field has capacity of 1.2 million bpd.
In another remarks published in Arabic language daily Al-Hayat he said fresh oil production cuts would not help revive the global economy.
“Any new reduction in the cartel’s production would lead to an increase in the oil price and prevent any contribution to reviving the global economy.”
On arriving in Vienna, Al-Naimi threw the emphasis on output discipline.
“Compliance is very good,” he told reporters.
“We’d like to see compliance as high as possible. It is over 80 percent now, it can be better.”
He also said the current oil price of around $46 a barrel was not enough to sustain new production and said a reasonable price was about $75.
“It’s what we have said before. If you want the marginal producers to produce, all the poor guys that are shutting down their wells now, they need something about $70-$75. Everybody would be happy,” Al-Naimi said.
Al-Naimi told journalists on his arrival in Vienna on Saturday that oil demand in 2009 is falling due to the global economic downturn, Al-Hayat reported.
“We are going to discuss with the rest of the OPEC members if they are in favour of another production cut or not. And we will decide in light of a collective OPEC decision,” he said.
Al-Naimi said that there was an 80-percent compliance level with the cuts agreed late last year to reduce output by a total of 4.2 million barrels per day.
“The adherence of OPEC countries (to their quotas) is somewhat good at around 80 percent, but it could be better,” he said. – Agencies