JEDDAH – Saudi Arabian Oil Co. (Saudi Aramco) Chief Executive Khalid Al-Falih sees no reason to raise oil output capacity as expansion plans in other producing countries such as Iraq and Brazil should be enough to satisfy world markets.
In an article published in the Wall Street Journal, he was quoted as saying that "there is no reason for Saudi Aramco to pursue 15 million barrels (of output capacity), noting that "it is difficult to see (an increase in capacity) because there are too many variables happening."
"You’ve got too many announcements about massive capacity expansions coming out of countries like Brazil, coming out of countries like Iraq. The market demand is addressed by others," he said.
Aramco is currently producing about 9 million barrels of oil a day, having raised output sharply earlier this year to make up for lost output from Libya. Saudi Aramco’s current output capacity stands at 12 million barrels a day.
"Our objective is not to grow our production for the sake of growing our production," Falih said, "but to be there for the market if the market needs it, and we are waiting to see what happens on the supply side as well as how demand stabilizes."
Moreover, Falih said Saudi Aramco remains committed to the rest of its massive investment program, worth about $125 billion over the next five years, despite the troubles in the global economy. The program involves increasing refining capacity by 50 percent as well as other upstream and downstream developments.
"Our planning horizons are in the decades and most of our investments are investments that will do very well at the end of an economic recession so we will pursue them…regardless of what happens in Europe or in the US," he said.
Oil prices are rising after a burst of hiring in the US calmed fears of a new recession.
Benchmark crude rose 60 cents to $83.19 per barrel in morning trading in New York on Friday, while Brent crude lost 9 cents at $105.64 in London.
Oil recovered from 12-month lows this week as European leaders took steps to control the region’s lingering debt crisis. – SG