Saudi oil strategy stays on target

An $11bn development of the country's Khurais field alone will add 1.2 million b/d according to senior Vice President Abdullah Al-Saif. In addition a further 350,000 b/d of capacity will be available at the end of next year from developments at the company's Shaybah and Nuayim fields.

Investments in the Khursaniyah, Khurais and Manifa acreages as well will add 2.95 million b/d to Aramco's production capacity by 2011. The International Energy Agency predicts that by 2030 world crude demand will be sufficient for Aramco to raise production further to 18.2 million b/d which would take its share of global oil production to 15% from 11% now.

While some analysts question the Saudi capacity to meet such levels, others are in no doubt of the Kingdom's potential. Company executives have said that only 28% of proven Saudi oil reserves are depleted and declared that recoverable crude at production levels translate into well over a century's worth of oil.

"The likely reserve base of Saudi Aramco alone far outweighs that of the five international super-major oil companies," says Moody's Dubai-based senior credit analyst Philipp Lotter.

Huge oil reserves

Saudi Arabia officially lists oil reserves of 259 billion barrels, though senior officials point to a reserve base more than three times as large. Al-Saif is quoted as saying "the target we have set ourselves in discovery is to increase the discovered oil resources from 716 billion barrels to 900 billion barrels within the next 20 years."

In the long term the aim is to increase both discovered resources and the recoverable part of those resources. Oil is now found in 85 different fields and in more than 300 reservoirs. The largest field is Ghawar in eastern province which produces some five million barrels a day representing some 6% of global production.

The company plans to invest $90bn over the next five years to meet global demand says Aramco president Abdullah Jumah. As part of the strategy, the company's number of rigs has increased from 50 to 130 over the last four years.

However, heavier crude, which trades at a discount to light oil, is likely to feature prominently in the production increase, with Aramco planning to extract 900,000 b/d from its hitherto mothballed offshore Manifa acreage within the next three years, as well as from its offshore Zuluf and Marjan fields.

The heavier oil though is expected to be reserved for processing by Saudi domestic refineries which are undergoing a multi-billion dollar expansion.

The Kingdom is also a key investor in refineries outside the region points out Saudi Oil Minister Ali Al-Naimi. "We have capacity now in the Kingdom and outside to refine 3.2 million b/d. Over the next five years, we will double that to about six million b/d."

See also:
UAE waits for Saudi signal on revaluation