Saudi Arabia may expand oil capacity by 30 %

Oct 11, 2004 02:00 AM

Saudi Arabia may boost output capacity by 30 % within two years in order to prevent shortages, the country's oil minister said.
"We're investing $ 2.5 bn a year to boost output capacity," Ali al-Naimi said. The kingdom is "willing to do what it takes to satisfy demand." The country can increase its limit by 3.2 mm barrels to more than 14 mm bpd, if that is needed, al-Naimi said, adding that 69 % of the new supply would be so-called light or extra light oil, which are most in demand.

Supply uncertainties have sparked concern among traders that shortages may arise if supplies are disrupted from Iraq, Russia, Nigeria or elsewhere. Saudi Arabia, the world's largest exporter, in September increased its production capacity to 11 mm bpd from 10.5 mm, leaving 1.5 mm bpd in spare capacity, enough to compensate for most of Iraqi exports.
Al-Naimi said that the new oil would come from six fields that would be expanded or developed. Oil prices in New York hit $ 53.31 a barrel on Oct. 8 as members ofOPEC operated near their maximum to meet growing demand, led by China.

"There is absolutely no justification for prices to be at current levels," al-Naimi said. "We have the know-how, the manpower and the capital to build capacity if demand is there."
Al-Naimi also said that Saudi Arabia, the only OPEC member that currently has idle capacity, will maintain a buffer of 1.5 mm to 2 mm bpd "for the foreseeable future."

Source: PIN
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