Saudi Arabia will meet an end-of-June target for raising its oil output capacity to 12.5 million barrels per day (bpd), a Saudi Aramco [SDABO.UL] executive said Tuesday.
Amin Nasser, Saudi Aramco’s senior vice president for exploration and production, made the prediction to Reuters on the sidelines of the Offshore Technology Conference.
The kingdom currently produces about 8 million bpd, and there are no current expectations of a change, a spokesman for Nasser added later.
Nasser said all oilfield development projects scheduled for completion in June are on target, including Khurais, Nuayyim and Shaybah, which will add a total of 1.45 million bpd of capacity. Khurais alone is set to add 1.2 million bpd.
With capacity now at 12 million bpd, the expected increase exceeds the target of 12.5 million bpd of kingdom capacity by the end of June, but Nasser said some additions will merely offset declines elsewhere.
“We don’t use all of it for expanding our capacity. Some of it’s being utilized for maintaining potential. It’s a combination,” he said.
Nasser said marginal world oil production, such as output from deep offshore waters or tar sands, needs a price in the range of $70 a barrel to continue expanding.
Saudi Arabia can keep expanding at “much lower” prices because its costs are lower, he said, declining to state the lowest price before Saudi output cuts become unavoidable.
“It all depends on the markets. We don’t dictate the prices in the market,” Nasser said. “We let the market dictate what prices we will sell our crude at.”
As to other projects, the Moneefa will come on line in 2013, not 2012 as earlier planned, mainly because Saudi Arabia does not expect to need the additional capacity, Nasser said.
Aramco expects development costs to decline because of the world economic slowdown but he declined to say how much.
During an OTC panel discussion, Nasser said that, while the Saudis are expanding overseas in refining and petrochemicals, they do not expect to carry out crude oil exploration or production overseas.