Saudis say oil capacity expansion plans on track

Dubai (Platts)--14Nov2005

The Saudi Arabian oil ministry issued a statement Sunday saying its oil
production capacity expansion plans were on track and there was no obstacle to
raising capacity to 12.5-mil b/d by 2009, contrary to remarks by a former
board member of state-run Saudi Aramco.
     "The kingdom is proceeding with its current and future plan, as stated
previously, to raise production capacity to 12.5-mil b/d by 2009. The plan is
proceeding according to the agreed schedule and there are no obstacles to this
plan from a lack of technical or engineering expertise, funding or national
Saudi human resources," an unnamed ministry official was quoted by the
official Saudi Press Agency as saying.
     The official referred to an article by Reuters news agency in which 
former Aramco board member Sadad Husseini was quoted as saying Saudi Arabia's
plan to raise output by 1.5-mil b/d by 2009 might be delayed because of a
shortage of rigs and equipment.
     "Hussein's allegation that Saudi Arabia and the Saudi oil industry in
general face difficulties in obtaining rigs and necessary equipment to raise
production is devoid of all truth and fact but is based on personal
assumptions that may have a personal motive," the unnamed official was quoted
as saying. 
     The official added that Husseini, who retired from Aramco in 2004, had
"in recent times and since leaving Aramco, been making statements to the
international media about the Saudi oil industry on such important issues as
production capacity and raising production as well as on the size of Saudi
reserves."
     These remarks were "in addition to being erroneous and misleading, raises
questions about the kingdom's petroleum capability and harms the kingdom's
efforts and its firm policy of helping to stabilize the world oil market," the
official said.
     Saudi Arabia, the world's biggest oil producer and exporter with proven
crude oil reserves of 262-bil bbl, has put present output capacity at 11-mil
b/d. Current production is running at 9.5-mil b/d, leaving 1.5-mil b/d in
spare capacity which the kingdom has promised to expand to meet future demand
by developing new fields and upgrading existing ones, including the massive
Ghawar oilfield, the world's biggest.
     Husseini's remarks were echoed by US energy officials currently touring
the Gulf. 
     Guy Caruso, the administrator of the US energy department's Energy
Information Energy (IEA) said Saudi Arabia's short-term efforts to boost crude
oil production capacity from 11-mil b/d to 12.5-mil b/d could be hampered by
limited supplies of materials and human resources but not capital and
reserves.
     "I don't think there is a problem with money," Caruso said during an
opening ceremony marking publication of the first Arabic addition of the EIA
Outlook. "The short-term obstacles are getting access to enough equipment. The
reserves appear to be there." 
     Caruso was in Dubai as part of a delegation headed by US energy secretary
Samuel Bodman, who began a Gulf tour in the UAE capital Abu Dhabi Saturday.
Bodman is also due to visit Kuwait, Qatar and Saudi Arabia.
-- Kate Dourian, kate_dourian@platts.com

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