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Thu 12 Nov 2009 07:55 AM

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Saudi Aramco sees oil demand rising by 1m bpd from 2010

Company chief's post downturn forecast higher than that of OPEC - report.

World oil demand could rise by 1 million to 1.5 million barrels per day from 2010, the head of Saudi Arabia's state oil company told UK daily the Financial Times.

But chief executive Khalid Al Falih added that there was no need for the country to add capacity.

The predicted demand growth exceeds the most recent forecast from the Organisation of the Petroleum Exporting Countries for 750,000 bpd in 2010, but is in line with the International Energy Agency's 1.42 million bpd outlook.

Even so, Saudi Aramco has cut its upstream maintenance budget to $4 billion-$5 billion a year from $7 billion because of the global economic crisis, Falih told the newspaper.

The cut was "to respond to the fact that we are sitting on significant spare capacity and our production declined by more than 1.5 million barrels," Falih said.

With spare capcity of around 4 million barrels, Falih said there were no current plans for new capacity development.

"You look at announced capacity additions by others and you come to the conclusion that Saudi Arabia doesn't need to."

The Manifa oilfield is expected to add 900,000 bpd to Saudi Arabia's oil capacity around 2013, later than an earlier target of 2011, the newspaper said, because of the recent fall in oil demand.

"Once we are getting close to Manifa, we will relax spending in other areas to allow Manifa to replace rather than add to capacity," said Falih.

Oil prices in the $70s were a "healthy range for both consumers and producers to work around", he said, in line with comments from OPEC oil ministers who have signalled no change in output policy at the group's December meeting.

By 6.21am UAE time US crude oil futures were steady at $79.34 a barrel, having risen above $70 in mid-October, but still nearly halved from the record of mroe than $147 hit in the middle of last year.

Falih said the challenge for Aramco was supplying enough gas to meet consumption that the FT said was rising at 7 percent a year.

Aramco will begin drilling in the Red Sea for the first time in 2012, and will continue exploration in the Empty Quarter, he said. (Reuters)

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