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Fri 22 Apr 2011 10:27 AM

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Saudi sees need to pump 9m bpd oil - report

Petroleum Intelligence Weekly says top oil exporter is mulling plan to boost capacity to meet demand

Saudi sees need to pump 9m bpd oil - report
Top oil exporter Saudi Arabia needs to pump at least 9 million barrels per day (bpd) of crude for the next few years, says a new report. (Getty Images)

Top oil exporter Saudi

Arabia needs to pump at least 9 million barrels per day (bpd) of

crude for the next few years and is considering boosting

capacity to meet rising demand, Petroleum Intelligence Weekly

(PIW) said in a report citing Saudi sources this week.

Rising fuel demand led by growth in China, India and the

Middle East has outpaced Riyadh's expectations, and Saudi Arabia

now sees medium to long-term oil consumption higher than it had

previously anticipated, trade publication PIW reported.

"Saudi sources expect the kingdom will need to keep oil

output around 9 million bpd or higher over the next few years,"

PIW said.

Saudi Oil Minister Ali al-Naimi said on Sunday the kingdom's

April oil output may rise from March, when it pumped 8.292

million bpd. Output was above 9 million bpd as recently as

February, when the kingdom produced 9.125 million bpd to plug

the gap left by Libya, where civil war cut exports.

Libyan output disruption, the threat of more supply cuts

stemming from political tumult across the Middle East and North

Africa, and strong growth in fuel demand helped push oil prices

to 2.5-year highs this year.

Brent crude  rose to $127.02

a barrel earlier this month, the highest since August 2008,

while US crude rose to $113.46.

Oil consuming and producing countries have warned that high

energy costs could impact economic growth and lead to fuel

demand destruction, but OPEC has taken no coordinated decision

to boost supply. The group next meets to discuss supply policy

in June.

OPEC's biggest producer Saudi Arabia is the only member of

the group with significant spare capacity to boost output to

meet unexpected interruptions in oil flows such as Libya's

export cut. It has a long-held policy of maintaining a capacity

buffer of 1.5-2 million bpd.

To maintain that cushion as it pumps more, the kingdom is

discussing plans to take capacity beyond 12.5 million bpd.

Saudi was considering projects to boost Moneefa, Khurais and

Shaybah oilfields, PIW said. Expansion would add another 300,000

bpd at Moneefa, taking that field's capacity to 1.2 million bpd,

PIW said. The field is already under development to take it to

900,000 bpd.

Another 300,000 bpd could be added at Khurais, and 250,000

bpd at Shaybah, PIW reported. Projects were unlikely to go ahead

this year, even if the kingdom decides to take them on, PIW

added.

Saudi Arabia plans to bring in more rigs this year as it

moves ahead with Moneefa, boosting rigs at its disposal by over

a quarter.

It had slowed the first stage of development at Moneefa

after the global economic slowdown in 2008 cut demand and left

it with over 4 million bpd of spare capacity - more than double

its target.

But that cushion would shrink to less than 3.5 million bpd

if output rose about 9 million bpd, leaving the kingdom with

less scope to deal with another large unexpected outage in the

global oil supply system.

Some analysts have doubted the kingdom has kept all its

spare capacity ready for immediate production and said it would

be tested to the limit if it needed to compensate for another

large disruption.

Saudi Arabia has previously said it could take capacity to

15 million bpd when demand warranted, and detailed potential

expansion plans during the run up in oil prices to nearly $150 a

barrel in 2008.

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