Petroleum Intelligence Weekly says top oil exporter is mulling plan to boost capacity to meet demand
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,"
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
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
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
Saudi Arabia plans to bring in more rigs this year as it
moves ahead with Moneefa, boosting rigs at its disposal by over
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
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
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.