March 5 (Bloomberg) -- Saudi Arabian Oil Co., the world’s largest oil exporter, is “committed” to exports to the U.S. market, Khalid Al-Falih, the company’s chief executive officer, said today at the IHS CERAWeek conference in Houston.
Saudi Aramco, as the company is known, will supply crude to the U.S. market because many of the refineries on the Gulf Coast are set up to process the kingdom’s sour crudes, Al-Falih said in the speech.
The U.S. cut crude imports by 21 percent last year as domestic output surged, according to the Energy Information Administration. The state-owned Saudi company has the world’s largest proven reserves. The kingdom exported an average of 920,000 barrels a day to the U.S. in the four weeks ended Feb. 22, 38 percent less than the same period a year earlier, EIA data show.
“We’re committed to the U.S. market,” Al-Falih said. “The outlook from our customers is that they will continue to require our crude for a long time to come.”
The U.S. has narrowed Saudi Arabia’s lead in production this year to 1.9 million barrels a day, the slimmest margin since December 2002, according to data compiled by Bloomberg. The kingdom’s output declined to 9 million barrels a day in February, the lowest since May 2011, according to a Bloomberg survey of oil companies, producers and analysts.
The U.S. pumped 7.096 million barrels a day in the week ended Feb. 22, according to the EIA, a division of the Energy Department. America added 1.134 million barrels a day last year as improvements in horizontal drilling and hydraulic fracturing, or fracking, drove gains in oilfields such as the Eagle Ford in Texas and the Bakken in North Dakota.
The growth of U.S. output has widened the discount of West Texas Intermediate oil, the country’s benchmark, to London-traded Brent, which sets prices for more than half the world’s crude. WTI has declined 1.3 percent so far this year to $90.63 a barrel on the New York Mercantile Exchange. Brent is little changed this year at $110.89 on ICE Futures Europe, a premium of $20.26 a barrel.
Growing North American oil production has helped the world oil markets withstand the impact of U.S. and European sanctions against Iran. The Islamic republic’s output averaged 2.63 million barrels a day in February, a loss of almost 1 million barrels since the start of 2012, according to data compiled by Bloomberg.
“Exaggerated concerns about scarcity and security of oil supplies have been dispelled,” Al-Falih said. “It is now more certain that our industry will continue to play the major role in fueling the transport, power and chemical sectors for many decades to come.”
Motiva Enterprises LLC’s Port Arthur, Texas, refinery, the largest in the U.S. by capacity at 600,000 barrels a day, was expected to run primarily Saudi Arabian crude after a $10 billion expansion last year.
A new 325,000-barrel-a-day crude unit, the centerpiece of the project, caught fire a week after the company celebrated the opening, forcing a shutdown for several months. The restart was delayed when another fire broke out in December. The plant has not reached full expanded rates. Motiva is a joint venture of units of Saudi Aramco and Royal Dutch Shell Plc.
“Investment with our partners Shell and Motiva is satisfactory and we’re working to improve it.” Al-Falih said. “Our commitment to this market is unwavering”
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