Saudi Arabia intends to maintain its crude production capacity at 12.5 million barrels a day, its oil minister said just days after a prince revived talks of a higher internal target.
“We don’t see the need to build capacity beyond what we have today,” Ali al-Naimi said today at the Center for Strategic & International Studies in Washington.
The kingdom plans to raise capacity to 15 million barrels a day by 2020, allowing it to be able to export as much as 10 million barrels, Prince Turki Al Faisal, 68, a former head of intelligence, said in an April 25 speech at Harvard University that was posted on the university’s website yesterday.
Saudi Arabia doesn’t plan to boost volume beyond 12.5 million barrels, though it has the ability to do so if needed, al-Naimi told reporters in March last year. The country first announced its plans to raise daily capacity to 15 million barrels in a speech delivered by al-Naimi in 2008, weeks before Brent crude reached a record $147 a barrel as OPEC’s spare capacity shrank.
The desert kingdom has the largest portion of spare capacity within the Organization of Petroleum Exporting Countries. It pumped about 9.2 million barrels of crude a day this month and kept 3.3 million barrels a day unused, according to data compiled by Bloomberg.
Khalid Al-Falih, chief executive officer of Saudi Arabian Oil Co., or Saudi Aramco, said in November 2011 that the state-run company had no plans to increase daily capacity beyond 12.5 million barrels and was focused on developing the Manifa oil field to compensate for declines at other deposits.
Aramco started pumping crude from Manifa this month and is currently producing 200,000 barrels a day of Arabian Heavy crude and will reach its target 900,000 barrels by the middle of 2014. Al-Naimi said today. He said on June 22 that oil from five “mega” fields could be used to boost capacity. The country raised its volume to about 12.5 million barrels in 2009, from 10 million barrels, and has kept it at that level since then.
“As far as what we’ve seen, there’s no plan to expand capacity before 2015,” said Robin Mills, head of consulting at Dubai-based Manaar Energy Consulting and Project Management, commenting on the prince’s suggestion of a 15 million-barrel capacity target. There are projects “on the shelf” that would allow the country to reach that level, though work on those probably couldn’t start before 2015, he said.
The country’s strategic goal is to maintain sufficient spare oil production capacity to offset global crude-supply interruptions, Prince Turki said in his speech this month. He said it has an unused 2.5 million barrels a day of capacity, which is enough to “almost instantly replace all of Iraq’s oil exports,” he said. Iraq overtook Iran last year to become the second-largest producer in OPEC, trailing only Saudi Arabia.
The prince made his remarks in a speech entitled “Saudi Arabia’s New Foreign Policy Doctrine in the Aftermath of the Arab Awakening.”
Saudi Arabia’s policy is also to meet rising domestic energy needs through renewable energy and natural gas, where possible, to free up oil for export, Prince Turki said. The country currently meets 40 percent of its energy needs through gas, said Prince Turki, who also served as an ambassador to U.S. until 2007.