Saudi Arabia’s energy minister Khalid al-Falih announced that the world’s largest oil exporter does not target a specific level of oil production and that its output is based on customers’ needs.
Speaking during an official visit to China, minister Falih told al-Arabiya TV channel that despite low crude prices he was exceptionally optimistic for global demand.
As talks on OPEC’s bid for freezing output backing oil rates resurface, Falih commented on the well-standing demand for crude in China, saying that it remains “very healthy” and that India’s demand was “very good” too.
“We in the kingdom of Saudi Arabia do not have a targeted number to reach. The kingdom’s production meets the requirements of the customers, whether they are outside internationally or inside the kingdom,” Falih said on Wednesday.
“The kingdom’s production policy will maintain a large degree of responsibility,” he said, signaling the kingdom would not flood an oversupplied market if there was no demand for it, a position Saudi Arabia has always said it holds to.
OPEC is due to meet in Algeria in September and is expected to seek to revive a global output freeze deal.
In July the kingdom pumped 10.67 million barrels per day, the most in its history. Falih last week told Reuters production in August had remained around that level.
Saudi Arabia has a production capacity of 12.5 million bpd, leaving it able to boost output further to meet any global shortage. Falih said that production level was not expected to be reached unless there were unexpected outages.
“The market now is saturated with oversupply and we don’t see in the short term a need for the kingdom to reach its maximum production capacity,” he told al-Arabiya.
Falih is on a visit headed by Deputy Crown Prince Mohammed bin Salman, aimed at bolstering relations with China, a top energy customer and trade partner. The delegation heads to Japan late on Wednesday.
Saudi Arabia has traditionally accounted for most of Asia’s crude needs.
Falih denied there was a price war between producers in China, adding that increasing Russian oil supplies to China “is something natural and we do not see it as a threatening move to Saudi Arabia.”
Under sweeping economic reforms led by Prince Mohammed, Riyadh plans to sell a stake of less than 5 percent in national oil major Saudi Aramco.
Falih, Aramco’s chairman, told al-Arabiya that China had shown interest in opening its stock markets for Aramco’s flotation.
Aramco has been in talks with China’s CNPC and Sinopec for investment opportunities in refining, marketing and petrochemicals.
Falih said he hoped to reach a deal with CNPC before the end of the year, expecting investments in China to exceed $20 billion, if the talks were finalized.
Aramco is talking to CNPC about two refineries in China, with one being built in Yunnan at a more advanced stage, he said.
Aramco is also in talks with Sinopec on a refinery in Qingdao. “We look forward to improve the economic feasibility of the project and finish the negotiations,” he said, adding Aramco is expected to take a stake of between 40 and 45 percent in such projects.