HOUSTON, (Reuters) – Saudi Arabia’s plans to expand oil and refining capacity are on track, though economic turmoil and the promotion of alternative energies have clouded the oil demand outlook, the head of Saudi Aramco said Tuesday.
Saudi Arabia plans to expand oil production capacity to 12 million barrels per day (bpd) by the end of 2009, Saudi Aramco Chief Executive Abdallah Jumah told the CERA week energy conference on Tuesday.
Jumah added that Saudi Arabia, the largest OPEC exporter, plans to spend $90 billion over the next five years in upstream and downstream projects globally, including $1 billion to expand production of low sulfur fuels.
However, the fallout from the U.S. subprime crisis and volatility in the value of the U.S. dollar have created uncertainty in the global oil market, he said.
Uncertainty over alternative fuels has “negative implications” for fossil fuel development, Jumah added.
He said there is “considerable risk” that global oil expansion projects could be “significantly compromised” without stable energy policies.
Jumah said that Saudi Arabia’s Ghawar oil field, the largest in the world, was not in decline and that the water cut from the field was currently running at about 27 percent.