NEW DELHI, (AP) -Saudi Arabia plans to increase its crude oil production capacity nearly 40 percent by 2009 and double its refining size over the next five years to keep pace with growing global demand, the country’s oil minister said Thursday.
Ali Naimi said the plans are part of a $80-billion-commitment that Saudi Arabia — the world’s biggest oil exporter — has made to increase oil supplies in the global market.
Naimi blamed the sharp rise in global crude prices over the past two years mostly on “insufficient investment and rising energy demand,” especially from the booming economies of Asia.
“The rise has been a wake-up call for the industry and for producers and consumers alike, who are now beginning to address deliverability problem head on,” he told delegates to an international energy conference in New Delhi.
Saudi Arabia, which has a quarter of the world’s proven oil reserves, has a significant stake in ensuring stable markets, Naimi said.
It plans to expand crude production capacity to 12.5 million barrels a day by 2009 from 9 million barrels now. And if market conditions demand, the country has identified additional projects to further boost capacity after 2009, he said.
Saudi Arabia is also making substantial investments in refineries within and outside the country so to double its refining capacity to 6 million barrels a day over the next five years, he said.
Naimi said an assessment by his government has revealed that “oil will remain the fuel of choice for the transportation sector and as such, will make up significant portion of new energy demand in the coming decades.”
He believes oil resources are sufficient enough so that they can meet future energy demands for the next 30 years.
Naimi said the overall energy mix in 2030 will look much the same as it does today, despite the increase in availability of alternative energy sources, because these are still not economically competitive with fossil fuel.
His comments come at a time when crude oil prices have dropped considerably after hitting a record high of $78.40 a barrel last July.
After his arrival in New Delhi on Tuesday, Naimi said he felt the global oil market was moving in the right direction — remarks that prompted crude prices fall to a 20-month low of $50.28 a barrel Wednesday.
Prices rose later to close at $52.24 in New York and then climbed further in Asian electronic trading Thursday to $52.41 a barrel.
“Prices needed to be high enough to give adequate returns to producers without hurting consumers,” Naimi said.