Saudi Aramco plans to invest USD 35 billion over the next 5 years in projects to protect an oil production capacity cushion the world still relies on despite a shale oil boom and weak demand.

Mr Khalid al Falih head of Saudi Aramco said that "Preserving our spare oil production capacity is crucial to maintaining oil market stability because it plays a pivotal role in protecting the world's economic health.

Mr Falih said that "So we are continuing to strengthen our oil business to meet the rising call on our oil production; in fact, we plan to invest USD 35 billion over the next 5 years in crude oil exploration and development alone to keep our oil production portfolio robust."

Despite weak demand in Europe, Saudi Aramco has been pumping oil at multi decade highs of around 10 million barrels per day for much of this year, largely to make up for sanctioned Iranian oil, leaving around 2.5 million barrels per day of capacity.

Mr Ali Al Naimi oil minister of Saudi Arabia said recently that it was unclear whether the kingdom would need to increase its capacity beyond current levels, thanks to uncertain demand and rising supplies of alternative energy sources. But large investments in new production capacity are still needed to offset declines in older fields if Saudi Arabia is to maintain its key position as the world's only swing producer over the next decade.

Until the financial crisis began of 2008, expectations of a sustained and rapid rise in energy demand stoked concern among many consumers that Saudi Arabia's 12.5 million barrels per day capacity might not provide a comfortable cushion for long. But supplies of oil have since ballooned at a time of weak demand with global economic growth potentially taking years to return to pre crisis levels while efficiency improvements in the transport sector weigh on oil demand further.

Source - Reuters

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