The Saudi Gazette reported that Saudi Arabia has stopped USD 100 billion expansion of its oil production capacity after reaching a target of 12 million barrels per day.

As per report, in an online story that the Kingdom believes new oil resources like Libya will meet rising demand. Libya has resumed oil production after the ouster of former dictator Muammar Gaddafi.

Mr Khalid Al Falih CEO of the state owned Saudi Aramco said that pressure on the Kingdom to raise its output capacity had substantially reduced. Saudi Arabia is not pushing ahead with an assumed expansion plan to produce 15 million barrels a day by the end of 2020. Including the oil fields in the neutral zone between Saudi Arabia and Kuwait, Riyadh can produce up to 12.5 million barrels a day.

The comments put a cap at least temporarily on USD 100 billion expansion program that started in the early 2000s when Saudi was able to produce about 8.5 million barrel per day. The halt comes in spite of tightness in the oil market due to ongoing production disruptions in Libya, Syria and Yemen. Riyadh boosted its oil output to 10 million barrels a day earlier this year the highest in 30 years, to compensate for the loss of production in Libya.

Mr Al Falih said that there was pressure on the Kingdom and Saudi Aramco to raise production. That pressure, I think has been substantially reduced.

The International Energy Agency said that Iraq is coming out as the biggest contributor to the global oil supply growth between 2010 and 2035 adding more than 5 million barrels per day. Saudi Arabia would remain second but closely followed by global biofuel production and oil supplies from Brazil, Canada and Kazakhstan.

Mr Falih said that Saudi Aramco was shifting its spending priorities from oil production into natural gas, refining and the chemicals business. The downstream is increasingly growing in scale to equal and sometimes eclipse the level of spending we are doing in upstream.

(Sourced from the Saudi Gazette)