Saudi Aramco, the oil and gas powerhouse of the Kingdom of Saudi Arabia would be investing $129 billion to augment their production capacity and various other energy projects in next five years. The state owned company’s Executive Vice President of Operations Khalid al-Falih said that he expects to utilize $70 billion for international and domestic joint-ventures, and the remaining $59 billion would be set aside for projects which would be carried out by the company itself. As Saudi Arabia being the largest oil producing nation in the world, they regard the present oil demand and higher prices would help them to implement the projects in five years on a time-bound manner.
Falih said they had to hike the amount allocated for the projects due to the company’s policy of adapting and responding to needs of the time. However, he argued that the higher oil prices were not due to any cutback in production but a rapid increase in demand, and oil’s increased exploitation as financial instrument in the markets by the investors. Analysts have warned, the oil futures rise was with clear fundamentals, and any oil bubble burst has been completely ruled out though there would be resistance at $200 per barrel. Aramco’s expansion plans are contrary to Saudi Oil Minister Ali al-Naimi’s last month’s statement, “on account of estimates, which show lower demand for oil in the future has forced us not to engage in any expansion program”.
Aramco’s refinery projects will extend up to the US and China, besides domestic ones. Apart from the production from the neutral zone between Saudi Arabia and Kuwait, the production capacity would reach 12 million barrels per day by the end of 2009. Though Falih admitted the refining margins were set to fall in the coming years, they would go ahead with the expansion plans.