Saudi: No Need to Boost Oil Output for 'Foreseeable Future'

[Strelnikov_]

Saudi: No Need to Boost Oil Output for 'Foreseeable Future'
by Karen Matusic
Tue, Aug 16, 2005

http://www.slb.com/news/story.cfm

Saudi Arabia sees no reason to boost its oil production for the "foreseeable future," because current record-high oil prices are the result of refinery tightness and geopolitical concerns and not the result of a crude shortfall, a Saudi oil source said Tuesday.

Daily production by Saudi Arabia, by far the world's largest exporter, will remain steady at about 9.5 million barrels a day in September, as demand from the kingdom's customers hasn't changed for "months," the source said.

. . .

Saudi Oil Minister Ali Naimi said in June that Saudi Arabia had been producing about 9.5 million barrels a day for more than a year, because refiners had turned down offers of incremental barrels.

. . .

But with most countries pumping at full throttle, only Saudi Arabia has significant spare capacity to meet any supply disruptions. The kingdom says it can pump another another 1.5 million barrels a day. Though Naimi and other Saudi oil officials say refiners have run out of capacity to process the heavy, high-sulfur crude the kingdom has in reserve, U.S. traders at big refineries said they could process more Saudi oil if the prices were lower.

SA has been claiming for the last year that they have increased production. Now they are saying that they have pumped at a steady state for the year. This could be an indication that SA has reached peak and is now making up excuses for the inability to increase production.

[DaveinMD]

1. actually they are right

the consolodation of oil refineries are a big cause of this mess.

[madeline_con]

2. Everything has to be blamed on an Ayrab....

it makes the Murcans feel better about our fearless leader who won't walk down a dirt road in Texas to talk up the war he's so proud of to the people who awaait an audience with His Chickenshitness.

[Strelnikov_]

3. Saudi Arabia To Boost Oil Production (April)

Saudi Arabia To Boost Oil Production
27 April 2005

http://english.aljazeera.net/NR/exeres/2AD53C02-545A-4354-ADD9-D01FDA7DB66E.htm

. . .

Saudi Arabia now pumps about 9.5 million barrels daily. If necessary, Saudi Arabia says it will eventually develop a capacity of 15mbpd.

At the meeting between US President George Bush and Saudi Arabia's Crown Prince Abd Allah bin Abd al-Aziz Al Saud in Crawford, Texas, White House National Security Adviser Stephen Hadley said the plan could be seen as positive news by financial markets.

"The problem in the oil market now is a perception that there is inadequate capacity," Hadley said. Reassurance that can be given to the market on available supply, he said, should "have a downward pressure on the price".

Bush pushed Abd Allah to help curb skyrocketing oil prices, and the White House expressed hope that the kingdom's plans would ease petrol prices.

. . .

So. I take it Ali Naimi's statement was an Arabic 'Bite Me' directed at the Chimp.

[Porcupine]

4. Explain? Refinery shortage makes oil prices higher?

That's like the price of apples going up when there's too many for the cider plant to process.

People are stupid.

[bemildred]

5. Well, see, if they admit they can't, it will spook the herd ... nt

[Massacure]

7. There is extra oil in sour grades, but not sweet.

The problem is U.S. refineries cannot use heavy and sour oils so they fight over sweet and jack the prices up in the process. If refineries would just be willing to expand to refine sour crude, the prices would drop.

[Porcupine]

13. So their is a shortage of USABLE oil. The rest is Asphalt or

high sulfer, barely refinable, crap. That would mean there is a shortage. Producing hooves does nothing if steak is what the market demands.

[hatrack]

6. How about "we can't boost output for the forseeable future"?

These are the same people who in 2004 were assuring us that SA could produce 20 million barrels a day for the next 50 years. Right, whatever . . .

[phantom power]

8. No doubt. I guess I'm glad that they aren't going to try and

increase production, just to maintain the fantasy. Anything that might prod people into facing the end of fossil fuels is better than nothing.

[htuttle]

9. Yes, I think there's a typo in the headline

"No Need" should read "No Ability".

[Coastie for Truth]

10. What they mean is

We can't boost output for the forseeable future without some major breakthroughs in petroleum engineering - some new recovery methods. Looks like they have reached "Peak Oil."

[Strelnikov_]

11. Statement By Matt Simmons That Seems Related To The Production Hold

http://www.financialsense.com/transcriptions/Simmons.html

JP: So, based on your study – and in fact you state this in your book – you believe there is no way that Saudi Arabia is going to be able to produce 20-25 million barrels?

MS: No, that’s impossible. What’s interesting is that now there are a number of people within Saudi Arabia that are starting to say publicly, “No, that’s impossible.” Dr. Sadad Al-Husseini who was eased out of being Executive Vice-President of Saudi Aramco a year ago February, because I’m told, he was actually starting to scold people for being naive about how much they could produce, has been on record in several different places as saying that Saudi Arabia could never produce over 12 million bpd. It is just not in the cards. And he was known by everyone who counted as the brains of Saudi Aramco. So we should be listening carefully, and I’m going to be very curious to see in the new regime change whether there’s some jobs that start to change, because I have a sneaking suspicion that my book is going to educate some people in Saudi Arabia to what the real issues were. And maybe some heads were going to roll – not literally – of people that have been promoting this concept of ‘don’t worry about our oil’. And we’re going to go back to a return to the conservationists within Saudi Arabia, and see them lower their rates of production, so they can sustain it for a longer period of time. And if that happens, I think I’ve done Saudi Arabia a great favor because I’ve given them grounds to do that, without the world thinking, “these crazy people in the Middle East are trying to blackmail us.”

[funflower]

12. It's not about what they say. It's about what they do.

:eyes:

[rman]

14. OPEC: "sweet crude production has peaked"

Refinery expansions efforts needed to match evolving crude supply - Report
Vienna, 17/8/05
http://www.opec.org/home/Special%20Features/2005/Fea082005.htm

Refinery capacity expansion plans are needed in the major consuming regions to reflect the evolving quality of global crudes if efforts to moderate crude prices and reduce oil market volatility are to be effective, according to the OPEC Monthly Oil Market Report for August. The report highlights the fact that recent production trends have resulted in a global crude slate that is heavier and sourer. At the same time, the refining sector has been slow to not only expand to meet the increasing demand but also to adapt to the changes in crude quality. The resulting constraints in the downstream sector have become a major source of upward pressure on prices.

“The recent rise in crude oil prices to new record highs — triggered by a series of refinery outages that have aggravated downstream constraints along with increased geopolitical tensions — only highlights the pressing need to enact concrete measures that would encourage rapid and sizeable investments in the refining sector,” the report said. The report noted that it will take several years to deliver the projects needed to ease current bottlenecks and prepare the appropriate refining capacity to meet expected demand. “Any delays will only continue the current mismatch between the installed refinery capacity and crude type, and undermine OPEC efforts, and those of other producers, on the upstream side to reduce volatility in the oil market,” it added.
<more>

OPEC Monthly Oil Market Report Aug.05
http://www.opec.org/home/Monthly%20Oil%20Market%20Reports/2005/MR082005.htm


Also mentioned in the report:
"Brazilian oil supply is now expected to average 1.99 mb/d, a growth of 190,000 b/d versus 2004. The performance in the second quarter of 2005 was better than expected, with the two new deepwater fields (Barracuda and Caratinga) now reported to have reached peak production."