Saudi Arabia halts $100bn oil expansion programme

[NickB79]

"Saudi Arabia has halted the $100bn expansion of its oil production capacity after reaching a target of 12m barrels a day as the kingdom believes that new oil sources will meet rising demand.

Khalid al-Falih, chief executive of state-owned Saudi Aramco, said on Monday that pressure on Riyadh to raise its output capacity had “substantially reduced”, the clearest indication yet that the world’s top oil producer is not pushing ahead with an assumed expansion plan to 15m b/d by the end of 2020.

The comments put a cap at least temporarily on a $100bn expansion program that started in the early 2000s when Saudi was able to produce about 8.5m b/d. The halt comes in spite of tightness in the oil market due to ongoing production disruptions in Libya, Syria and Yemen.

Oil prices reached a two-year high of more than $125 a barrel this year after the civil war broke in Libya but since then the cost of Brent, the global benchmark, has fallen back to $105 a barrel due to the impact of the financial crisis."

http://www.ft.com/intl/cms/s/967a332a-146d-11e1-8367-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F967a332a-146d-11e1-8367-00144feabdc0.html&_i_referer=http%3A%2F%2Fwww.democraticunderground.com%2Fdiscuss%2Fduboard.php%3Faz%3Dview_all%26address%3D102x5067516#axzz1eVTUuCtP


I've said it before, and I'll say it again: Saudi Arabia has peaked.

[Old and In the Way]

1. Could be peaked or they could be managing the supply/demand curve.

It would be in their best interests to supply only enough to maximize the barrel value by minimizing excess stocks. Because too much available oil will collapse the market price. Everyone in the supply chain benefits...except the consumer, of course. I don't see Exxon or BP looking to expand their efforts to generate new non-Saudi sources. Drilling is expensive and risky - better to maintain high prices by managing supply so it is always chasing demand.

[JDPriestly]

2. Maybe Saudi Arabia anticipates a serious worldwide economic downturnt

and doesn't want to flood the market with crude oil. They may be trying to keep prices up as they expect a decline in demand.

[happyslug]

3. Duplicate from Monday.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x5067516

When Manning released the E-mails to Wikileaks, some of them made references to Saudi Arabia's oil estimates to be over stated by at least 40%. i.e. The House of Saud has a lot less oil then they claim to have AND they know it. See my post at the above sites for Copies of those E-mails.