RIYADH, 7 January 2008 — Minister of Petroleum and Mineral Resources Ali Al-Naimi said yesterday that the rise in oil prices to a record high had been determined by market forces. “The market fixes the price of oil,” Naimi told reporters at an energy conference in Riyadh when asked to comment on oil’s surge to a record above $100 last week.

Naimi declined further comment on the price or what the Organization of the Petroleum Exporting Countries would decide at its next meeting on Feb. 1 in Vienna.

US crude hit a record of $100.09 a barrel on Thursday. High energy costs have caused concern among some members of OPEC about the potential impact on the global economy. But ministers say there is little they can do to tame the price, which is driven by political tension and speculators and not supply and demand fundamentals.

OPEC President and Algerian Energy and Mines Minister Chakib Khelil said on Saturday that the steady rise in prices was due to tension in Pakistan, escalating violence in Nigeria and a fall in oil inventories in the United States.

The world had sufficient oil supplies for now and no decision could be made to increase production before the next OPEC meeting, Algerian state news agency APS quoted Khelil as saying.

Libya’s top oil official, Shokri Ghanem, said last week that the producer group could do little about $100 oil as most members were already pumping flat out.

OPEC, supplier of more than a third of the world’s oil, decided to keep output steady at its last meeting in December, rejecting calls from consumer countries for more supply to ease high prices.

Meanwhile, Saudi Aramco is on track to hit its oil production capacity target of 12 million barrels per day (bpd) in 2009, an Aramco official said yesterday.

The start of Aramco’s 500,000 bpd Khursaniyah oil field was delayed a few months to the first quarter this year from December last year. Other expansion projects in the world’s largest oil exporter through to 2009 remain on schedule, Aramco’s Senior Vice President of Exploration and Production Amin Al-Nasser said. “We are going up to 12 million bpd (oil production capacity) in 2009,” Nasser said at a presentation to an energy conference in Riyadh.

Aramco’s total output capacity does not include the Saudi share of capacity in the neutral zone between the Kingdom and Kuwait. Saudi Arabia is aiming for total output capacity, including the neutral zone, of 12.5 million bpd in 2009.

Saudi Arabia is spending billions on projects to meet growing world demand and maintain spare capacity of 1.5-2 million bpd of oil to deal with any unexpected outages in global supply. A 250,000 bpd expansion at the Shaybah oil field and the development of the 100,000 bpd Nuayyim field will add another 350,000 bpd of capacity by the end of 2008, he said.

The planned 1.2 million bpd Khurais oil field is expected to start production by mid-2009. The 900,000 bpd Moneefa oil field will start in September 2011, three months later than Aramco’s initial schedule. He did not explain why Khursaniyah and Moneefa were delayed.

Aramco also aims to boost gas output capacity to 12 billion cubic feet per day (cfd) in 2011 from 9.5 billion cfd, he said. By mid-July both the Khursaniyah and Hawiyah gas plants should have started, he added. According to Aramco data, the Khursaniyah plant will have capacity to process 1 billion cfd. The Hawiyah plant expansion will increase gas production capacity at the field by 800 million cfd to 2.4 billion cfd.

The 1.5 billion cfd Karan gas project will start production by the end of 2011, Nasser added. Gas from the offshore Karan gas field will be processed with gas produced from the Moneefa oil field.

Aramco aims to increase the recovery rate of oil from its fields to 70 percent from 50 percent through the use of advanced technology, Nasser added. That would help add around another 80 billion barrels to recoverable reserves in the next 20 years, he said.

Saudi Arabia has proven recoverable oil reserves of around 260 billion barrels, nearly a quarter of the world’s total reserves. Total discovered oil resources — including proven, produced and oil in the ground currently seen as unrecoverable — stands at 722 billion barrels, Nasser said. The Kingdom plans to raise this figure to 900 billion barrels through exploration over the next 20 years, he said.