RIYADH: State oil company Saudi Aramco yesterday renewed its commitment to long-term investment plans in oil and gas during the global financial crisis, which has dampened demand for sources of energy.
Aramco cited two projects — a SR100 billion ($26.67 billion) integrated refinery and petrochemical project with US Dow Chemicals and a second development phase of a petrochemicals joint-venture with Japan’s Sumitomo Chemical.
“Despite the difficulty in the current global economic climate and ... challenges facing the energy sector, the Kingdom will continue its long-term investments to expand oil and gas sectors,” Chief Executive Khalid Al-Falih said in a statement. The investments would “shore up both domestic and international energy supplies,” he said.
The global economic slowdown was an opportunity to “formulate future investment strategies and prepare for the upcoming phases of economic expansion,” Al-Falih added. He made the remarks at a conference in the Eastern Province, Aramco said. Aramco would soon sign a “memorandum of understanding” with Sumitomo Chemical to develop a second phase of their joint-venture PetroRabigh complex, Al-Falih said.
Al-Falih also cited Aramco’s plan to develop an integrated refinery and petrochemicals project at Ras Tanura in partnership with Dow Chemical.
Saudi Arabia has not made public further plans to boost capacity beyond a program ending this year to take it to 12.5 million barrels per day, but it has outlined how it could reach 15 million bpd in the future.
Saudi Arabia has a long-held policy to keep a 1.5 million to 2.0 million bpd spare capacity to meet any surprise outages in the global oil supplies. When the Kingdom completes expansion plans, it will have more than double the capacity cushion it likes to keep. Aramco is looking to force down new project costs to take advantage of cheaper prices for raw materials due to the global economic downturn. The firm met contractors earlier this month to discuss bringing down costs.
Turmoil in world credit markets and tumbling oil prices have prompted energy firms globally to review more expensive projects or cut back on spending to preserve liquidity.
