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Oil & Gas Investment Highlighted

Source: www.GulfOilandGas.com 12/10/2003, Location: Middle East

LONDON, December 10, 2003 -- Saudi Aramco's plans in crude oil production and exports, refining, gas and petrochemicals were outlined in a wide-ranging presentation titled, "Saudi Arabia: Ample Investment Opportunities in the Oil and Gas Sector," delivered recently at a conference in London.

Khalid A. Al-Falih, vice president of New Business Development, addressed the Middle East Economic Digest (MEED) conference on "Investing in Saudi Arabia" on Dec. 1.

Al-Falih said world energy supplies would need to grow to meet increasing demand. The oil and gas share of world energy demand is particularly projected to increase compared to other forms of energy, he said.

Al-Falih said Saudi Aramco's plans include increasing crude oil production market share and maintaining substantial spare capacity to help ensure price stability.

The company also intends to invest heavily in domestic oil and gas facilities, and execute a series of power generation projects.

His presentation outlined Saudi Aramco's plans to invest more than $18 billion in materials and services through 2007.

Al-Falih said that trends in world refining soon would make investing in the sector attractive again. At present, the company has refining capacity of 2 million barrels a day (bpd), and aims to export 840,000 bpd in 2004.

"We in Saudi Aramco are beginning to look at the refining sector as a platform for future growth," he said. "Global refining capacity is being absorbed, and a need for new incremental capacity is forecast by 2005.

"We feel that capacity should not be where sales are but where the resources are in Saudi Arabia," he said. "We see Saudi Arabia as a natural source for meeting the rising energy demand and for the next wave of refining capacity."

Al-Falih highlighted near-term plans, which call for investment in the 400,000 bpd Rabigh Refinery on the Red Sea coast. "Our objective is to create a platform for industry, to improve the profitability of the topping refinery, integrate it with the petrochemical industry and achieve significant savings and synergies," Al-Falih said. The company is planning to carry out the project with a partner, and a selection is expected in early 2004.

Saudi Aramco is also seeking to develop investment opportunities at the 500,000 bpd Ras Tanura Refinery, the largest in the Kingdom.

Al-Falih said that projects being considered include a mixed xylene unit, a cumene unit, an isobutene facility and a petroleum coke and pitch plant, but he said planning was at a preliminary stage.

On the issue of oil production capacity, Al-Falih said that Saudi Aramco is at various stages of development of a number of new oil increments. Al-Falih went on to say, "The objective is to maintain the company's maximum sustained capacity and not to increase capacity beyond the current 2 million barrels of spare production capacity that Saudi Arabia has maintained for years."

Other projects will include a new NGL recovery plant at Hawiyah, expansion of the Master Gas System, and the extension and upgrade of refinery and distribution facilities.

"These projects require the design and construction of more than 20 offshore platforms, several gas-oil separation plants and process plants, in addition to 2,300 kilometers of flow lines and long distance pipelines and related infrastructure," Al-Falih said.

The upstream work opportunities would attract, in particular, drilling and seismic contractors, as well as service companies specializing in wireline, stimulation, testing, cementing, and equipment for surface and downhole completion.

"The projects require more than 200 rig-years, including maintaining potential drilling for oil and gas, and about 20 million vibration points of 2-D and 3-D seismic data," he added.


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