Uchenna Izundu
International Editor
LONDON, Feb. 12 -- Saudi Arabia will spend $507 billion on energy and infrastructure projects over the next 11 years, a Saudi government official said Feb. 12 at the International Petroleum Week conference in London.
The kingdom will spend about $267 billion on its oil, gas, and chemical businesses and $240 billion on developing minerals, environmental technologies, infrastructure, power, and water. "Deliverability is the issue for oil and gas, and not supply," said Saud Al Amnari, minister plenipotentiary at the Saudi embassy in the UK. Speaking in place of Saudi Ambassador to the UK Prince Mohammed bin Nawaf, he pointed out that Saudi Arabia has about 100 years worth of reserves to tap and meet future global demand. Its crude reserves stood at 259.8 billion bbl at yearend 2005.
Saudi Arabia is committed to using diplomacy in handling Iran and its uranium-enrichment program, which is causing anxiety worldwide, Amnari said, adding that it was vital that there is peace in the Middle East to ensure stable petroleum supplies. "Iran is important because it holds up to one tenth of the world's oil reserves, is the second-largest holder of gas reserves, and occupies a strategic location. We need genuine brokers of peace to bring stability to the region."
Meanwhile, Saudi Aramco plans to expand its production capacity to 12 million b/d by 2009 and its worldwide refining capacity to 6 million b/d over the next 5 years. With high oil prices dampening global demand, Ibrahim S. Mishari, Aramco vice-president, marketing and supply planning, said it has not revised its production capacity figures.
Aramco will focus on expanding its resources base through discoveries and improving its recovery rates from fields, Mishari said.
Aramco will be a key player in providing global oil supplies but varied estimates on world energy demand make it hard to predict how much it will contribute in 2030. According to some forecasts, there will be a 50% increase in world energy needs by 2030, while others say 60%. The predicted call on Saudi oil ranges from 11-20 million b/d of oil.
"That 9 million b/d difference presents big producers like Saudi Arabia with a difficult balancing act since underinvestment in capacity will result in price spikes and supply shortages, while overinvestment will drain substantial amounts of capital from the Kingdom's other economic needs," he said.
A key priority for the petroleum industry is to hire sufficient competent individuals who can drive technological developments, Mishari noted. About 40-60% of the industry's workforce are eligible for retirement, and another wave of retirees is on their heels within the next decade or so—but unlike the past, there are not enough new graduates to replace them.
Mishari told OGJ there are a number of initiatives under way in Saudi Arabia to encourage new recruits, including scholarships, sending students abroad, on-the-job training, and working with universities to set the curricula.
Contact Uchenna Izundu at [email protected].
