BIG E&P PROGRAM OUTLINED IN SAUDI ARABIA

June 11, 1990
Capital spending by Saudi Arabian Oil Co. could total as much as $44.6 billion in 1990-2000 in Saudi Arabia, with another $60 billion spent on operating costs during the same period. The figures appear in Saudi Aramco's quarterly capital programs bulletin from November 1989 published by Business International's Saudi Arabian Monitor, London. Since the end of last year the $44.6 billion figure may have been cut to $36 billion, the report said.

Capital spending by Saudi Arabian Oil Co. could total as much as $44.6 billion in 1990-2000 in Saudi Arabia, with another $60 billion spent on operating costs during the same period.

The figures appear in Saudi Aramco's quarterly capital programs bulletin from November 1989 published by Business International's Saudi Arabian Monitor, London. Since the end of last year the $44.6 billion figure may have been cut to $36 billion, the report said.

Dominating the spending will be a program to boost sustainable productive capacity to 10 million b/d by 2000. That's about twice as much as Saudi Arabia produced in the first 2 months of this year. Saudi Aramco estimates exploration and production spending during the 1990s at $36.1 billion.

Installing new production units and reactivating onshore and offshore facilities, mothballed since the early 1980s, to achieve the productive capacity target will tax Saudi Aramco's organizational skills and purse strings, says Saudi Arabian Monitor.

The program was put into place very speedily, it added, because only 1 year ago Saudi Aramco was told by the government to reduce its operating budget by $1 billion in a cost cutting move.

WHAT'S PLANNED

Much of Saudi Aramco's expansion program centers on existing fields. However, the program includes $724 million for expansion of the east-west crude oil pipeline to Yanbu and $968 million to increase crude oil export capacity at the Red Sea port.

The program also provides the first indication that development of the al-Hawtah, Dilam, and al-Raghib discoveries in Central Saudi Arabia south of Riyadh is on the agenda. The budget for 1990-95 includes $500 million for projects in Central Saudi Arabia.

The biggest single new project will be development of Shaybah field, close to the borders with the United Arab Emirates and Oman and far from today's production facilities.

First phase of the project has a 1999-2002 timetable and includes $1 billion for a crude oil pipeline to Ras Tanura and $400 million for bringing infrastructure to that remote area. Also in the first phase are crude handling and gas separation facilities with a capacity of 300,000 b/d and gas gathering and reinjection facilities.

In the second phase, 20002003, another 200,000 b/d of capacity will be installed.

Total cost of the two phases is estimated at $2.96 billion.

Saudi Arabian Monitor says reports indicate Saudi Aramco is fairly bullish about its capacity to fund this vast program from internal resources, although there have been indications that the Saudi French bank has been considering putting together a financing package for the company with other banks.

At the end of last year the Saudi Aramco board approved a $17.5 billion capital budget for 1990-95.

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