Azernews.Az

(Newswires, October 9) – A senior oil executive said Saudi Arabia is unlikely to proceed with plans to raise its oil output capacity to 15 million barrels a day, as expansion plans in other producing countries such as Iraq and Brazil should be enough to satisfy world markets.

"There is no reason for Saudi Aramco to pursue 15 million barrels [of output capacity]," Saudi Arabian Oil Co. CEO Khalid Al Falih said in an interview Saturday.

"It is difficult to see [an increase in capacity] because there are too many variables happening," he said. "You've got too many announcements about massive capacity expansions coming out of countries like Brazil, coming out of countries like Iraq. The market demand is addressed by others."

Saudi Arabian Oil, better known as Saudi Aramco, is producing about nine million barrels of oil a day, having raised output sharply earlier this year to make up for lost output from Libya. Its current output capacity stands at 12.5 million barrels a day.

In 2008, when oil prices surged to a record $147 per barrel, Saudi Arabian oil minister Ali al-Naimi said the kingdom was examining plans to raise the country's production capacity to 15 million barrels a day in an attempt to reassure markets concerned about long-term security of supply.

With most members of the Organization of Petroleum Exporting Countries producing at full capacity, the amount of Saudi Arabia's unused output is closely watched by oil markets.

Saudi Arabia is the only OPEC state that can significantly raise output in order to offset market disruptions, such as the loss of Libyan output earlier this year and the suspension of Kuwaiti output during the Iraqi invasion of 1990. Two of the strongest periods of oil price increases – from 2003 to 2005 and 2007 to 2008 – coincided with OPEC spare capacity falling to historic lows.

Falih's comments suggest Saudi Arabia is comfortable with its current level of spare capacity.

In recent weeks, oil prices have retreated on fears of a slowdown in the global economy and as Libya has started to restore its oil production following the toppling of Moamar Ghadafi. Meanwhile, Iraq is pushing ahead with plans to raise its export capacity from its southern ports by close to one million barrels a day, and Brazil is developing major offshore oil finds.

"Our objective is not to grow our production for the sake of growing our production," Falih said, "but to be there for the market if the market needs it, and we are waiting to see what happens on the supply side as well as how demand stabilizes."