(Updates with comments from CEO in third paragraph.)
Dec. 6 (Bloomberg) -- Saudi Arabia will spend about $17 billion developing the Manifa oil field as the national crude producer shifts focus to developing natural gas deposits and refining and petrochemical plants, the company’s head said.
State-run Saudi Arabian Oil Co. will spend $90 billion expanding its refining and petrochemical assets, Chief Executive Officer Khalid Al-Falih said in Doha, Qatar today. The company, known as Saudi Aramco aims to be a “top-tier” producer of petrochemicals within the next decade, al-Falih said. The Manifa field is set to begin producing crude in 2013, he said.
“Saudi Aramco is going to grow in our downstream and our gas production,” al-Falih told reporters at the World Energy Congress taking place in the Qatari capital today. Aramco generally outlines its spending in five-year plans.
Saudi Arabia holds the world’s largest oil reserves and the fifth-largest gas deposits, according to BP Plc’s Statistical Review of World Energy. The country is seeking to produce more gas to run power plants and save more valuable crude for exports, with local electricity demand growing by about 8 percent, according to government figures. The kingdom used 8.1 billion cubic feet of gas a day last year, BP data show.
Unconventional gas will help meet domestic demand, said Al- Falih, adding that Aramco is boosting investment in gas exploration and will look for deposits in the Red Sea and for shale oil.
“We are undertaking a massive exploration campaign,” he said. The company plans to start drilling for gas in the Red Sea “very soon” next year and may expand exploration to deeper water areas in late 2012, al-Falih said. Aramco made a conventional gas discovery in the northwest of the kingdom that it is still evaluating, he said.
Aramco is developing the Manifa oil field to raise output of heavy crude, which is thicker and more difficult to refine. The company is planning three refineries to process the blend, which generally fetches lower prices on international markets compared with lighter grades. It is producing “well above” 9 million barrels a day, Falih said.
Saudi Arabia will invest $125 billion on upstream and downstream oil projects over five years to enhance its production capacity, Oil Minister Ali Al-Naimi said June 2. The company in 2009 completed the previous capital spending program of more than $100 billion, which was then the biggest in its history, the minister said in a speech in November 2010.
The company sees a “new golden age of petroleum” with adequate supply and technology, while noting that the pace of progress on alternatives to crude, including renewable energy and nuclear projects, is “faltering,” he said.
Saudi Arabia produced 10 percent more oil in the first half of 2011 compared with a year earlier, according to an Oct. 24 report from Riyadh-based Jadwa Investment Co. Higher crude prices this year contributed to a 26 percent increase in the kingdom’s nominal gross domestic product, it said.
--With assistance from Nayla Razzouk in Dubai. Editors: Raj Rajendran, Rachel Graham.
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