Article content continued

“If you get up to (10 mln bpd), you start to really create a very tight market relative to spare capacity,” he told the Reuters Global Energy and Climate Summit in London.

“But the question that’s more appropriate is when do you get to 9.5, when do you get to 10? Because when you start to look out over the horizon, their ability to create more flexibility in spare capacity increases tremendously.”

Peter Oosterveer, group president for energy and chemicals with global engineering giant Fluor Corp, recently met with executives in the Middle East, and returned with a feeling that Saudi Arabia’s capacity was not as large as some estimates.

He did not provide any specific numbers on the kingdom’s overall production, but said workable spare capacity was in the range of 1.5 to 2 million bpd.

“That doesn’t mean to say that it isn’t ultimately available,” Oosterveer said at the Summit. He added that there did not seem to be a great deal of concern in Saudi Arabia about the current level of capacity.

“There’s always a lot of activity in Saudi, and there’s still a lot of activity in Saudi as we speak,” he added, with more focus there on exploration and production projects compared with two or three years ago.

Saudi Arabia is the only country in the world with a significant base of idle capacity, and therefore can act as a supplier of last resort in times of crisis. It has already ramped up output following the halt in Libya’s over 1 million bpd of oil exports, and is expected to pump more shortly.