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Page added on August 31, 2016

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Saudi Arabia doesn’t target specific level of oil output

Production

Aug 31 Saudi Arabian Energy Minister Khalid al-Falih said the top crude exporter does not target a specific figure for its oil production and that its output is based on customers’ needs.

“We in the kingdom of Saudi Arabia do not have a targeted number to reach. The kingdom’s production meets the requirements of the customers, whether they are outside or inside the kingdom,” Falih told the Saudi-owned al-Arabiya television channel in remarks broadcast on Wednesday.

“The kingdom’s production policy will maintain a large degree of responsibility,” he said.

Speaking during an official visit to China, Falih said that despite low crude prices, “demand for oil does not worry me”, adding that demand for crude in China remains “very healthy”.

The OPEC heavyweight started to increase production in June to meet a seasonal rise in domestic demand as well as higher export requirements. Industry sources have told Reuters that Riyadh could boost production to a record in August.

Saudi Arabia produced 10.67 million barrels per day (bpd) of crude, the most in its history, in July. Falih told Reuters last week that production in August had remained around that level, though he could not cite a specific number.

 

Saudi Arabia has a production capacity of 12.5 million bpd, giving it the ability to boost output in case of any global shortage.

Falih said that production level was not expected to be reached unless there were unexpected outages.

“The market now is saturated with oversupply and we don’t see in the short term a need for the kingdom to reach its maximum production capacity,” he told the TV channel.

The minister is part of an official Saudi visit headed by Deputy Crown Prince Mohammed bin Salman aimed at bolstering relations with China, a top energy customer and trade partner. The delegation heads to Japan late on Wednesday. (Reporting by Rania El Gamal; Editing by Dale Hudson and Sami Aboudi)

 

Reuters



16 Comments on "Saudi Arabia doesn’t target specific level of oil output"

  1. rockman on Wed, 31st Aug 2016 9:42 am 

    “…that its output is based on customers’ needs”. IOW they don’t sell oil to consumers that don’t need to buy the KSA oil. Very sound biz plan IMHO. LOL.

  2. Cloggie on Wed, 31st Aug 2016 10:08 am 

    Oversupply and oil price at $45… who would have thought that five years ago? Anyone on this board?

    Be careful, it is easy to verify.lol

    Those were the days we took the Energy Watch Group serious:

    http://www.oilempire.us/peak-timeline.html

  3. rockman on Wed, 31st Aug 2016 11:20 am 

    “…who would have thought that five years ago? ” Me! Me! Me! LOL. But having survived multiple boom/bust cycles for more then 4 decades it was an easy call. Just as predicting it would be late 2016/early 2017 before the beginning of significant US oil production decline as a result of the rig count bust. The time lags (both ups and downs) have varied little for more then half a century.

  4. HARM on Wed, 31st Aug 2016 12:52 pm 

    @Cloggie,

    Not me. Which is why I keep pointing out how badly us Peakers got the 2005-2008 “undulating plateau” call, and how no one –not even the late great M.K. Hubbert (practically a god around here)– predicted that the U.S. would achieve a second peak 45 years after the first one.

    I keep getting accused of being a cornucopian convert, but… fact is we all badly miscalculated and underestimated the impact and viability of shale/frack/tight oil. Truth is, we really have no idea how much of the remaining oil –conventional or tight– is actually recoverable.

    As George Monbiot famously said, “We Were Wrong on Peak Oil. There’s Enough to Fry Us All”.

  5. ghung on Wed, 31st Aug 2016 2:04 pm 

    …. fact is we all badly miscalculated and underestimated the impact and viability of shale/frack/tight oil of the Fed and Treasury dumping $trillions into the economy at/near zero interest. Fixed it for you, Harm. The real fact is, our kids and grandkids will be paying for that tight oil, one way or the other.

  6. peakyeast on Wed, 31st Aug 2016 2:35 pm 

    So many that continue to insist on not knowing the difference between BO and BOe and the inclusions of less and less tractable resources and, of course, the double accounting being done.

    The unconventionals are going to be a tiny bleep – to use it as a “game changer” and proof that peak oil not being here is just ludicrous.

    Here look at yourselves:
    https://www.youtube.com/watch?v=-tV0Ajoq4iw

  7. Boat on Wed, 31st Aug 2016 4:32 pm 

    Harm,

    From what I read most oil fields have 30-80 percent of the left in them. Who knows piece that puzzle.

  8. Boat on Wed, 31st Aug 2016 4:33 pm 

    Who knows if producers will piece that puzzle together.

  9. rockman on Wed, 31st Aug 2016 4:59 pm 

    Peaky – What makes your point worse: many don’t understand the SEC regs US pubcos have to follow:

    The volume of natural gas needed to generate the equivalent amount of heat as a barrel of crude oil. Approximately 6,000 cubic feet of natural gas is equivalent to one barrel of crude oil.

    So think about when oil was selling for $100/bbl and NG for $4/MCF: 6 MCF (worth $24) would represent 1 bbl (worth $100). So a volume of NG converted to bbls of oil would be valued 4X it’s actual market value. IOW $1 million of NG would be “booked” as worth $4 million. And even today with oil at $40/bbl and NG at $2.70/MCF the NG is valued at 2.4X what it would actually sell for in the current market.

    So if the Rockman had a pubco and booked all his 100% NG production as bbls of oil equivalent my company would appear to the unknowlegable masses to be worth more than twice as much as it really is.

  10. Rick Bronson on Wed, 31st Aug 2016 11:03 pm 

    Saudi’s don’t need any specific level. They will sell all they can until the entire SHALE & SANDS goes bust.

    Funny thing is Venezuela is #1 in reserves, but they are importing Extra light crude from USA to blend with their Extra heavy crude to produce transport fuels. Isn’t it funny.

    You cannot call Bitumen as Oil.

  11. Boat on Thu, 1st Sep 2016 8:55 am 

    Rick Bronson on Wed, 31st Aug 2016 11:03 pm

    If you use shorts version of viable oil, (api 35-45) Most of what the US refiners buy is not viable. To me bitman\heavy all the way to condensate\light is oil. Api testing deterimines the density, the rest is just word play.

  12. ERRATA on Thu, 1st Sep 2016 9:35 am 

    !
    It should look here:

    https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRFPUS2&f=W

    Oil production continues to decline.
    – And how many experts – optimists – predicted three years ago that oil production will fall so fast? –

  13. rockman on Thu, 1st Sep 2016 9:55 am 

    Rick – “…but they are importing Extra light crude from USA to blend with their Extra heavy crude to produce transport fuels”. Are you aware that Canada imports about 120 MILLION bbls per year of US condensate to blend (called dilbit) with the oil sands production so it can be pumped down pipelines? That’s in addition to the 165 MILLION bbls per year of Canadian condensate used to make dilbit.

    Essentially about 25% to 30% of the 3 million bbls per day of “oil sands production” imported by the US is actually light oil. And that imported oil (or whatever you want to call it) has been refined in the US to produce more then 300 BILLION GALLONS of gasoline, deisel and other refinery products.

    So even if you don’t want to call the oil sands production “oil” it still yields the products we depend upon from “real oil”. LOL.

  14. rockman on Thu, 1st Sep 2016 10:44 am 

    E – “And how many experts…predicted three years ago that oil production will fall so fast?” Just about everyone in the oil patch knew oil prices would eventually fall. Having seen the cycle numerous times before that was an easy call. It also explains why the shale playing pubcos borrowed so much capex so fast: they knew that had a limited window to booked the new reserves they desperately needed.

    But predicting the timing and magnitude of the price collapse is a very different matter. Again why those pubcos put the rigs drilling on as fast as possible because they really couldn’t make that prediction. But it’s easy to imply they didn’t expect the party to last very long. And it’s obvious they were correct.

    As said before: this ain’t the oil patch’s first rodeo. LOL. Remember back at the end of 2008 the price of oil fell 70% in less the 6 months…very similar to the collapse we just witnessed. And likewise very similar to the price collapse we saw in 1998. And likewise very similar to the price collapsed we saw in the early 80’s. In fact the last time we had a relatively long term stability in oil prices was the 27 year span from 1946 to 1973. And that was due to the power of the Texas Rail Road Commission to control oil production to create such stability.

    The oil patch management running the shale play had front row seats to the 2008 collapse. Not very difficult to remember.

  15. peakyeast on Thu, 1st Sep 2016 12:13 pm 

    @rockman: Thanks… I didnt know that. Now I know it until I see the nile. what? what did u say? :-O

  16. rockman on Fri, 2nd Sep 2016 10:54 am 

    Peaky – Some folks like to pooh-pooh the cyclic dynamic. And yes: no two boom/bust cycles are exactly the same. But they are all still cycles and the swings will persist. So while it may be different in numerous ways there will be another drilling boom. Might be in 5 years… might be in 20 years. And just as surely will be followed by a bust.

    It has happened this way ever since Col. Drake drilled that first well. LOL.

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