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Saudi finds more gas, says not for use now

Riyadh, December 5, 2011

Saudi Arabia has discovered commercially viable quantities of natural gas in the Red Sea and Empty Quarter, but has no plans to immediately start production, Oil Minister Ali al-Naimi said in a speech delivered on his behalf on Monday.

The world's top oil exporter will continue to explore the country for tight gas and heavy oil for future energy needs, according to the speech read by Naimi's adviser Ibrahim Muhanna in Riyadh.

'Although we continue to explore the kingdom's oil and gas potential and resources, this does not mean we will immediately start production from the newly-discovered fields, rather it only means determining resources available in the kingdom for future use when needed,' according to the speech read by Naimi's advisor Ibrahim Muhanna in Riyadh.

'In this respect, I would like to point out the positive results. We have discovered commercially-utilizable volumes of the various types of natural gas in the Red Sea, in the north of the kingdom and in the Rub' al Khali.'      Aramco has said it plans to start drilling offshore frontiers in 2012.

The kingdom will continue exploration for tight gas and heavy oil after making some discoveries.

'But I want to make it clear, again, that the ultimate objective of these new explorations is not to extract oil now but rather to determine the kingdom's potential for the sake of coming generations, The discovered resources will be used based on commercial needs,' said Naimi's speech.

Saudi Arabia, which has kept its vast oil reserves off-limits to foreigners needs gas to help cover domestic fuel demand and conserve oil for lucrative export markets.

Saudi Aramco chief executive, Khalid al-Falih said last month his company would focus on gas in the short to medium term as raising oil production capacity beyond the current 12 million barrels per day (bpd) was not needed.

Little has been announced in terms of how much gas has been found in the desert in Saudi Arabia's southeast, known as the Rub al-Khali or the Empty Quarter. Analysts have said finding gas alone would not be enough to guarantee profits.

Terms agreed with Aramco were so poor, the consortia need to find condensate - a form of light oil that can be sold at international market prices - to cover the cost of development.

The speech also said Saudi Arabia will keep its oil production rates in line with market requirements and global demand.-Reuters




Tags: Saudi | gas | Red Sea | production |

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