Country Report Saudi Arabia May 2011

Economic performance: Progress made in Red Sea exploration

A key component of Aramco's long-term investment plans could centre on the hydrocarbons potential of the Red Sea. As part of this effort, ARKeX of the UK and Electromagnetic Geoservices (EMGS) of Norway have been contracted by Aramco to collect geological data, as part of efforts to better understand the geology of the subsea salt structures and also assist in carrying out 3-D seismic imaging. The work will cover three blocks and is scheduled to be completed by mid-2011. At the same time, EMGS will carry out electromagnetic and 3-D seismic surveys of the seabed starting in May.

It will still be a while before drilling of exploratory wells starts, however, and for now Aramco's focus will be on high oil prices and the continued disruption to supply from Libya. Speaking to al-Arabiya, a Dubai-based news channel, an unnamed Saudi official from the Ministry of Petroleum and Mineral Resources stated that Saudi Arabia would lift production in May to 9.5m barrels/day (b/d) of crude oil, to cover the 1.3m-b/d loss in Libyan supplies-a month-on-month increase of 800,000 b/d. However, the al-Arabiya report, which said that Saudi Arabia would not necessarily wait for the next scheduled OPEC meeting in Vienna, the Austrian capital, in June to raise its output, contradicted recent statements by the petroleum and mineral resources minister, Ali bin Ibrahim al-Naimi. On April 8th he said that, with the global market being oversupplied, the kingdom had in fact cut production to 8.29m b/d in March, having temporarily boosted output to 9.11m b/d in February.

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