Saudi Arabias plan to boost the number of oil rigs at its disposal by 28 per cent suggests the kingdom may be struggling to maintain the 12.5mn barrels a day of output capacity it has long said is in place.
Saudi officials said that the extra rig activity would maintain rather than increase the kingdom's oil capacity. "It's not to expand capacity. It's to sustain current capacity on new fields and old fields that have been bottled up," one of the officials said.
State-run oil giant Saudi Aramco met leading oil service companies including Halliburton over the weekend to discuss plans to boost the country's rig count this year and next to 118, from around 92 now, Simmons & Co analyst Bill Herbert said earlier this week.
Saudi Arabia has increased its output to around 9m bpd this month to help compensate for disruption of supply from fellow Opec producer Libya. In theory, that leaves a 3.5mn bpd cushion to protect against any further supply outages on the global market. Riyadh completed expansion plans in 2009, which it said took its capacity to 12.5mn bpd.
But many in the oil industry question how quickly and sustainably Riyadh could deliver that volume.
