Saudi Aramco, the world's biggest state-owned oil company, said a further drop in crude oil prices may curtail investments needed to offset declining output in aging fields. Investment is also needed to expand production capacity to meet long-term demand growth, Chief Executive Officer Abdallah Jum'ah said in a statement at an industry summit here on Saturday. Benchmark crude prices in New York have declined 58 percent since reaching a record $147.27 a barrel in July, because of concerns a slowing world economy will erode demand. The world will need to invest more than $26 trillion, almost twice the annual domestic product of the U.S., by 2030 to ensure energy supply, the International Energy Agency said on Nov. 6. “It is clear that collapsing oil prices are not only detrimental to the economies of oil-producing states but also to future upstream investments to sustain future oil demand consumption,'' Vienna-based consultant JBC Energy said in its weekly market report issued today. In Riyadh, French oil major Total's $12-billion joint venture with Saudi Aramco could face a delay as the two firms seek to cut costs, Gulf newspaper Al-Hayat reported on Saturday, quoting unidentified sources. The two firms said in June they would award all the packages for the construction of the 400,000 barrels-per-day Jubail refinery in the first quarter of 2009. But the launch of many oil-related projects in the world's largest oil exporter could be delayed to 2009, Al-Hayat quoted the sources as saying. The sources cited the global financial crisis, fears over a world economic recession and an expected drop in construction costs as reasons for the potential delays. “The delay could affect the projected refineries of Jizan, Jubail and Yanbu,” the sources said. Al-Hayat did not clarify when exactly in 2009 the launches would occur. Saudi Arabia, which has the world's largest proved reserves of oil, is implementing large-scale energy projects to boost production and refining capacity. The country has pledged to spend some $250 billion on energy by 2012, including raising oil output to 12.5 million barrels a day by next year, and increasing refining capacity by 50 percent. “Notwithstanding the current dip in consumption and the widespread uncertainty we see in the global economy, global energy demand will be on the rise due to the further development of developing countries' economy,” Jum?ah said in the handout at the fifth National Oil Companies summit. The impact of the current global financial crisis on demand won't be sufficient to offset rising consumption in developing countries, led by China and India, the IEA said in an executive summary of its annual World Energy Outlook on Nov. 6. “There remains a real risk that underinvestment will cause an oil supply crunch” by 2015, the Paris-based adviser to 28 oil-consuming nations said. “The current financial crisis is not expected to affect long-term investment, but could lead to delays in bringing current projects to completion.” On Friday, ConocoPhillips and Aramco said they halted bidding on the construction of the 400,000 barrel per day joint-venture Yanbu refinery in Saudi Arabia, citing uncertainties in the financial and contracting markets. The current bidding process to build the Yanbu export refinery will be delayed to the second quarter of 2009 from the fourth quarter of 2008, the companies said in a statement. Current oil supplies, Jum?ah said, are adequate as demand growth slows. Global energy demand to 2030, including oil, natural gas and coal, is set to grow 1.6 percent a year to 17.01 billion metric tons of oil equivalent, the IEA said. The credit crisis has created acquisition opportunities for companies such as PetroChina Co. and India's Oil & Natural Gas Corp., the chairmen of both companies said at the Beijing summit. Jiang Jiemin, chairman of PetroChina, said today that Asia's biggest oil producer is studying the possibility of buying companies affected by the credit crunch. PetroChina is the Hong Kong-listed unit of China National Petroleum Corp. Capital expenditure in 2009 “won't decrease or increase,” Jiang said. Spending for this year will be unchanged at 207.9 billion yuan ($30.5 billion), Jiang said on Oct. 21.
