and-a-half to two million barrels per day over its actual production. This surplus capacity, which the Kingdom has maintained at great expense, has played a pivotal role in maintaining market stability. Similar commitment from both producers and consumers will help secure the energy future of our world. When it comes to oil resources, I believe that there is plenty of new onshore and offshore exploration across the world still to come, especially in an environment of healthy oil prices. We may not find many super giant fields, but many medium and small size fields will continue to be discovered as we explore more, drill more and make use of increasingly better technology. But here we must turn our attention to the downstream sector, because our challenge doesn't end once the oil is out of the ground. Even as crude oil production must increase by nearly 40 million barrels per day over the next two decades if demand is to be met, there must be a corresponding expansion in the world's refining capacity. Given the nature of much of this additional production, a significant share of new refining capacity will have to accommodate heavy, sour crudes, as the barrel of refined products continues to whiten and product specifications continue to tighten. We've already seen the effects of the mismatch between available refinery hardware and the types of crude increasingly available in the market. Last fall, oil producers-including Saudi Aramco-ramped up production to calm the oil market, but refiners geared toward lighter, sweeter crudes could not process all of these additional heavy, sour barrels. Refiners and marketers, regulatory agencies and producers must cooperate more closely to alleviate the product supply-demand imbalances and ensure that consumer demand is adequately met. The location of future refineries is just as significant as their configuration, however. Until now, refineries have been built primarily in consuming nations, but I believe we will see a portion of this new refining capacity being located in producing countries. To an extent this is due to the permitting constraints associated with new or expanded refineries in many consuming nations. But the growth of producer-based refineries will be driven primarily by their proximity to oil reserves, the flexibility that comes with supplying products to multiple markets from a central location, and the desire to add value to oil supplies prior to their export. Such refineries and mega-manufacturing complexes and clusters-which integrate refineries, petrochemical facilities, and downstream conversion and service industries-also serve to strengthen and diversify local economies while stimulating job growth. I think this emerging downstream paradigm also represents a new opportunity for international investors, if they are willing to rethink their investment models and better align them with the needs of host nations. Many producing countries have strong upstream capabilities, but can benefit from partnerships in downstream activities, the engineering and technology sectors, and in selected service areas. --MORE 1409 Local Time 1109 GMT
