limited refining capacity and the mismatch between the available crude slate and refinery capabilities. To help address the limitations of existing refining capacity to process medium and heavy crudes, Saudi Arabia is undertaking a two pronged strategy: First, we are developing reserves of lighter crudes in our current production capacity expansion program. Second, we are expanding our capacity to refine heavier crudes in domestic refineries and international refining joint ventures. As part of this effort, Motiva, our U.S. joint venture with Shell Oil, just announced last Friday our plans to upgrade and increase capacity at our Port Arthur facility. While we are confident that we will make a valuable contribution to increasing our ability to produce and deliver energy to the world's consumers, Saudi Arabia, alone, cannot solve the world's deliverability problems. All parties will have to actively participate - consumers, producers and energy companies. Each has a role to play in upgrading our energy infrastructure along the entire supply chain. Challenge Number 3: The pressing need to protect our energy infrastructure. Terrorism is a threat to us all and both our countries have suffered at the hands of those who wish us ill. In their efforts to strike at us, the terrorists have begun to focus on disrupting our energy infrastructure. The recently foiled attempt on the facilities at Abqaiq in Saudi Arabia is just one example of the threat we face. In Saudi Arabia, we have been aware of the potential threat to energy facilities for some time and we have invested heavily in both technology and manpower to protect against such acts of violence. The threat from terrorism to the world's energy infrastructure is not limited to any one country or region. We must all be vigilant and prepared to protect our facilities from those deviants whose aim is to disrupt the flow of energy to the world's economy. As recent developments over the past year have demonstrated, terrorism is not the only threat to the security of our energy infrastructure. Natural disasters, like hurricanes and earth quakes have the potential to seriously disrupt our energy supply system for extended periods of time. Just look at what happened to oil and gas production in the U.S. Gulf of Mexico after the hurricanes of 2004 and 2005. While the solutions may be different, Saudi Arabia and the U.S. need to look at ways to "harden" our systems against these potential threats. Challenge Number 4: Maintaining sufficient flexibility in our energy system to meet unexpected developments that can adversely affect markets. We in Saudi Arabia have long recognized the value of spare capacity to enhancing the security of the global energy supply system. That is why it has been, and will continue to be, our policy to maintain 1.5-2.0 million barrels per day of spare crude oil production capacity. Over the years, the existence of spare production capacity in Saudi Arabia and in other countries has acted as an insurance policy for consumers, helping to lessen the negative impact on prices of wars, strikes and natural disasters. --more 2136 Local Time 1836 GMT
