Saudi Aramco plans record rig count this year, sources claim

saudioil1Saudi Aramco plans use a record number of rigs to search for unconventional gas while drilling for oil needed to maintain the world's biggest spare capacity cushion, industry sources in Saudi Arabia have said

The world's biggest oil producer is to deploy an additional 30 rigs this year, taking its total to over 170 to meet rapidly rising demand at home, while maintaining its oil production capacity at 12.5mmbpd as flows from some older fields decline.

"The rigs will be for gas exploration and oil development," an industry source said.

Saudi Arabian oil officials have said that they do not see any need to raise the country's oil production capacity beyond the current level as they have never come close to testing those levels and see oil production rising elsewhere.

The country has cut its crude oil production by nearly 700,000bpd over the last two months of 2012, with output falling to around 9mmbpd in December 2012. Saudi Arabia has rarely needed to pump more than 10mmbpd, even while making up for supply losses from Libya and Iran over the last two years, according to Reuters.

A surge in North American and Iraqi production has also taken pressure off Riyadh to spend billions of dollars on boosting its capacity further. State-run Saudi Aramco, however, has declined to comment on its rigs plans.

Industry sources in Saudi Arabia have, however, said the additional rigs would be deployed mostly in northwestern parts of the country where Aramco plans to explore for unconventional gas, drill deep offshore in the Red Sea and develop oil prospects.

Some of the additional rigs will be used for maintenance or drilling for water to reinject into oilfields to boost production.

"If production continues at its current high levels of output or rises further, the rig count will continue to go up based on technical factors," said Sadad al-Husseini, a former top executive at Saudi Aramco.

Oilfield service company Schlumberger had said on 18 January that Saudi Arabia's rig count could rise by about 25 rigs this year to 160, though global oil demand would grow at a similar pace to 2012 and spare capacity would be unchanged.

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