Saudi Arabia's total oil production capacity stands at 12.5 million b/d, energy minister Khalid al-Falih said on Thursday, but he warned that the country would need to continue investing to maintain it.
"If you do not invest, it will start to decline," he told reporters in Vienna just before OPEC began its ministerial meeting.
Saudi Arabia pumped 10.18 million b/d in April, according to the latest Platts OPEC production survey, which would mean the kingdom has maintained about 2.3 million b/d of spare capacity.
But Falih did not elaborate on how quickly Saudi Arabia could get its maximum production capacity online, nor how long it could be maintained. He also did not say how much investment would be necessary to keep that capacity.
In an interview with Argus Media published Thursday, Falih said some of Saudi Arabia's non-core projects had been "stretched and deferred," but state-owned Saudi Aramco was maintaining drilling.
Domestic price reforms and gas investments gave the country more flexibility in "periods of market imbalance and/or unforeseen circumstances," he said.
"We want to keep a cushion. We think in fact that cushion will be needed pretty soon, because markets will tighten, as supply expansion lags demand growth," he said.
"We have not abandoned our policy of keeping spare capacity."
Saudi deputy crown prince Mohammed bin Salman, the royal in charge of the kingdom's economy, said in an April interview with Bloomberg that Saudi oil output could increase to 11.5 million b/d immediately and go to 12.5 million b/d in six to nine months.
Total production capacity could reach 20 million b/d if Saudi Arabia chose to increase investment, the prince said.
The prince's comments had raised fears among price hawks that Saudi Arabia could be prepared to boost production in the short-term, exacerbating the market's oversupply.
But Falih seemed to temper some of those concerns Thursday, telling reporters: "We will be very gentle in our approach and make sure we don't shock the market."
MARKET-BASED APPROACH
The energy minister, who was named to the post last month, reiterated the kingdom's approach to oil policy of the last couple of years, eschewing cutting production to prop up prices, though like his long-standing predecessor Ali al-Naimi, he denied that Saudi Arabia was engaged in a market share battle.
"I wouldn't call it a market share strategy in general, I think we just realized that the pace of which the market was growing with supply increasing faster than demand was not sustainable and the market needed to adjust," he said. "This is the role of OPEC to let the market at times do what it has to do."
He added that Saudi Arabia remains committed to meeting the oil needs of its customers.
"If there is for any reason a shortage in the market we will do what we have to do to meet our customers' demands," Falih said. "Saudi Arabia is very responsible in our approach to the market. The Saudi government can manage with high prices or lower prices."
