Saudi Arabia's growing domestic energy consumption will have no impact on Saudi oil exports "now or in the future" and the kingdom will continue to be a reliable supplier of oil to world markets with capacity to handle future supply shortages, Saudi Oil Minister Ali Naimi said Monday.
"Warnings about what would happen to Saudi oil exports if current levels of domestic usage were left unchecked were taken as fact," Naimi told delegates to the Middle East Energy Conference at London's Chatham House.
"But we are not leaving domestic consumption unchecked. I would like to state for the record here in London, that the kingdom will continue to be a reliable, steady and dependable supplier of energy to the world. Saudi Arabia's domestic growth will not impact on exports now or in the future. Of this, I am very confident," Naimi said.
Saudi Arabia had completed a "massive program to increase oil production capacity," as well as in downstream investment and development of its 286 trillion cubic feet of natural gas reserves, Naimi said.
"I hope you can see how we are investing for the future, Saudi Arabia's future and the future stability of global oil markets," he said.
"It is because of our ongoing investment that Saudi Arabia is able to respond to shortages around the world," the Saudi minister said, referring to the kingdom's role in raising output last year to make up for the loss of Libyan crude oil during the civil war in the fellow OPEC state.
"And it is because of our investment that any future shortages will be handled," Naimi said.
Saudi Arabia, home to the world's largest crude oil reserves, produced 9.8 million b/d of crude oil in December, according to the latest Platts survey of OPEC production. Its total output capacity stands at 12.5 million b/d.
"In 2009, the kingdom completed a massive program to increase oil production capacity. This investment effort is aimed at retaining our position as number one supplier of oil to the world and the investment continues," Naimi said.
"But Saudi Arabia doesn't stop at oil production," he said, pointing to investment in expanding refining capacity at home and abroad, a gas development program -- both conventional and unconventional -- and a commitment to renewable sources of energy and unconventional and a gas development program.
Gas production increased to 10.7 Bcf/d in 2011 from 1.65 Bcf/d in 1981 with overall capacity expected to reach 16 Bcf/d by 2020, Naimi said.
"This increase will meet a large part of our energy consumption and will also free up more oil for export," he said, referring to rapid economic growth in the kingdom, which has led to higher domestic energy consumption that Naimi and other senior officials have previously warned may impact oil exports if not checked.
Naimi acknowledged that, while there may be occasional supply disruptions, the problem in the short term was not supply but demand.
"There will always be short-term supply issues somewhere in the world, but in my view, it is not supply that will be a problem in the near future. It is demand," Naimi said.
Europe is facing difficult times and the economic readjustment will result in falling demand for oil and imports, he added.
"But the world does not begin and end with Europe. Going forward, I see potential for real prosperity and growth throughout the Middle east, in Asia, South America and Africa. So dynamic times, yes, difficult times for some, yes, but also a time for optimism."
