Saudi Aramco chief executive Khalid al-Falih said on Tuesday global oil demand growth has moderated, largely because of environmental pressures and lifestyle changes, as well as energy policies.
The head of Saudi Arabia’s national oil company also told energy executives that increased output driven by technological advances – including rapid production growth in prolific US shale and tight oil plays – has helped quash concerns about oil supply.
Speaking at the annual IHS CERAWeek conference in Houston, al-Falih said Saudi Arabia, an OPEC member, had maintained its maximum potential oil production at 12.5 million barrels per day, leaving its cushion of spare capacity unchanged at 2.5 million bpd.
“We have seen post-financial crisis a reduction of demand to where our spare capacity ballooned, but we have not abandoned that number we have committed to today – we’re sitting on about 2.5 million barrels of capacity,” al-Falih said.
The U.S. Energy Information Administration said on Tuesday that Saudi Arabia produced an average of 11.6 million bpd in 2012, while exporting 8.6 million bpd.
Also last year, Aramco and joint venture partner Royal Dutch Shell Plc completed a $10 billion expansion of their 600,000 bpd Motiva Port Arthur refinery in Texas, the biggest refinery in the U.S., after several start-up problems.
“We’re committed to the U.S. market,” al-Falih said, adding that while U.S. demand for crude flattened out during the recession, Aramco now supplies more oil to the United States than it did in 2011.
Yet al-Falih said that healthy projections for global demand growth should not foster complacency in the oil industry.
“Although we are on the right track, if our history teaches us anything, it is that such rosy forecasts will not always materialise,” he said. “And as the old cowboy philosopher Will Rogers once said, even if you’re on the right track, you run the risk of being run over if you just sit there.”
Looking back at the 2008 financial crisis, which sent oil prices from nearly $150 a barrel to $33 a barrel in a few months, al-Falih warned about squandering financial resources.
“We need to heed the lessons of the past and better manage our risk,” he said.