February 19, 2008	Tuesday	Safar 11, 1429

RIYADH, Feb 18: Growing economic woes are clouding investment prospects in the energy sector, globally. Oil executives from around the world appeared concerned over the health of the US economy last week during the CeraWeek energy conference in Houston, as they wearily looked for signs of weakness in the world’s largest economy spreading to other economies and hurting global energy demand.

Oil prices have soared to record levels, recently climbing above $100 a barrel on robust demand from fast-growing economies and worries about supply disruptions. But the scenario may fall apart if a downturn in the US economy hits demand.

“The effects of the sub-prime debt problem have rippled through global markets, risking global economic growth and creating uncertainty for the oil market in general, and oil demand in particular,” Abdullah Jumah, the chief executive officer of Saudi Aramco, said in his keynote address at the conference.

Helge Lund, chief executive officer of Statoil Hydro that he believes a recession in the US would spread to economies in other countries and hit demand for oil.

And this could hurt the currently ongoing plans to expand output.

US Energy Secretary Samuel Bodman had stressed lately while in Riyadh on the need to invest “billions of dollars” in the industry annually, so as to achieve “global energy security.”

International Energy Agency estimates that $22 trillion of investment will be needed between now and 2030 if the world is to meet expected energy demand.

In response to the tight demand-supply crude balance, Opec member countries are undertaking substantial investments in the sector to expand capacity to around 36.9 million bpd by 2010 from 31.7 million bpd in 2005.

In the short term, over 100 energy infrastructure projects, such as pipelines, export terminals and downstream expansion are in hand. Saudi Arabia, the Opec heavyweight, is investing $50 billion plus to meet the growing call on its production. During the Houston conference the Saudi Aramco CEO stressed that despite the ominous clouds on demand scenario, plans to bring on stream 12.5 million bpd capacity by 2009 are on track.

A number of projects in the kingdom are currently on. The Abu Hadriyah, Fadhili and Khursaniyah fields now under development, would produce 500,000 bpd of Arabian Light crude. The Khurais project, which will also include production from the Abu Jifan and Mazalij fields, is expected to produce 1.2 million bpd of Arab Light oil in 2009.

Located deep in the Rub Al-Khali, plans call for increasing production capacity of Shaybah field to one million bpd. The first addition of 250,000 bpd currently under implementation is said to come on stream by the end 2008 or early 2009.

The Nuayyim project, a central Arabian field, is stated to add 100,000 bpd of Arabian Super Light crude by 2008. The $10 billion plus Manifa development programme, Aramco’s largest-ever offshore project, aims to add 900,000 barrels a day of Arabian Heavy crude by mid 2011.

Kuwait has plans to spend $51 billion over the next five years to upgrade its vital energy sector. The projects include raising Kuwait’s oil output capacity from 2.7 million bpd to four million bpd by 2020. Further under the $8.5 billion Kuwait project targets doubling of output to 900,000 bpd from four oilfields but has been stalled by the opposition-controlled parliament.