State oil company Saudi Aramco on Monday renewed its commitment to long-term investment plans in oil and gas during the global financial crisis, which has dampened demand for sources of energy.
Aramco cited two projects -- a 100 billion riyals ($26.67 billion) integrated refinery and petrochemical project with U.S. Dow Chemicals and a second development phase of a petrochemicals joint-venture with Japan's Sumitomo Chemical .
"Despite the difficulty in the current global economic climate and ... challenges facing the energy sector, the kingdom will continue its long-term investments to expand oil and gas sectors," Chief Executive Khalid al-Falih said in a statement.
The investments would "shore up both domestic and international energy supplies," he said.
The global economic slowdown was an opportunity to "formulate future investment strategies and prepare for the upcoming phases of economic expansion," Falih added. He made the remarks at a conference in the Eastern province, Aramco said.
Aramco would soon sign a "memorandum of understanding" with Sumitomo Chemical to develop a second phase of their joint-venture PetroRabigh complex, Falih said.
Earlier this month, Japan's Nikkei business daily reported that PetroRabigh could spend up to 500 billion yen ($5.17 billion) to build a petrochemical complex next to one that is scheduled to start up at the end of this month.
Falih also cited Aramco's plan to develop an integrated refinery and petrochemicals project at Ras Tanura in partnership with Dow Chemical.
Saudi Arabia has not made public further plans to boost capacity beyond a programme ending this year to take it to 12.5 million barrels per day, but it has outlined how it could reach 15 million bpd in the future.
Earlier this week, a Saudi newspaper reported that the state firm will keep spending on oil and gas projects within the kingdom through 2014 at about $60 billion, which would be $10 billion cheaper than the last plan coming to completion in June.
The kingdom is spending billions more on international joint ventures.
Saudi Arabia has a long-held policy to keep a 1.5 million to 2.0 million bpd spare capacity to meet any surprise outages in the global oil supplies.
When the kingdom completes expansion plans, it will have more than double the capacity cushion it likes to keep. Output stands just below 8 million bpd.
Aramco is looking to force down new project costs to take advantage of cheaper prices for raw materials due to the global economic downturn. The firm met contractors earlier this month to discuss bringing down costs.
Turmoil in world credit markets and tumbling oil prices have prompted energy firms globally to review more expensive projects or cut back on spending to preserve liquidity.
Aramco has laid out plans for 144 projects until 2014, including eight "giant" projects, it said earlier this month, without giving a timetable.
Last week ConocoPhillips said the refiner would likely make an investment decision on its new Yanbu joint venture refinery in Saudi Arabia in early 2010.
Conoco and Aramco halted bidding on the construction of the planned 400,000 barrel per day (bpd) Yanbu refinery in November, citing uncertainties in the financial markets.
Conoco said the delay in the project would likely help drive down its construction costs, which had soared to around $12 billion as oil prices ran up their record above $147 a barrel in July 2008. Those costs had been estimated in 2006 at about $6 billion.
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