CERAWEEK-UPDATE 2-Aramco CEO: global oil demand growth moderated

Tue Mar 5, 2013 12:54pm EST

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* Healthy growth projections should not foster complacency
    * Spare capacity unchanged at 2.5 million bpd
    * Committed to U.S. market

 (Adds comments on U.S. market, paragraphs 6-7)
    By Kristen Hays and Braden Reddall
    HOUSTON, March 5 (Reuters) - 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 U.S.
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
materialize," 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. 

 (Reporting by Braden Reddall and Kristen Hays, with additional
reporting by Erwin Seba; editing by Sofina Mirza-Reid)
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