November 13, 2008 / 5:32 PM / 10 years ago

UPDATE 1-Baker Hughes sees Saudi rig cut, region strong

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NEW YORK, Nov 13 (Reuters) - Saudi Aramco is expected to reduce the number of rigs drilling for oil and gas in the coming months, but spending by other national oil companies in the Middle East is expected to remain strong, an executive at Baker Hughes BHI.N said on Thursday.

“We do expect that (Aramco) will lay some rigs down ... but outside of Aramco, it seems pretty strong,” Martin Craighead, president of Baker Hughes’ Drilling & Evaluation group, told a Bank of America investment conference.

Costs for oilfield services such as drilling have risen sharply in recent years as demand from oil and gas producers surged, but a sharp drop in the price of oil has raised concerns that the those producers would pare back their spending.

Those rising costs, coupled with the turmoil in the global economy, are forcing companies to reconsider some of their more expensive projects.

Still, Aramco, the state-owned company that is the world’s largest oil exporter, remains on track to boost its production capacity to 12 million barrels per day by mid-2009, Chief Executive Khalid al-Fahlin told news channel al-Arabiya on Sunday.

Last week, Aramco and U.S. oil major ConocoPhillips (COP.N) said they had halted construction of the 400,000-barrel-per-day Yanbu refinery because of uncertainties in the global financial markets. (Reporting by Matt Daily; Editing by Brian Moss)

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