Saudi Arabia could cut the number of oil rigs they have in operation by as much as 20% in 2009, according to an industry insider.
Speaking to the Zawya Dow Jones the insider, who didn’t wish to be named, claimed that Saudi Aramco, the state-run oil company, operated around 130 offshore and onshore rigs during peak production periods, but that number is set to be reduced by up to a fifth due to the current slump in crude output.
“They haven’t announced any specifics, but they are saying there will be a reduction in the number of rigs by 20%,” the Gulf-based oil industry official said.
Saudi Aramco has enjoyed significant growth in recent years and the rising energy demand has meant that the company has had to expand its drilling rig fleet to keep in line with that demand.
“Given the slowdown in oil production this year and the completion of major oil expansion projects, it is not surprising to see an easing of drilling activity,” Raja Kiwan, an analyst at PFC Energy said.
“But this will be temporary before work begins on the next slate of oil and gas projects,” Kiwan added.”
The International Energy Agency recently announced that global oil demand is expected to fall by 1.2%, the largest annual drop in 27 years. The continuing recession in Europe and the US, the effects of which are being felt across the globe as demand for goods dwindles is being blamed for the drop.
In a bid to boost oil prices, OPEC has announced three production cuts in the past seven months in an attempt to remove 4.2 million barrels a day of crude from the market. The current oil price of around $40 a barrel is a stark contrast to the record $147 a barrel in July, 2008.
Saudi Aramco declined to comment on the number of rigs in operation.
