Saudi Arabia plans shipbuilding complex to support oil exports

Employees work on a platform near the propeller of a ship under construction in the dry dock at the Hyundai Heavy Industries Co. shipyard in Ulsan, South Korea, on Tuesday, Nov. 10, 2015. Shipbuilding has been central to South Korea's economy since the 1970s. Ships accounted for 8.5 percent of the country's total exports through June 20 of this year, according to the trade ministry. Photographer: SeongJoon Cho/Bloomberg

Saudi Arabia will build a maritime complex on its east coast, with shipbuilding capability, to provide sufficient capacity for exporting oil, energy minister Khalid Al Falih said on Sunday.

The country, the world’s largest oil-producing nation, eventually will have a shipping fleet that will match its oil capabilities, Mr Al Falih said in Riyadh. Saudi Arabian Oil Company, or Aramco, will need more tankers to meet global demand, he told reporters.

Oil prices have rebounded more than 70 per cent from the 12-year low reached earlier this year as a Saudi Arabian-led Opec strategy to pressure rivals with lower prices slowly eliminates a surplus in global supply. Mr Al Falih told the Houston Chronicle newspaper in June that the glut was over, an assessment shared by the International Energy Agency, which said on June 14 that the crude market will be balanced in the second half of 2016.

The Opec expects demand for its oil will rise to about 33 million barrels a day next year, 142,000 a day more than in June, the group said in its monthly report published July 12. Saudi Arabia is producing at close to a record, according to the report. Production outside Opec is expected to fall by 900,000 barrels a day this year, the largest decline since 1992, according to the IEA.

Crude oil will rise to a range of US$50 to $60 a barrel until at least 2018 as demand rises, Kuwait’s acting oil minister Anas Al Saleh said last week.

Saudi Arabia, along with the United Arab Emirates and Kuwait, is expanding its energy industry, driving investments in the region to $900 billion over the next five years, Apicorp said on April 12.