Saudi Arabia to boost oil production

Saudi Arabia has outlined a plan to increase oil production capacity to 12.5 million barrels per day (mbpd) by 2009 from the current 11 million limit.

    Bush (L) pushed Abd Allah to help curb skyrocketing oil prices

    Saudi Arabia now pumps about 9.5 million barrels daily. If necessary, Saudi Arabia says it will eventually develop a capacity of 15mbpd.

    At the meeting between US President George Bush and Saudi Arabia's Crown Prince Abd Allah bin Abd al-Aziz Al Saud in Crawford, Texas, White House National Security Adviser Stephen Hadley said the plan could be seen as positive news by financial markets.

    "The problem in the oil market now is a perception that there is inadequate capacity," Hadley said. Reassurance that can be given to the market on available supply, he said, should "have a downward pressure on the price".

    Bush pushed Abd Allah to help curb skyrocketing oil prices, and the White House expressed hope that the kingdom's plans would ease petrol prices.


    "A high oil price will damage markets, and he knows that," Bush said on Monday of Abd Allah, the de facto leader of the desert kingdom.

    Drop in prices


    Asked whether there would be a drop in petrol prices - now averaging a relatively high $2.20 a gallon (58 cents a litre) in the United States - Bush said that would depend on supply and demand.


    "One thing is for certain: The price of crude is driving the price of gasoline," Bush said.


    "The price of crude is up because not only is our economy growing, but economies such as India and China's economies are growing"

    US President George Bush

    "The price of crude is up because not only is our economy growing, but economies such as India and China's economies are growing."


    The president has been urging Congress to pass his energy plan, but even Bush has said that it will do little to give motorists short-term relief from high petrol prices.


    But Subhi Ghandur, director of the Arab al-Hiwar (Dialogue) Centre in Washington, told Aljazeera: "Some, not all, Americans know that only 10% of US oil imports come from Saudi Arabia while the rest comes from other countries, mostly non-Arab.


    "Any increase in Saudi oil production will not change oil prices in the United States a great deal.


    "It [the issue] is nothing but media and political propaganda serving the US administration's special interests," he added.


    On another economic issue, the US and Saudi Arabia are on the verge of a bilateral trade agreement that would allow the Gulf nation to join the World Trade Organisation by the end of the year, Abd Allah's foreign affairs adviser, Adil al-Jubair, said.


    Other issues, including terrorism, prospects for peace between the Israelis and Palestinians, Syria's role in Lebanon, and democratic change in the Middle East, filled the leaders' meeting and discussion over lunch.


    Ghandur added: "I believe the US administration seeks a number of objectives, bigger than oil issues, such as attempting to move the Middle East into a new situation where a kind of US-sponsored security [mechanism] is achieved and where political views change according to US standards."


    Palestinian aid

    Abd Allah pushed his plan for a broad settlement of the Middle East conflict that would call on Israel to withdraw from Arab lands occupied in the 1967 Middle East war.

    Under his plan, Arab states would normalise ties with Israel in exchange for full withdrawal.

    But Hadley said if the partial pullout envisioned by Israel was carried out successfully, it would help the parties move towards the broader issues.

    "So the focus has been very much what we can all do - the United States, Saudis and others - to assist the Palestinians to be able to develop the institutions of a democratic state that is prepared to take responsibility for the territory that they are going to get," Hadley said.

    American dependence


    In Washington, Senator John Kerry, the Democrat who lost against Bush in the 2004 elections, said the president's meeting with Abd Allah was a reminder of America's dependence on foreign oil.


    Kerry: More needs to be done to
    develop alternative energy

    He said fewer than 5% of the incentives in the energy bill were devoted to developing alternative energy sources.

    Kerry said US dependence on foreign oil tethers the US to unstable regions of the world.


    "We risk being drawn into dangerous conflicts, and an already overburdened military is increasingly stretched too thin," he said.

    Al-Jubair said Saudi Arabia was producing all the oil that its customers were requesting. He said the price was being driven up by a shortage of refining capacity.


    "What we have done is explain to the US what our production capabilities are," he said about the meeting. "We also explained to the US - and we have for months - what our plans are for adding to that capacity in the future years."

    Democratic reforms


    A US push for democratic change across the Arab world faces a difficult test with Saudi Arabia, a long time ally ruled by a monarchy.


    Saudi Arabia completed its first
    nationwide elections last week

    Last week, Saudi Arabia completed its first nationwide elections, an experiment in democracy designed to take the steam out of armed Islamic movements.


    The council posts that were on the ballots, however, have little power, and women were not allowed to vote. Moreover, the US has long-standing concerns about human and civil rights in the kingdom.


    A joint statement by the two leaders reflected tensions over the issue of democratic change.


    It said: "While the United States considers that nations will create institutions that reflect the history, culture and traditions of their societies, it does not seek to impose its own style of government on the government and people of Saudi Arabia."


    Both nations also agreed to cooperate in fighting terrorists.


    Cosy relations


    US-Saudi relations were strained after the 2001 attacks, in which 15 of the 19 airplane hijackers were Saudis.


    Bush has been accused of being
    too cosy with Saudi officials

    But American officials have been much more satisfied with anti-terrorism efforts the Saudis have undertaken since insurgents' attacks in Riyadh in May 2003.

    The president was accused during last year's presidential campaign of being too cosy with Saudi officials. But he paid such criticism no public mind.


    On Monday, he offered Abd Allah a warm embrace and a kiss on both cheeks and gripped his hand as they disappeared into an office building on the ranch.

    SOURCE: Agencies


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