Army of labourers races to get Saudi oil oasis ready

Deep in the Saudi desert, 28,000 Asian workers are racing to get a giant oil processing complex ready to help King Abdullah keep a vow to meet world demand for crude.

In a year's time, the Al-Khurais field will be supplying 1.2 million barrels a day of Arab light crude to thirsty global markets, under a tight schedule set by Saudi Aramco, the national oil giant.

The king, and other top Saudi officials, promised at an oil summit they hosted in Jeddah on Sunday to increase current production by 200,000 barrels a day to 9.7 million barrels and to supply any further increase in global demand.

In temperatures that seldom fall under 100 degrees Fahrenheit (38 Celsius) during the day, workers from Indonesia, Bangladesh, India, the Philippines and other nations wear hoods against the sun as they finish the hundreds of kilometres (miles) of pipelines, three 600,000 barrel storage tanks, 15,000 horsepower pumps and a bomb proof control centre that make up the 10 billion dollar complex.

Khurais is city-sized but can only be reached up a seemingly endless desert road, with truck tyres and carcases of burned out cars strewn along the sides and black camels roaming in the dunes.

Aramco took journalists this week to its latest "mega project", about 100 miles (160 kilometres) east of Riyadh, which will handle oil extracted from its Khurais, Abu Jifan and Mazalij fields.

The company calls it "the largest industrial project in the world."

Together the three fields have estimated reserves of 27 billion barrels and their joint daily production of 1.2 million barrels will be more than OPEC's three smallest members Indonesia, Qatar and Ecuador, according to Aramco.

World demand is growing by about one percent a year and Saudi Arabia has vowed to invest tens of billions of dollars to take production capacity to 12.5 million barrels by the end of next year and eventually 15 million if the demand is there.

Aramco vice president for production Amin Al-Nasser said 500,000 barrels a day will start coming out of its Khursaniyah field in August, and by the end of the year 250,000 barrels will be coming from the Shaybah field and 100,000 barrels a day from the Nuayyim field.

But Khursaniyah is eight months behind schedule and Saudi Aramco has faced questions about whether it can get Khurais ready on time as well as the sustainability of Ghawar, the world's biggest oil field currently producing five million barrels a day.

Nasser said he was "100 percent confident" that Khurais would be ready on time and insisted that Aramco's other fields are nowhere near peak production.

"If we want more oil, we open the valves across the fields and none of them is yet wide open," he said.

He said that the depletion rate -- the amount of oil it produces each year as a proportion of its reserves -- averaged about two percent where other countries average 4.0-9.0 percent.

Aramco is dismissive of "peak production" theorists who say Saudi Arabia's production will now start to fall as it has in the North Sea and Alaska's Prudhoe Bay.

Nasser said the theory does not apply to his country, even though the Ghawar field has now been in operation for 50 years.

The Saudi firm has embarked on a huge operation to find new fields to add to its estimated 260 billion barrels of crude oil reserves.

Aramco research chief Muhammad Saggaf said that over the next 20 years the company's overall resource base -- a more theoretical measure of reserves that may or may not be available -- could grow to 900 billion barrels from the current level of 735 million.

"We have never failed to replace what we have produced through our exploration programme," said Nasser, "and it is expanding year-by-year."