NEW DELHI -- Saudi Arabia's spare crude oil production capacity will rise to 3 million barrels per day (bpd) in February after a second round of OPEC output cuts, oil minister Ali al-Naimi said on Wednesday.
He also told reporters in the Indian capital that long-term investments in the oil sector will not be determined by short-term crude oil price movements.
"Investments in the oil and gas industry is very long-term investment, it is not decided upon by short-term price movements," he said.
Naimi said he wanted to see economic growth in the world, especially among developing countries. Demand is going to grow and that fossil fuels will remain the primary source of energy, he added.
"Investment in this business is very prudent," he said.
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The Organization of the Petroleum Exporting Countries (OPEC) has an estimated 100 exploration and production projects with estimated investments of $100 billion to meet rising demand, but justifying spare capacity to calm oil market nerves has been difficult.
One of the reasons for oil's four-year rally is the lack of spare output capacity from OPEC producers that would cushion unexpected supply disruptions such as hurricanes or attacks on oil facilities.
Saudi Arabia, the world's largest oil exporter, is investing billions of dollars to boost its production capacity to 12.5 million bpd by 2009 to meet world demand.
The kingdom has repeatedly said its policy is to maintain spare capacity of between 1.5 million and 2.0 million bpd.
OPEC cut production from Nov. 1 by 1.2 million bpd, and an additional reduction of 500,000 bpd is due to take effect from Feb. 1.
Middle East producers have also sought to do refining deals with nations such as India and China, providing crude to an expanding regional refining sector. For example, Iran is in talks with India's Essar Group to build a refinery in Iran.
MARKET HEALTHY
Naimi said that producers take into account supply, demand and inventories, but unfortunately the market also moved on other factors such as geopolitics, interest rates, dollar value, natural events and OPEC ministers' comments.
"That is a big problem for us," he said. "We hope the future will be bright. We hope the market will be stable. When the price is stable everyone is happy."
Naimi earlier told reporters that there was no need to worry about oil prices because the market was healthy.
Oil prices fell 3 percent to hit $50.53 on Tuesday, the lowest level since May 25, 2005, after Naimi said OPEC production cuts were working well and there was no need for an emergency meeting of the producer group.
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