Oil's well in Gulf: Saudi

The world's largest producer of oil, Saudi Arabia, today assured a reliable delivery of petroleum by maintaining spare production capacity in the range of 1.5-2 million barrels per day but cautioned that alternatives to Gulf petroleum are "untried and riskier".

Donning the mantle of central bank in the petroleum sector, Saudi Arabia said that diversification of supply sources offers no protection from price volatility.

"We operate in a single global market with price being the most important factor in the equation," said Saudi Arabia's Minister of Petroleum and Mineral Resources Ali al-Naimi at the first Roundtable of Asian Ministers on Regional Cooperation in the Oil Economy hosted by New Delhi.

Naimi expressed his country's preference for mutually beneficial partners over a relationship built on just buyer-and-seller equations.

"To meet the needs our customers, we have been producing about 9.5 million barrels per day throughout the second half of 2004, and could produce more on short notice," said Naimi.

The minister said Asia has become its most important customer with more than 4.5 million barrels of petroleum per day, comprising 60 per cent being shipped to the region.

Both Saudi Arabia and Iran expressed their preference for joint investment in refining and marketing sectors.

While stating that major Asian energy consumers do not hold the required international qualifications for upstream oil operations, Iran's Petroleum Minister Bijan Zangeneh stressed the necessity of a structural interdependence of Asia's major energy consumers and producers and their interests.

He said the establishment of financial institutions like an Asian Bank for Energy Development can effectively back-up energy projects.