Saudi Oil Income Expected to Top $160bn

By Philip White

(EUNN) London - While it may come as no surprise, Saudi Arabia's estimated oil income this year is forecast at $160 billion.

Even though Saudi Arabia is expected to have surplus cash in its government accounts for the third year in a row, thanks to higher oil prices, for two decades before that Saudi Arabia was in the red. But this year promises to set a record, none the less.

The Kingdom made an estimated $154 billion from oil sales in 2005 and is expected to reach around $160 billion in 2006 in oil export revenues.

The 2006 revenue figure was based on an average price of just over $60 for London Brent crude with Saudi oil output of around 9.6 million barrels per day.

Saudi Arabia plans to use the surplus cash to boost production levels. The Kingdom has launched a $50 billion plan to boost its production capacity to 12.5 million barrels per day by 2009 and maintain spare capacity of at least 1.5 million bpd.

Saudi Arabia is OPEC's largest producer and currently has the largest spare capacity as well. State oil firm Saudi Aramco has a separate budget for its operations than the state budget set by the finance ministry and has already made several upstream and downstream multi-million dollar investments and that is expected to continue.

Explosive demand growth in Asia and the United States sparked a four-year price rally and pushed oil above $60, prompting consumer governments to pile pressure on major oil producers to inflate the global supply cushion.

Yet buyers feel that OPEC members have held back when supplies were seasonally more plentiful to keep prices artificially higher. At the last OPEC meeting the ministers said they would not cut back production at that time. However, oil prices still managed to stay above $60 per barrel due to "political concerns in the market place.