Saudi Aramco's strange response to a future oil shortage

London

LET'S say you're the holder of the world's largest reserves of conventional, low-cost crude oil and you believe the supply outlook is "increasingly worrying" due to a lack of investment. Enhancing production capacity so as to cash in when prices soar would seem like a good idea. Apparently not if you're Saudi Aramco.

Saudi Arabian Oil Co CEO Amin Nasser spoke at the World Petroleum Congress in Istanbul last week, describing his company's plans to invest US$300 billion over the next decade. But that cash won't go toward boosting the rate at which Saudi Arabia can get oil out of the ground, even though as much as 20 million barrels a day of new output could be needed over the next five years to offset rising demand and the natural decline of fields that are currently in production. Instead, that money will be used to maintain current capacity, and double gas output.