Top oil exporter Saudi Arabia plans to release 15 oil rigs by the end of the year as it reduces drilling activity with slowing global demand, oil industry sources in the kingdom said on Monday.
"We feel we have huge extra capacity," said one. "Why do we need to drill?"
By the end of 2009, the number of rigs working in Saudi Arabia would fall to around 100, down from 115 currently in operation, he said.
State oil firm Saudi Aramco had already released 15 rigs from the 130 operating in October 2008, he added.
The total fall in rigs would be similar in magnitude to the oil supply cuts Saudi has made since last summer as the recession eats into demand. The kingdom has cut output to under 8 million barrels per day (bpd) from around 9.7 million bpd.
Saudi Arabia is responsible for most of the oil supply cuts enacted by the Organization of the Petroleum Exporting Countries since September. OPEC has delivered around 84 percent, or 3.52 million bpd, of pledged cuts of 4.2 million bpd.
Rigs could quickly be contracted to return to work if demand picked up and more oil was needed, the industry sources said.
"If there's higher demand our drilling activity would naturally increase," one source said. "We are well positioned to respond fast."
When the kingdom completed projects to boost capacity to 12.5 million bpd in June, it would have had spare capacity of 4.5 million bpd. That is more than double the 1.5 million to 2.0 million bpd cushion it aims to keep to meet any surprise outages in the global oil supplies.
Drilling activity has been dropping around the world as the economic crisis and the lower oil price have forced cutbacks, hurting the earnings of the top oilfield service companies.