SAUDI ARAMCO. Saudi Aramco, the world's largest state oil company, probably isn't on target to meet its oil production goals, said Matthew Simmons, Chairman of Simmons & Co International.

"I'm dubious they can hit their targets,'' Simmons said today at a Houston conference sponsored by the Association for the Study of Peak Oil & Gas, a non-profit think tank. "If they had hit their targets, they would be more forthcoming.''

Simmons is the author of 2005's 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy', which argues that global oil production has already peaked and Middle East reserves estimates are overstated.

Aramco is boosting spending on projects to raise the Kingdom's daily output capacity from 11.3 million barrels to 12.5 million barrels by 2009. Simmons has called on national oil companies and other producers to disclose field output figures.

"Amid all these long-term projections of demand, Saudi Arabia's output has to grow or other supply has to come out of the air to replace it,'' Simmons said.

Oil futures traded on the New York Mercantile Exchange today rose above US$90 a barrel for the first time after the US Dollar declined to a record low against the euro, enhancing the appeal of commodities as an investment.

Oil and natural-gas producers are pouring money into oilfield services that can stem production declines from aging fields in the North Sea, Saudi Arabia and Mexico.

Simmons, who has predicted crude will exceed US$200 a barrel or more, reiterated he believes today's prices are cheap.

"At US$40, US$50 and US$60 they said it's just traders and speculators,'' he said. Light, sweet grades of oil in Malaysia were US$90 a barrel earlier this month, Simmons said.

"That to me is not speculation; that's refiners struggling to find light, sweet crude,'' Simmons said. "I don't know what fundamentals they're looking at. The fundamentals I'm looking at say fasten your seat belts.''

Critics of Simmons' peak-oil assertions say it's impossible to know when petroleum production has peaked, given uncertainties estimating global reserves, and point out that previous theories pegging a specific date for peak oil output have been wrong.

Schlumberger Chief Executive Andrew Gould, speaking at a Simmons & Co event in Scotland in September, said more investment will be required to increase oil and gas production. Schlumberger is the world's largest oilfield-services provider.

"For perhaps the first time in more than 30 years, the industry will need to pursue exploration for new reserves at the same time as it grows and sustains the existing production of both oil and natural gas,'' Gould said in the presentation. 

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