SAUDI ARABIA'S decision to pump more oil than it has in nearly 30 years risks being completely negated by the sharp drop in output caused by attacks on production facilities in Nigeria.

Nigeria now pumps fewer than 1.5 million barrels a day, its lowest level in 25 years, rather than the 2.5 million it has the ability to produce, according to officials attending yesterday's high-level meeting in Jeddah, Saudi Arabia.

The hastily convened conference of consumers and producers, as well as energy ministers and oil company chief executives from around the world, is likely to be seen as a disappointment because it yielded little more than had been expected from the world's largest exporter in spite of global concerns that developing countries were cracking under the burden of record oil and food prices.

Saudi Arabia confirmed it would pump 9.7 million barrels a day next month, an increase of 200,000 and the highest level in nearly 30 years, as it repeated its standard offer of extra barrels if customers demanded them.

The kingdom also reiterated its promise to expand production capacity, noting that it expects to achieve 12.5 million b/d next year and could add an additional 2.5 million, if needed, after that, with a massive investment programme.

Ali Naimi, Saudi Arabia's energy minister, said in a speech: "This will enable us to maintain our spare capacity in the interest of global market stability - which is in everyone's interest."

Saudi Arabia's spare capacity is now estimated at 1.5 million b/d, the lowest in a generation, but as it pumps more oil into the market, that cushion shrinks. The fear that the kingdom's extra oil might not be enough is one element that drove oil prices to a record $139.89 last week - double what they were a year ago.

Such fears are fuelled by - among other things - attacks by militant groups in Nigeria. For long Africa's largest producer, the country recently fell to second place behind Angola, crippled by attacks such as those on fields run by Royal Dutch Shell and Chevron, which stopped production of 345,000 barrels per day.

The communique issued at the end of the conference broadly touched on all the main issues, from the need to improve the transparency and regulation of financial markets to the need to increase investment in upstream and downstream projects. But it provided no solid details. A follow-up meeting is expected to be held in London before the end of the year. Robert H Laughlin, of MF Global in London, said oil ministers had tried to put a brave face on the outcome. "I fear this may turn out to be an understatement especially when you take into account the recent losses from Nigerian production which wipes out any fresh oil offered by the Saudis." -