MANAMA, May 25 - State oil giant Saudi Aramco plans to invest $129 billion on new energy projects in the next five years, the company’s executive vice president of operations said on Sunday.

Saudi Arabia is the world’s largest oil exporter and Aramco is expanding to increase crude, gas, refining and petrochemical capacity.

About $70 billion of the total would be spent by international and domestic joint ventures, and the remaining $59 billion on projects solely undertaken by Aramco, Khalid al-Falih told Reuters.

The $129 billion figure is nearly $40 billion higher that previous estimates given by Saudi official for expansion.

”We are updating our figures all of the time. This figure includes more projects,” Falih said. This includes refinery projects in the United States and China, a second phase of the Saudi-based PetroRabigh, and a giant petrochemical plant at Ras Tanura to be built by Dow Chemical.

Total investment would be higher as it would include some of the $65 billion that Aramco is investing in projects that are already under way.

”We are clearly focused on the downstream as the area of greatest potential for future growth and impact,” he said earlier in a speech to a conference.

Movements in crude oil prices and the physical market are disconnected due to oil’s increased use as a financial instrument by investors, Falih said.

”Buyers and sellers (are) taking their cues not just from production numbers, demand projections and inventory levels, but from a whole host of factors which lie beyond the realm of the petroleum industry itself,” he said.

High energy prices were attracting investment in new and alternative energy supplies, creating ”significant uncertainty about the outlook of future demand for petroleum products,” he said.

Saudi Oil Minister Ali al-Naimi said last month that, because of falling projections for future demand, the kingdom had no plans to further boost output capacity after it completes it current expansion program.

Aramco’s oil output capacity would reach 12 million barrels per day by the end of 2009, Falih said.

Aramco capacity does not include production from the Neutral Zone between Saudia Arabia and Kuwait. Including the zone, Saudi Arabia is aiming to reach a total crude capacity of 12.5 million bpds.

Refining margins are expected to fall over the next several years due to increased capacity and a economic slowdown in key markets, Falih said.