$10 billion Saudi project aims to pump up production.

KHURAIS OIL FIELD, Saudi Arabia - This massive oil field surrounded by the desolate sands of Saudi Arabia's vast eastern desert feels like the middle of nowhere.

But what happens during the next year at Khurais, one of Saudi Arabia's last undeveloped giant oil fields, could hold the key to what drivers worldwide will pay at the pump for years to come.

Under way at Khurais and at two smaller fields nearby is what Saudi Arabia calls the single largest expansion of oil-production capacity in history.

With consumers howling over record fuel prices and the United States pushing Saudi Arabia to produce more oil, this patch of sand 100 miles west of the Saudi capital, Riyadh, has become one of the most important places in the world economy.

Saudi Arabia's state-owned oil company, Aramco, is spending $10 billion to build the infrastructure to pump 1.2 million barrels of oil per day by June 2009 from the Khurais field and its two smaller neighbors. That would be more than the total production of OPEC members Qatar, Indonesia and Ecuador.

The project is the centerpiece of Saudi Arabia's plan to increase the amount of oil it can produce to 12.5 million barrels per day by the end of 2009, from a little more than 11 million barrels per day now.

Saudi Arabia plans to produce 9.7 million barrels of oil per day, or 11 percent of the world's total, in July. It is the only nation with significant excess capacity that it could put on the market quickly.

But the kingdom has resisted calls to increase production further, saying financial speculators and the falling dollar - not a shortage of supply - are to blame for high oil prices.

The political tussle over output masks the challenge Saudi Arabia faces in boosting production capacity by developing giant fields such as Khurais.

"That is what people don't appreciate," said Manouchehr Takin, an oil expert at the Centre for Global Energy Studies in London. "These are major projects, and people don't realize they aren't that easy."

The Saudis estimate Khurais and the nearby Abu Jifan and Mazalij fields hold a total of 27 billion barrels of oil encased in solid rock 5,000 feet below the baking desert.

Aramco is using hundreds of mostly South Asian workers to build a massive processing facility at the Khurais field. More than 150 wells will pump crude to the surface, where water and natural gas will be separated out. The oil then will be funneled to the country's east-west pipeline for delivery to ships in the Red Sea.

With its twisting maze of metal, the half-finished facility rises out of the desert like a massive space station. Workers wear gloves and wrap bandannas across their faces to hide from the searing sun as they put in 10-hour shifts in temperatures well above 100 degrees.

Aramco officials say that besides geological challenges, they also face difficulty finding enough qualified workers and equipment. The project will use 145,000 tons of steel - almost enough to build two Golden Gate bridges.