Saudi Aramco chief executive Amin Nasser said the company can swiftly scale up its oil production to its nameplate capacity of 12 million barrels per day, if the Saudi government approves an expansion plan.
Speaking during the company’s earnings call for its second-quarter results, Nasser outlined the Saudi giant’s longer-term expansion plans, aiming at a maximum sustainable capacity of 13 million bpd, which it hopes to achieve by 2027.
However, Nasser, while acknowledging limited global spare capacity, dismissed suggestion that Aramco will struggle to achieve its current nameplate capacity on a sustainable basis.
“We are confident of our ability to ramp up to 12 million bpd anytime with any call from the government or from the Ministry of Energy to increase our production,” Nasser said.
He added that the company will be able to bring its current maximum sustainable capacity “on stream quickly and sustain it”, clarifying that the country has some spare capacity to test, once such a need arises.
Saudi Arabia is bound by its commitment to the larger Opec+ grouping to continue restricting its oil output, owing to the cuts imposed by the group to moderate international oil prices.
While Saudi Arabia has been allocated a September production quota of 11.03 million bpd by the Opec+ grouping, it might struggle to sustain this sanctioned capacity, project watchers have told Upstream.
Energy expert and S&P Global vice chairman Daniel Yergin recently said in a note that Saudi Arabia does not appear to have a large amount of extra oil that can be produced at short notice.
Yergin’s statement echoes a wider industry-based understanding about constraints on the company’s ability to keep production at 12 million bpd or more sustainably.
However, Nasser insisted that the company is building its maximum sustained capacity to 13 million bpd and the expansion plan is “progressing very well so far”.
“We are making progress on ramping up our maximum sustainable capacity from 12 million to 13 million bpd by 2027, and potentially increasing gas production by more than 50% by 2030,” he said.
Nasser said Aramco’s capacity by 2025 should go to 12.3 million bpd, while by 2026, it should increase to 12.7 million bpd, before reaching 13 million by 2027.
Most incremental oil production is expected from its offshore fields.
“The main incremental outcome is from Marjan [oilfield] looking at 300,000 bpd. Additionally, you have Berri — another 250,000 bpd. And then you have Zuluf heavy, another 600,000 bpd lined up,” Nasser said.
The company has maintained capital expenditure guidance for between $40 billion and $50 billion during 2022.
“Early next year, we’ll announce the guidance for 2023, but we mentioned earlier that our capital [expenditure] will increase until 2025. So, there will be an increase year on year to meet our growth not only in oil, gas and hydrogen...", he noted.
Global capacity concerns
Nasser pointed to a lack of global spare oil capacity and underinvestment in the upstream sector.
“We have always said that it’s less than 2 million bpd [spare capacity] and it is declining fast. So, with 100 million bpd of demand with very limited spare capacity, [if] there’s an upset anywhere in the world that will have a huge impact in meeting demand,” he added.
Nasser expressed concern about a lack of investment to bring on stream incremental volumes, especially as Covid restrictions ease up in China.
Saudi Crown Prince Mohammed bin Salman recently said the country would not have any additional capacity to increase production beyond the envisaged 13 million bpd level by 2027.
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