Riyad March 20 2022: Saudi Aramco, the world’s largest oil company, said March 20 that it’s increased its capital expenditure guidance to $40 billion to $50 billion for 2022 after oil production was little changed for 2021.
Oil production averaged 9.2 million b/d, with all hydrocarbons output at 12.3 million b/d, Aramco said in a statement. In 2020, oil output was 9.2 million b/d and hydrocarbons production was 12.4 million b/d, according to the company’s annual report. Capital expenditure in 2021 was $31.9 billion in 2021, Aramco said.
“Our investment plan aims to tap into rising long-term demand for reliable, affordable and ever more secure and sustainable energy,” CEO Amin Nasser said in the statement. “Although economic conditions have improved considerably, the outlook remains uncertain due to various macro-economic and geopolitical factors.”
Aramco is taking steps to increase its crude oil maximum sustainable capacity to 13 million b/d by 2027, from 12 million b/d, and potentially boost its gas production by more than 50% by 2030 as it taps into its vast unconventional resources such as the Jafurah gas field.
The additional gas production will add ethane and natural gas liquids, which could be used to expand Aramco’s chemical operations, Nasser said.
“We will have more feedstock and more liquids to export as we increase our NGLs with more gas production from within,” he added.
Net income more than doubled on the year to $110 billion, from $49 billion in 2020, reflecting higher crude oil prices, stronger refining and chemicals margins and the consolidation of petrochemicals company SABIC’s full-year results, Aramco said.
The Platts Dated Brent benchmark was assessed at $113.28/b on March 18, down from the 14-year peak of more than $137/b seen earlier in the month but still more than four times higher than a year earlier. Many consuming countries have said high prices jeopardize the world’s economy. Aramco pumped an average of 10.25 million b/d in February, according to the latest S&P Global Commodity Insight monthly analysis of OPEC+ production.
Demand outlook
OPEC+, led by Saudi Arabia and Russia, will meet to discuss their supply arrangements on March 31.
The group has so far resisted calls to increase production substantially amid rising prices.
OPEC+ has been gradually rolling back the record production cuts it instituted during the market crash of 2020 in 400,000 b/d monthly increments, but the US, India, Japan and other crude customers have criticized the pace as far too slow.
Oil demand is expected to remain robust, with countries such as China continuing to show growth year-on-year, Nasser said on a call with reporters.
Global spare capacity of around 2 million b/d is “not enough to cater to unforeseen events,” he said, noting that spare capacity “is declining every month as we’re releasing more production every month.”
Aramco’s CEO urged international energy players to invest in oil and gas production to help with a tight market in 2022.
“We are increasing our gas substantially which will bring another 1 million b/d so basically, over the next couple of years, by 2027 we’ll bring the 13 million b/d and as we bring more gas, we will avail more of of the liquid that is going for burning to be available to the market. So basically we’re bringing 2 million b/d to the market through 2030,” he said.
The global hydrocarbons industry would need to bring incremental volumes of 7 million b/d to the market supplied with around 100 million b/d presently in order to offset natural decline rates of 7%, he said.
“And that would require a lot of investment. So all need to contribute to ensure that we have energy security,” Nasser said.
Aramco’s liquids to chemicals capacity is also marked for expansion to up to 4 million b/d, while the company plans to develop export capability for hydrogen and become a global leader in carbon capture and storage.
Aramco also announced the start-up of the 400,000 b/d Jizan refinery, with current capacity a “little bit over” 200,000 b/d, Nasser said.
“We put a gasifier online this month and the other gasifiers are being planned to be put gradually over time and Jizan is a major power exporter and we expect that power to be added to the grid by 2023,” he said.
