The world's largest oil company and biggest oil exporter, Saudi Aramco, has resumed tendering and development work on major offshore oil expansion projects that would give Saudi Arabia another 1.15 million barrels per day (bpd) of production capacity by 2024, Argus reported on Friday, citing a contractor with knowledge of one of the projects.
After the oil price and demand collapse last year, to which Saudi Arabia itself contributed by breaking up the OPEC+ pact for a month, Aramco idled offshore rigs and postponed the start of the expansion of several projects.
Offshore drilling contractors Noble Corporation and Shelf Drilling said in June they had been notified by Saudi Aramco that their rigs offshore the Kingdom would be suspended for up to one year.
Now Aramco is moving forward with the postponed start of the development work. The Saudi oil giant has issued tenders for development work at the offshore Zuluf oilfield with a capacity of 825,000 bpd, which is planned to be increased by 600,000 bpd, the contractor told Argus.
The expansion project, initially expected to start up in 2023, is now postponed with a few months and is expected to start operations either late into 2023 or in early 2024, according to Argus.
Work on the expansion of two other offshore oilfields, Marjan and Berri, had already started at the end of March, Argus notes. The 400,000-bpd Marjan field is set to boost its capacity by 300,000 bpd, and the Berri field, currently with a capacity of 300,000 bpd, will see its production capacity rise by 250,000 bpd by 2023.
In July 2019, Saudi Aramco awarded 34 contracts worth a total of US$18 billion to boost the oil production capacity of the two fields by a total of 550,000 bpd to sustain its 12-million-bpd production capacity by the early 2020s and to replace production capacity lost from aging oilfields.
By Tsvetana Paraskova for Oilprice.com
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Comments
If this is the case, then the persistent reports of steep production depletion which have been circulating for years about Ghawar must be true. It is fair then to suggest that the same depletion would have also affected the other oilfields of the same age.
Therefore it is virtually impossible for Saudi Aramco to expand the production capacity of Zuluf which is depleting fast like Ghawar, Safaniya, Hanifa and Khurais by 600,000 b/d.
While Saudi Aramco might have a better luck expanding the production capacity of the two smaller offshore Marjan and Berri oilfields by an estimated 300,000 b/d and 250,000 b/d respectively after 2023, the increase will neither offset the continuing decline in Saudi’s five giant oilfields nor in Saudi oil production.
Saudi oil production peaked at 9.6 mbd in 2005 and has been in decline since. Current production is estimated between 8.0-8.5 mbd but it is topped up by some 2 mbd of stored oil to enable Saudi Arabia to meet its contractual supply obligations.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London