The spare oil production capacity of the world's largest crude exporter, Saudi Aramco, currently stands at 3 million barrels per day (bpd), the chief executive of the Saudi oil giant said on Tuesday.
Saudi Aramco can raise its oil production "in a couple of weeks" if necessary, the company's CEO Amin Nasser said during the Energy Intelligence Forum in London, as carried by Reuters.
The spare oil production capacity of the world's largest oil firm has increased in recent months as Saudi Arabia is cutting crude output as part of the OPEC+ agreement and is further reducing production by an extra 1 million bpd in a voluntary cut until the end of 2023.
After extending the voluntary production reduction for a month for two consecutive months, Saudi Arabia said in September it would extend the extra cut until the end of 2023. The Kingdom is currently pumping around 9 million bpd.
As a result of the cuts, Saudi Arabia's crude exports plunged to a 28-month low in August, data from the Joint Organizations Data Initiative (JODI) showed on Monday. Saudi crude oil exports fell to 5.58 million bpd in August, down by 428,000 bpd from July-the lowest level in 28 months, according to the latest available data in JODI, which compiles self-reported data from many countries.
Aramco's Nasser also said today at the forum that he expects global oil demand to average around 103 million bpd in the second half of 2023.
Last week, OPEC said it expects global oil demand to rise by 2.4 million bpd this year and by another 2.2 million bpd next year amid the improving Chinese economy, leaving its demand forecast for both 2023 and 2024 unchanged, despite fears of slowing economies and demand destruction.
World oil demand is set to reach a record average of 102.1 million bpd in 2023, driven by a 2.3-million-bpd demand increase in the non-OECD region, OPEC noted.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More
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Comments
1- How else could Saudi Arabia sacrifice the loss of oil export revenues on which it is primarily dependent at a Brent crude price of $90 a barrel or 5.9%-8.4% higher than its fiscal breakeven price of $83.0-$85.0?
2- The Saudi voluntary production cut of 1.0 million barrels a day (mbd) is a cut that the Saudis can’t produce. Therefore, it is not real.
3- It is estimated that 90% of Saudi production has for the last 70 years been coming from five giant fast-depleting and aging oilfields (Ghawar, Safaniya, Hanifa, Khurais and Zuluf) all of which are more than 74 years old and are being kept producing by an injection of billions of barrels of water. Depletion in these oilfields is estimated at 7% per annum. That is why a reduced Saudi production could become a permanent fixture of the market.
4- Saudi oil production is currently estimated to range from 6.5-7.0 mbd with 3.0-3.5 mbd coming from stored oil to make up the 10.0 mbd that the Saudis declare as their production.
5- By 2030 I project that Saudi Arabia could be left with an estimated 120,000-400,000 barrels a day (b/d) to export at which time it would virtually cease to remain an oil exporter.
Based on the above analysis. Saudi Arabia doesn’t have any spare capacity. How could a country whose production is declining have a spare capacity unless it reduces its production by 3.0 mbd to claim a spare capacity of 3.0 mb?
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert