Saudi Arabia has a spare oil production capacity of 2 million bpd and is able to meet additional demand in case of disruption of oil supplies, the chief executive of Saudi state oil giant Saudi Aramco said on Monday.
Aramco, which currently pumps around 10 million bpd, has the capacity to produce some 12 million bpd, Aramco’s president and chief executive officer Amin Nasser said in New Delhi today.
OPEC’s biggest producer Saudi Arabia managed last week to bring all cartel members to an agreement to boost current production, but the official statement lacked specific details referring to how much individual countries would contribute to the supply increase. OPEC agreed to start adhering to a 100-percent compliance rate beginning July 1, compared to 152-percent compliance for May 2018.
The agreement, according to officials, will see a real production increase by around 600,000 bpd.
Saudi Arabia, as well as the leader of the non-OPEC countries part of the deal—Russia—are expected to benefit the most from the 100-percent compliance target because they are the ones with enough spare capacity to ramp up production.
According to last month’s Oil Market Report of the International Energy Agency (IEA), the spare oil production capacity within OPEC was 3.47 million bpd as of April 2018, with ‘spare capacity’ defined as the level that can be reached within 90 days and sustained for an extended period of time. Of this 3.47 million bpd spare OPEC capacity, Saudi Arabia’s spare capacity accounts for around 60 percent, according to the IEA. Related: The New OPEC Deal: Paper Barrels Won’t Materialize
“It costs us between capital and 'opex' tens of billions of dollars to keep 2 million b/d of spare capacity, and we weigh very carefully whether it needs to increase or not,” Saudi Arabia’s Energy Minister Khalid al-Falih told Platts on Friday.
“I think 2 million barrels of spare capacity is very high for one country to have and it’s very expensive. I don’t want Saudi spare capacity to be 3 million-4 million b/d,” al-Falih was quoted as saying.
By Tsvetana Paraskova for Oilprice.com
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