Citing $1 trillion in planned investments lost since the market downturn began, Aramco's chairman of the board of directors Khalid Al-Falih issued a battle cry to the world's other oil producers in its latest report, Saudi Aramco Annual Review 2017.
The message: mature oil fields are seeing an increase in declining production rates, and this must be offset by continued investments in the industry if the world is to meet what is thought to be an 1-1.5 million barrel per day annual demand growth rate in coming years.
"To respond to this situation, significant new investments are required in additional capacity and expanded and upgraded infrastructure, as well as the development of pioneering technology to make petroleum energy more sustainable and accessible," Al-Falih said in his opening message to the 42-page report published on Friday.
Aramco's annual report cites the International Energy Agency's World Energy Outlook 2017 New Policies Scenario estimates that call for a 30 percent increase in global energy needs between now and 2040.
Saudi Aramco, for now the world's top oil producer, is doing its part to meet this future demand, according to the report.
"Saudi Aramco is committed to playing its unique part in meeting the world's energy needs today and tomorrow by continuing to invest wisely throughout the cycle and across the value chain, reinforcing our preeminent leadership position in the industry," Al-Falih added.
Aramco referenced its new discoveries in the Sakab and Zumul oil fields, as well as its gas reservoir find in Sahba field. Other projects in 2017 that Aramco has invested include Khurais field (300,000 bpd by 2018), Fazran field (75,000 bpd by 2020), Dammam field (25,000 bpd by 2021; 75,000 by 2026). Fadhili Gas Plant (start up 2019, 2.5 billion scfd), Hawiyah Gas Plant (1.1 billion scfd).
By Julianne Geiger for Oilprice.com
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Comments
Poppycock, as Mike Scioscia would say.
Saudi Arabias has some production issues, but the great fear among OPEC countries and oil-rich countries like Venezuela and Argentina is that if they don't start selling the stuff in the ground in the next 5-15 years, it won't be sold at all as the world goes electric. Realistic or not, everybody wants to pump flat-out and sell what they have in the next few decades. Nobody wants to get stuck with 50 billion barrels of oil worth $0 in the year 2050.
Saudi Arabia wanted prices higher the last few years. Increasing production was NOT in their interests, especially since they had budget issues and ramping up CAPX wasn't a way to help.
A global oil price of $70-$90 is good for both producers and consumers. Let's hope it stays in that range, rather than AVERAGING that price by spiking to triple-digits and then plunging 75% in the next crash. Volatility is good for nobody.
Except traders.
However, Saudi Arabia’s major oilfields including Ghawar, the world’s largest onshore oilfield and Safaniya, the world’s largest offshore oilfield which account for more than 90% of Saudi oil production, are more than 70 years old and are depleting fast at an estimated average depletion rate of 5% or 515,000 barrels a day (b/d) annually.
Saudi Arabia needs to add more than 500,000 b/d annually just to maintain its claimed production at 10 mbd.
The Khurais oilfiled which began production in 1963 along with the Farzan and Dammam fields could with a combined production of 475,000 b/d just offset the annual depletion in Saudi oil production rather than add to Saudi production.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London