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Saudi Aramco awarded on Tuesday to Baker Hughes the first integrated services contract for capacity expansion of its large offshore Marjan oilfield, the Saudi firm’s biggest upstream development this year and the first of three planned major offshore expansions aimed at expanding its offshore production capacity to offset natural declines at maturing fields that have been operating for decades.
Baker Hughes will provide drilling services, coiled tubing services, and drilling fluids engineering services at the Marjan oil field, which has current production capacity of 500,000 bpd.
Under the contract, Baker Hughes will start work as early as this month with an aim to increase the field’s capacity, and works will include logging-while-drilling, reservoir navigation services, and rotary steerable services, Aramco said in a statement on Tuesday.
“The Marjan oilfield is one of the major upstream developments this year that will contribute to the Kingdom’s oil production strengths, helping maintain capacity and meet domestic and global demand,” said Mohammed Y. Al Qahtani, senior vice president of Upstream at Saudi Aramco.
Total expansion and development works for all contractors at the Marjan oil field are expected to exceed US$10 billion, and plans are to raise the production capacity by 300,000 bpd from the current 500,000 bpd, Reuters reported earlier this year.
Marjan is the first of three major offshore field expansions that Saudi Arabia plans. The other two will be for the Zuluf and Berri offshore fields, which currently have capacity of 800,000 bpd and 200,000 bpd, respectively, S&P Global Platts data shows.
The three major offshore expansion plans are expected to add 1 million bpd of production capacity by 2023. This could offset declining production from the ageing fields in Saudi Arabia, which continues to be viewed as the swing oil producer in the global market.
According to S&P Global Platts, the Saudis have 1.7 million bpd of spare production capacity, an estimate based on Platts’ July survey, but some analysts doubt that Saudi Arabia’s spare capacity is that high.
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.