Saudi Arabia’s energy giant Saudi Aramco raised its target for increased natural gas production on March 10 and lowered its capital expenditure forecast for crude oil after being ordered to halt work on expanding oil production capacity.
The cancellation on expanding the maximum sustainable oil production capacity to 13 million b/d by 2027 from 12 million b/d means Aramco will reduce its capital expenditure by about $40 billion over 2024 to 2028, the company said in a statement. Capital expenditure is estimated at $48 billion to $58 billion for this year, compared with $49.7 billion in 2023, with plans to increase spending through the middle of this decade.
The company’s gas ambitions don’t end there. CEO Amin Nasser told reporters on a media call that Aramco is in talks with companies worldwide about boosting investments in LNG projects. In September, Aramco announced its first international LNG investment, taking a minority stake in MidOcean Energy for $500 million.
“For MidOcean, we’re going through the process of getting the right approvals,” Nasser said. “We are interested also in the US. We are in discussion with a number of companies and partners in the US and other parts of the world because that’s a growth market. Very significant. We’re looking at it for growth opportunity to expand our position in LNG.”
The gas production growth target was raised to “more than 60%” by 2030, against a 2021 baseline, compared with a previous goal of “more than 50%”. Aramco’s 2021 gas production was 10.1 Bcf/d.
The directive to not expand oil capacity means some projects will be cancelled, such as the Safaniya and Manifa increment programs. Nasser clarified that the spending profile on these projects “is small”, with 2024 unlikely to see the bulk of the $40 billion in reduced capital spending.
Aramco’s 2024 capex plan includes 60% spending geared toward upstream, including gas. Downstream will comprise 30% of capex, while 10% will be directed toward new energies, Nasser said.
Evolving capex
Over the next 10 years, capex will evolve to comprise 50% upstream, 35% downstream with new energies set to take up 15% share of spending.
“Gas is going to take quite a bit of upstream spending because it’s an important area, it’s a growth area,” Nasser said.
“We’ll have 1 million b/d by phasing down liquid burning in the kingdom that will be available for export. And with that it will bring 1 million b/d of liquids associated with gas expansion. So you’re looking at 2 million b/d that is coming on stream that is available for export both from phasing down of liquid burning and the additional associated liquids,” he said.
The company has no estimate when Saudi Arabia might revive development of the Safaniya and Manifa increment programs.
Scheduled increments from Zuluf, Marjan, Berri fields will “remain as planned”, the CEO said.
The first increments are due to come online in 2024, with 25,000 b/d from Dammam, closely followed by 300,000 b/d from Marjan and 250,000 b/d from Berri by 2025. A planned 600,000 b/d boost at Zuluf will be added by 2026.
Aramco’s average production of hydrocarbons for 2023 fell 5.8% to 12.8 million barrels of oil equivalent per day, including 10.7 million b/d of total liquids, the company said in its financial disclosure to the Tadawul exchange, where its shares trade.
Aramco produced 13.6 million boe/d in 2022, including 11.5 million boe/d of liquids. Aramco’s output has remained constrained due to Saudi Arabia’s adherence to OPEC+ cuts, which lowered its output to below 9 million b/d by the end of 2023.
Downstream focus
Despite the focus on increasing domestic gas production, Aramco will continue to look for investment opportunities in downstream ventures internationally, Nasser said.
“For liquid-to-chemicals, the biggest market that we see is in Asia,” he said. “We’re looking at investment in refineries, whether green or brown with a high level of integration, and that is our strategy and wherever that opportunity exists.”
Aramco recently acquired Chilean downstream player Esmax Distribución. In December, it also acquired a 40% stake in Pakistan’s downstream company Gas & Oil Pakistan.
Aramco has also long been on the lookout for foreign investments, including in the US, where it owns the Motiva oil refinery.
The company is also on track to produce 11 million mt/year of blue ammonia, equivalent to around 1.8 million mt/year of blue hydrogen by 2030, Nasser said. Aramco has identified hydrogen as another low-carbon fuel to focus on as part of its new energies strategy. The company is continuing to “work with major potential international offtakers and potential partners,” Nasser said.
Aramco, which plans to invest in up to 12 GW of solar and wind projects in the kingdom by 2030, will continue to participate in renewable rounds.
“We are hopeful that we will make some announcements in 2024 when some of these investments could materialize,” Nasser said. Aramco is currently developing two solar projects with a total capacity of 2.66 GW, it said in its financial disclosure.
Source: Platts
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