Saudi Aramco halts plan to raise production capacity: statement

Saudi Arabia has ordered energy giant Aramco to maintain its oil production capacity at 12 million barrels per day,
abandoning a planned increase, the firm said on Tuesday.

“Aramco announces that it has received a directive from the ministry of
energy to maintain its maximum sustainable capacity (MSC) at 12 million
barrels per day” instead of ramping it up to 13 million bpd, the firm said in
a statement.

“The company will update its capital spending guidance when its full-year
2023 results are announced in March.”

Saudi Arabia is the world’s largest crude exporter and Aramco is the jewel of
the Gulf kingdom’s economy.

Aramco’s profits are expected to finance Crown Prince Mohammed bin Salman’s
sweeping economic and social reform programme known as Vision 2030, which
aims to lay the groundwork for an eventual post-oil future.

Riyadh announced the planned production capacity increase in October 2021,
the same month it pledged to achieve net zero carbon emissions by 2060 —
drawing intense scepticism from environmental activists.

Aramco said it planned to achieve production capacity of 13 million bpd by
2027.

Aramco has pledged to achieve “operational net-zero” carbon emissions by
2050.

That applies to emissions that are produced directly by Aramco’s industrial
sites, but not the CO2 produced when clients burn Saudi oil in their cars,
power plants and furnaces.

In the lead-up to the COP28 climate change talks in Dubai last year, Saudi
Arabia was among the loudest voices calling for more investment in fossil
fuel production, saying it was necessary to fight energy poverty in regions
such as Africa.

Saudi Energy Minister Prince Abdulaziz bin Salman voiced staunch opposition
to any agreement emerging from the talks that would have explicitly mentioned
a “phase-down” or “phase-out” of fossil fuels.

In the end, nearly 200 countries adopted a deal stating the world will be
“transitioning away from fossil fuels” in order to achieve net-zero emissions
by 2050.

Prince Abdulaziz played down the significance of the text, insisting it would
have “no impact on exports” and that it “doesn’t impose anything” on oil-
producing countries, allowing them to cut emissions “according to their means
and interests”.

– Fluctuating profits –

Tuesday’s announcement was not expected to have an immediate effect on
production or exports.

After a series of oil supply cuts dating back to October 2022, Saudi Arabia’s
daily production stands at approximately nine million bpd, far below its
capacity of 12 million bpd.

Aramco reported record profits in 2022 after Russia’s invasion of Ukraine
sent oil prices soaring, allowing Saudi Arabia to record its first budget
surplus in nearly a decade.

Lower prices resulted in year-on-year profit drops of 23 percent in the third
quarter, 38 percent in the second quarter and 19.25 percent in the first
quarter of last year, with fourth quarter earnings yet to be announced. (BSS/AFP)