Saudi Aramco, the world’s largest oil-exporting company, plans to complete an increase in daily oil-production capacity to 13 million barrels per day from 12 million by 2027, according to its chief executive.
“The full capacity will be available by 2027 but it will come in increments,” Amin Nasser told the Energy Intelligence Forum, an online conference, on Monday.
To achieve the 13 million bpd capacity, “we will focus on existing fields and will make the appropriate disclosure and announcements when we reach certain project milestones but it is going to come from existing and new fields, so it will be a combination of both”.
Mr Nasser said that demand for oil is rising amid tighter natural gas supplies globally, as well as a fall in surplus oil inventories.
“There is some shift that we have seen from gas to liquids, especially in certain markets in Asia, and that impacts oil demand by almost half a million barrels.
“The surplus inventories are behind us right now, down more than 10 per cent from the five-year average so overall the demand is very healthy,” he added.
Oil prices rallied on Monday after Opec+ said it will stick to its original plan to increase production by 400,000 barrels per day of supply for November. Improved economic demand amid relaxing movement restrictions has also supported crude prices. Brent, the global benchmark, was trading above $81 per barrel on Monday, while West Texas Intermediate, the key gauge for US oil, was trading at $77.76 per barrel — the highest level since 2014.
Mr Nasser also said the investment was “prematurely cut” in the oil and gas industry due to pressure from shareholders and investors and several producers are “fidgeting away” from the sector.
“The net effect is lower supply and I am concerned that this will continue for the foreseeable future,” he said.
He also urged the industry to transition responsibly in a quest to not affect the supply.
“The bigger issue is they are related to energy transition and the industry supports the transition to have a better and cleaner source of energy but the transition must ensure there are reliable supplies of energy and also people can afford them at the same time.”
“There is a need for orderly transition. Pragmatic energy policies are needed and hasty decisions must be avoided as much as possible in order to get back to normality of the business.”
Publicly-listed oil majors around the world have come under increasing pressure from activist investors, governments, courts and large institutional investors that promote Environmental, Social, and Corporate Governance (ESG) standards to reduce their carbon footprint and transition to clean energy.
ExxonMobil earlier this year lost three of its board seats to small activist investor Engine No. 1, which had been pressing the company to cut emissions.
Royal Dutch Shell was also ordered by a Netherlands court to slash its emissions harder and faster than planned.
Saudi Aramco will focus on building blue hydrogen projects in line with demand worldwide, Mr Nasser said.
“The scale [of the projects] will all depend on demand,” he said.
“Clean hydrogen will cost much more than a barrel of oil equivalent or a barrel of gas equivalent so the market needs to develop for companies like Saudi Aramco and other companies to develop projects at scale.”
“We do have the interest, we do have the capacity to do that but right now we are working with our customers in different markets to see the appetite for these scaled projects.”