Report Claims Saudi Aramco Mulling Boosting Oil Output to 13 Mln Bpd Amid COVID-19 Pandemic
REUTERS / Ahmed JadallahBusiness15:57 GMT 07.10.2020Get short URLby Oleg Burunov
31Subscribehttps://cdn1.img.sputniknews.com/img/07e4/0a/07/1080697577_0:0:3072:1728_1200x675_80_0_0_4fc1796772c679e1c1ca46023e036394.jpgSputnik Internationalhttps://cdn2.img.sputniknews.com/i/logo.pngOleg Burunov. Sputnik Internationalhttps://sputniknews.com/business/202010071080698355-report-claims-saudi-aramco-mulling-boosting-oil-output-to-13-mln-bpd-amid-covid-19-pandemic/
In mid-August, the state-owned oil giant Saudi Aramco reported a 50% collapse in its net income due to the coronavirus pandemic, with the company’s President and CEO Amin Nasser suggesting that “the worst is likely behind us”.
Reuters has cited unnamed sources as saying that Saudi Arabia’s state-run oil corporation Aramco is considering increasing its production capacity to 13 million barrels per day (bpd) from 12 million bpd in the not-so-distant future.
The oil giant plans to outlast its competitors and keep on making a profit, even when lower crude prices “make it unprofitable for rivals”, according to the sources.
AP Photo / Bruce Stanley, FileIn this Monday, March 8, 2004 file photo, an industrial plant strips natural gas from freshly pumped crude oil is seen at Saudi Aramco’s Shaybah oil field at Shaybah in Saudi Arabia’s Rub al-Khali desert
They added that Aramco’s resolve to boost its production capacity in the face of the ongoing COVID-19 pandemic may contribute to funding Saudi Arabia’s economic reforms and implementing Saudi Crown Prince Mohammed bin Salman’s Vision 2030 plan for a diversification of the economy.
The blueprint, in particular, stipulates developing new industries in order to lessen Saudi Arabia’s dependence on oil.
Saudi Aramco Sees Profit Decline by 50 Percent
The claims came after Aramco revealed in an August release that its net income plummeted by $23.2 billion during the first six months of 2020, a drop by half compared to the $46.9 billion gained over the same period in the preceding year.
According to the release, the company’s total free cash flow amounted to $21.1 billion for the first half, a significant reduction from $38 billion in 2019.
Aramco’s president and chief executive, Amin Nasser, acknowledged in the release that the financial results for the second quarter indicate that global energy markets are experiencing their largest shock in decades, not least due to the coronavirus fallout.
The release also showed that the world’s largest crude producer kept its second-quarter dividend of $18.75 billion, announcing that its payment would be made in the third quarter, something that Nasser said “demonstrates Aramco’s agility, strength and resilience across market cycles”.
The CEO made the remarks as Aramco’s competitors BP and Royal Dutch Shell all slashed dividends in response to the effects of the coronavirus pandemic and shocks to the oil sector.
Saudi Aramco to Deliver to Market 8.5 Mln Bpd of Oil Starting 1 May
This followed Aramco announcing in mid-April that it would be delivering 8.5 million barrels of oil per day to the market as of 1 May, shortly after OPEC+* countries, as well as oil producers from the wider G20 group of nations such as the US, Brazil, and Canada, clinched what many touted as a historic agreement.
The 12 April OPEC+ deal obliged the signatories to reduce crude production by 9.7 million barrels per day in May and June. Thereafter, production would be slashed by 7.7 million barrels per day until the end of 2020, and by 5.8 million barrels daily from January 2021 until April 2022.
*OPEC, Organisation of Petroleum Exporting Countries, is an energy cartel that includes Saudi Arabia, Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Republic of Congo, United Arab Emirates, and Venezuela. The “+” denotes additional exporters cooperating with OPEC including Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan, and Sudan.