Aramco Drops Expansion Capacity Plans In Major Investment Pivot

2 Feb 2024 Issue: 67 / 5 By: Jamie Ingram

Saudi Arabia had led calls for more global upstream investment to avoid a future supply shock. But, in terms of its own plans, it has now radically changed direction dropping its 1mn b/d capacity expansion target amid strong supply growth elsewhere. If there’s no need for 13mn b/d by 2027, the kingdom sees better returns from directing near-term investment to growth areas elsewhere.

In a bombshell 30 January announcement, Saudi Aramco says that it has been directed by the Ministry of Energy to drop plans to expand its maximum sustainable capacity (MSC) to 13mn b/d by 2027. Alongside UAE state firm Adnoc’s push to 5mn b/d by 2027, this was to have been a key source of medium-term global oil supply growth. Instead, in a major reversal, the MSC will now be kept at 12mn b/d.

In a one-sentence update, “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, and not to continue increasing MSC to 13 million barrels per day.” The firm provided no further detail other than adding that it will update its capex guidance when announcing its 2023 annual results in March. There has been no comment from the Ministry of Energy on the reason for the decision. (CONTINUED - 2407 WORDS)