OIL AND GAS

Crude oil prices have soared nearly 63% by the end of October to reach USD 84.38 per barrel, as the global economy and oil consumption rebound.

The Organization of the Petroleum Countries (OPEC) expects global oil demand to rise by 5.8 million barrels per day (bpd) in 2021, to reach 96.6 million bpd of petroleum products.

Forecast for world oil demand growth in 2022 was unchanged at 4.2 million bpd. As a result, global consumption next year is seen averaging 100.8 million bpd, according to OPEC’s latest monthly report.

Still, global oil demand will remain dependent on healthy economic momentum in the main consuming countries, and better COVID-19 management.

“For 2022, the oil demand outlook takes into consideration an increase of 4.2% in economic activity with COVID-19 pandemic-related risks well managed due to higher vaccination rates and better treatment,” OPEC noted. “In terms of products, gasoline and diesel are estimated to increase the most, supported by an ongoing recovery in mobility and improving industrial activity.”

OPEC and its allies have managed to keep oil market stable. Oil production from OPEC and non-OPEC participating countries in the Declaration of Cooperation (DoC) continued to rise following the decision to adjust upward their overall output by 0.4 million bpd on a monthly basis starting August 2021. The recent 21st OPEC and non-OPEC Ministerial Meeting reconfirmed this decision for November 2021.

OPEC’s crude oil production stood at 27.3 million bpd by September compared to 26.6 million bpd by July. The steady increase has helped the market maintain equilibrium after tremendous volatility last year. The share of OPEC crude oil in total global production increased slightly to 28.5% in September compared with August in a sign that the group is gaining market share.

While OPEC’s current production is higher compared to the 25.65 million bpd average in 2020, it remains well below the 29.3 million bpd seen in the pre-COVID-19 period in 2019.

Strong oil prices have bolstered the bottomline of Saudi Arabian Oil Company, or Aramco, which posted a 158% year-on-year increase in net income to USD 30.4 billion and declared a dividend of USD 18.8 billion to be paid in the fourth quarter.

Aramco president and CEO Amin H. Nasser, credited the growth to increased economic activity in key markets and a rebound in energy demand, as well as the company’s low-cost position and financial discipline.

“Looking ahead, we are maintaining our strategy to invest for the long term, and we will build on our track record of low-cost and low-carbon intensity performance to advance our recently announced ambition to achieve net-zero Scope 1 and Scope 2 greenhouse gas emissions across our wholly-owned operated assets by 2050,” the CEO said.

Aramco and France’s TotalEnergies also launched two service stations as the first rollout of their joint venture to upgrade a network of 270 service stations.

“With our longstanding partner TotalEnergies, we are creating a premium network that will enhance the experience of Saudi Arabia’s motorists and travellers,” CEO Nasser said. “As the kingdom scales up tourism projects, we can expect domestic travel to increase, along with demand for hospitality and travel services.”

Another major Aramco venture underway is with Air Products, ACWA Power and Air Products Qudra, which are collaborating to finance the USD 12 billion air separation unit (ASU)/gasification/power joint venture (JV) in Jazan Economic City.

Aramco, through its subsidiary Saudi Aramco Power Company (SAPCO), has a 20% share in the joint venture, with Air Products owning 46%, while ACWA Power owns a 25% stake, and Air Products Qudra has 9%. Air Products’ total ownership rises to 50.6% by owning an additional 4.6% through Air Products Qudra.

“Drawing on the pioneering expertise and capabilities of all joint venture partners, Jazan IGCC is set to be the largest integrated project for gasification and combined cycle energy production in the world,” according to Mohammad Abunayyan, chairman of ACWA Power. “Bringing the most advanced technologies to the kingdom, the Jazan project will push the boundaries.”