SAUDI PUTS HOPES ON FUTURE DEMAND FOR HYDROCARBONS
Saudi Aramco’s net income reached USD 62 billion in the first half of the year, showing resilience despite lower hydrocarbon prices during the period. The company said it remains focused on generating shareholder returns through a balanced mix of growth and yield, and declared base dividend of USD 19.5 billion for the second quarter.
“Aramco believes demand for oil, gas, and chemicals will remain strong over the medium- to long-term. During the quarter, capital expenditures were USD 10.5 billion, reflecting Aramco’s aim to capture unique growth opportunities and maximise value from its integrated portfolio,” according to the company’s statement.
The company’s hydrocarbon output in the second quarter totalled 13.5 million barrels of oil equivalent per day (mboed). Aramco is also expanding its Marjan and Berri crude oil output, with new production capacity of 300,000 barrels per day (bpd) and 250,000 bpd, respectively, by 2025. In addition, the Dammam development project is expected to add 25,000 bpd by 2024 and ramped up to 50,000 bpd by 2027. The company’s Zuluf crude oil increment project is expected to provide a central facility to process a total of 600,000 bpd of crude oil from the Zuluf field by 2026.
NATURAL GAS OUTPUT
Aramco also intends to increase its gas production capacity to meet domestic demand growth. During the quarter, the company progressed multiple projects in support of this aim.
Design and construction activities continued on the Jafurah Gas Plant, part of the Jafurah unconventional gas field, which is expected to commence production in 2025 and will gradually increase natural gas deliveries to reach a sustainable rate of 2.0 billion standard cubic feet per day (bscfd) by 2030.
Aramco is also building its gas resources with construction and procurement activities continuing apace at the Tanajib Gas Plant, part of the Marjan development programme. The plant is expected to be onstream by 2025 and add 2.6 bscfd of additional processing capacity from the Marjan, Safaniyah, and Zuluf fields.
Hawiyah Unayzah Gas Reservoir Storage, the first underground natural gas storage in the kingdom, achieved its maximum injection target of 1.5 bscfd. This programme will provide up to 2.0 bscfd of natural gas for reintroduction into the Master Gas System by 2024.
Gas compression projects at the Haradh and Hawiyah fields continued commissioning activities, and are expected to be fully on stream in 2023; and Hawiyah Gas Plant expansion, which is part of the Haradh gas increment programme, continued commissioning activities and is expected to be on stream also in 2023.
Aramco, its subsidiary SABIC and partner Total Energies, also successfully converted oil derived from plastic waste into ISCC+ certified circular polymers — the first company to do so in the Middle East Africa region. The plastic pyrolysis oil, also called plastic waste derived oil (PDO), was processed at the SATORP refinery jointly owned by Aramco and Total Energies in Jubail, Saudi Arabia. It was then used as a feedstock by PETROKEMYA, a SABIC affiliate, to produce certified circular polymers.
OIL MARKETS
Saudi Arabia’s oil production expansion comes as the oil markets remain resilient despite an economic slowdown in China and recessionary fears in Western economies. The world’s top oil exporter said it extends a voluntary oil output cut of 1 million bpd for another month to include September, to provide additional support to the oil market.
Prices of crude oil futures bounced back in July from low levels recorded in June, as selling pressure in futures markets ceased and market sentiment turned optimistic about improving global oil market fundamentals in the second half of 2023, according to the latest report by the Organization of the Petroleum Exporting Countries (OPEC).
“Moreover, the expectations that central banks were approaching the end of their monetary tightening cycles, the sharp decline of the US dollar in the first half of July and expectations of economic stimulus in China added to the positive sentiment in financial markets,” the organisation noted.
World oil demand in 2023 is expected to grow by 2.4 million bpd, with consumption in OECD region expected to rise by 74,000 bpd, to an average of 46 million bpd, while non-OECD region will rise by nearly 2.4 million bpd, to average 56 million bpd, OPEC August forecast shows.
“For 2024, world oil demand is forecast to grow by a healthy 2.2 mbpd, unchanged from the previous assessment. The OECD is anticipated to expand by about 0.3 mbpd, with OECD Americas contributing the largest increase. The non-OECD is set to drive growth, increasing by around 2.0 mbpd, with China, the Middle East and Other Asia contributing the largest share, with further support from India, Latin America, and Africa,” according to OPEC’s report.
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