Saudi Aramco ditches plan to lift oil production

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Saudi Aramco has dropped a plan to boost its daily production capacity, in a big policy reversal by the world’s largest oil company.

The state-run oil producer said on Tuesday that it had been asked by the energy ministry to abandon a plan to increase the kingdom’s maximum sustainable production capacity from 12mn barrels a day to 13mn b/d by 2027.

The multibillion-dollar investment programme had set the company apart from much of the industry where spending on oil production is generally falling owing to concerns about climate targets and the strength of future demand. Saudi Aramco accounts for about 10 per cent of the world’s oil supply.

The decision was taken by the ministry of energy and was not driven by any technical or operational issue at the company, which remains in a position to restart the investment programme if requested, according to a person familiar with the matter.

Saudi Aramco is currently producing about 9mn b/d, following the kingdom’s decision to cut production as part of Opec’s efforts to support prices. That means the company already has 3mn b/d of spare capacity that it could bring online to meet any sudden spike in demand, reducing the immediate need to increase its maximum output further, the person said.

Saudi Arabia expects to free up a further 1mn b/d of oil for export by displacing liquid fuels used in the kingdom for power generation with gas, the person added.