Bruce Beaubouef * Managing Editor
DHAHRAN, Saudi Arabia – Saudi Aramco has been directed by the government of Saudi Arabia to stop its oil expansion plan and focus on a maximum sustained oil production capacity of 12 million barrels per day.
That figure is 1 MMBbl/d below a target announced in 2020, and, according to oilfield services analysis firm Evercore ISI, has led to the suspension of two offshore oil projects that would have started in 2025.
“We suspect the two projects that are most likely to be deferred are 1) the Safaniyah expansion project and 2) the Manifa expansion project,” Evercore wrote in its latest Offshore Oracle report. “Aramco’s capex plans may adjust lower or be offset by increased spending on gas plays, but we remain confident the long-duration offshore and international upcycle will continue and drive significant growth opportunities for oilfield services companies in 2024 [and beyond].”
The firm also noted that the shares of several large-cap, diversified oilfield services companies and offshore drillers, with large exposure to Saudi Arabia’s jackup market, were negatively impacted by the announcement. “We think the market overreacted and the jackup rig count will likely remain stable to modestly up in 2024, and other projects, including Marjan, Berri, and Zuluf, will continue to move forward,” Evercore wrote.