Saudi Aramco review confirms record crude oil production in 2016

Reserves are steady at around the 260 billion barrel mark, the annual review said. (Photo: Saudi Aramco)
Updated 06 July 2017
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Saudi Aramco review confirms record crude oil production in 2016

DUBAI: Saudi Aramco pumped more barrels of crude per day in 2016 than any oil company in history, according to the company’s annual review published Thursday.
The review shows that crude production at Aramco — the biggest oil company in the world — averaged a record of 10.5 million barrels of oil per day last year, much bigger than any of its rivals in Russia, Iran or the US. The record was for 2016, before a deal between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to cut output came into force. 
The 2016 review also reveals that reserves are steady at around the 260 billion barrel mark, though this is being reassessed separately by independent audit, and that Aramco’s share of worldwide refining capacity was 3.1 million barrels per day.
The review comes as Aramco gears up for an initial public offering (IPO) on Saudi and global stock markets, which is expected to value it at $2 trillion, according to an official estimates.
The Aramco chairman, Khalid Al-Falih, who is also minister of energy, industry and natural resources, said 2016 was a “challenging year.”
But he added: “Challenges often are the prelude for new opportunities and greater value ahead. I believe that history — and indeed, the near future — will prove that despite the discouraging business climate, 2016 was a turning point for both Saudi Aramco and the Kingdom, as well as for the global oil and gas industry.”
The IPO of Aramco — expected in the second half of next year — is the key feature of the Kingdom’s ambitious plan, known as Vision 2030, to transform the economy away from dependency on energy revenue.
Al-Falih said: “The Vision, which aims to diversify the national economy beyond oil and build a thriving private sector, will enable Saudi Aramco to expand its global presence. Concurrently with the Vision, the company will enlarge its supply chain and improve business reliability through a local network of suppliers and manufacturers while increasing the competitiveness of Saudi Arabia’s energy sector — and in the process, generate sustainable growth and quality jobs for Saudis.
“For Saudi Aramco, the most notable feature of the Kingdom’s transformation will be the future offering of part of the company’s shares in local and international stock markets. This move drives further diversification and growth of the national economy, while elevating the international visibility of the company’s decision making and governance, and building confidence in its long-term strategy,” he added.
Amin Nasser, president and chief executive of Aramco, said: “Since its earliest beginnings, Saudi Aramco has sought to be the world’s most reliable producer of petroleum energy. Our long-term approach to managing the Kingdom’s hydrocarbon resources has consistently delivered superior performance and growth. More recently, our vision has been to become the world’s leading integrated energy and chemicals company, reinforcing our focus on the long-term.”
He said that three major developments had impacted Aramco’s business in 2016.
“First, the oil market remained challenging, causing project deferments or cancelations across the industry. We responded to this challenge by intensifying our focus on excellence and on lowering costs, addressing every aspect of our business.”
The second was the National Transformation Program (NTP), part of the Vision 2030 strategy, which “reaffirms Saudi Aramco’s role as an important driver of the Kingdom’s growth and enables the expansion of our commercial ecosystem.”
Finally, he said that the Paris Agreement on climate change “underscored our view that shaping the future energy landscape in a greenhouse gas constrained world requires an industry led, technology-driven, collaborative approach.
“We are proud to be part of the $1 billion investment in innovative low-emission technologies by the Climate Initiative. Once commercialized, these technologies have the potential to reduce greenhouse gas emissions on a global scale,” he added.
Although the review does not contain any new financial information, advisers to the company regard it as an important agenda-setting part of the preparation for the IPO, highlighting the depth and breadth of Aramco’s business in Saudi Arabia and the world.
In upstream activity, the review said that Aramco discovered two new oil fields and one new gas field in 2016.
Downstream, it took steps to expand and integrate its domestic and global portfolio, in refining, chemicals and plastics.
In research and development, Aramco filed 285 new patents of which 175 have been awarded, and conducted the first feasibility study along with Saudi Basic Industries Corporation (SABIC) to develop a fully integrated crude-oil-to-chemicals complex.
There were also initiatives on climate change, localization of goods and services within the Kingdom, and talent development among the Saudi workforce.


Oil mixed on tighter US outlook

Updated 21 August 2018
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Oil mixed on tighter US outlook

  • Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months
  • The Iran supply cut may also be more than compensated for by production increases outside OPEC

SINGAPORE: Oil prices were mixed on Tuesday, with US fuel markets seen to be tightening while the Sino-US trade dispute dragged on international crude contracts.
US West Texas Intermediate (WTI) crude futures for September delivery were up 27 cents, or 0.4 percent, at 0306 GMT, at $66.70 per barrel. The contract expires on Tuesday.
The more active October futures were up 7 cents, or 0.1 percent, to $65.49 a barrel.
Traders said US markets were lifted by a tightening outlook for fuel markets in the coming months.
Inventories in the United States for refined products such as diesel and heating oil for this time of year are at their lowest in four years.
This is occurring just ahead of the peak demand period for these fuels, with diesel needed for tractors to harvest crops and the arrival of colder weather during the Northern Hemisphere autumn raising consumption of heating oil.
Outside the United States, Brent crude oil futures were somewhat weaker, trading at $72.18 per barrel, down 3 cents from their last close.
This followed the United States offering on Monday 11 million barrels of crude from its Strategic Petroleum Reserve (SPR) for delivery from Oct. 1 to Nov. 30.
The released oil could offset expected supply shortfalls from US sanctions against Iran, which will target its oil industry from November.
Because of the sanctions, French bank BNP Paribas said it expected oil production from the Organization of the Petroleum Exporting Countries (OPEC), of which Iran is a member, to fall from an average of 32.1 million barrels per day (bpd) in 2018 to 31.7 million bpd in 2019.
Still, traders said overall market sentiment was cautious because of concerns over the demand outlook amid the trade dispute between the United States and China.
A Chinese trade delegation is due in Washington this week to resolve the dispute, but US President Donald Trump told Reuters in an interview on Monday he does not expect much progress, and that resolving the trade dispute with China will “take time.”
The impact of the Iran sanctions is not yet clear.
China has indicated that it will continue to buy Iranian oil despite the US sanctions.
The Iran supply cut may also be more than compensated for by production increases outside OPEC.
BNP Paribas said non-OPEC output would likely grow by 2 million bpd in 2018 and by 1.9 million bpd next year.
“Depending on when pipeline infrastructure constraints are lifted in the US, non-OPEC supply growth by the end of 2019 may prove higher than currently assumed,” the bank said.
The search for new oil has increased globally in the last two years, with the worldwide rig count rising from 1,013 at the end of July 2016 to 1,664 in August 2018, according to energy services firm Baker Hughes.
The biggest increase was in North America, where the rig count shot up from 491 to 1,057 in the last two years.
How prices develop will also depend on demand.
“We see global oil demand growing by 1.4 million barrels per day in both 2018 and 2019,” BNP Paribas said, implying that global markets are likely to remain sufficiently supplied.