RIYADH: Energy goliath Aramco said on Tuesday that Saudi Arabia has ordered it to stick with its current oil production capacity of 12 million barrels per day, scrapping plans to increase.
The company released a statement saying, “Aramco announces that it has received a directive from the ministry of energy to maintain its maximum sustainable capacity (MSC) at 12 million barrels per day” rather than increasing it to 13 million bpd.
“The company will update its capital spending guidance when its full-year 2023 results are announced in March.”
The crown jewel of the Gulf state’s economy is Aramco, and Saudi Arabia is the biggest crude exporter in the world.
The vast economic and social reform initiative known as Vision 2030, spearheaded by Crown Prince Mohammed bin Salman, is anticipated to be funded in part by Aramco’s earnings. The program’s ultimate goal is to create the foundation for a world without oil.
Environmental groups expressed great skepticism when Riyadh announced the intended increase in production capacity in October 2021, the same month it made a commitment to attain net zero carbon emissions by 2060.
By 2027, Aramco stated that it aimed to reach a production capacity of 13 million barrels per day.
By 2050, Aramco promises to have “operational net-zero” carbon emissions.
That covers emissions that are directly generated by Aramco’s manufacturing facilities; it does not cover the carbon dioxide that is released when customers use Saudi oil in their furnaces, power plants, or automobiles.
Saudi Arabia was one of the most vocal advocates for more investment in fossil fuel production prior to the COP28 climate change meetings in Dubai last year, arguing that it was essential to combat energy poverty in areas like Africa.
Prince Abdulaziz bin Salman, the Saudi Arabian minister of energy, declared his strong opposition to any deal that came out of the negotiations that would have specifically called for a “phase-down” or “phase-out” of fossil fuels.
Ultimately, an agreement declaring that the world will be “transitioning away from fossil fuels” in order to reach net-zero emissions by 2050 was ratified by over 200 nations.
The text’s significance was downplayed by Prince Abdulaziz, who insisted that it would “no impact on exports” and “doesn’t impose anything” on oil-producing nations, enabling them to reduce emissions “according to their means and interests”.
It was anticipated that neither output nor exports would be immediately impacted by Tuesday’s announcement.
Following a sequence of oil supply disruptions that began in October 2022, Saudi Arabia’s daily production is currently at about nine million barrels, far less than its 12 million barrels potential.
Following Russia’s invasion of Ukraine, which skyrocketed oil prices and gave Saudi Arabia its first budget surplus in almost ten years, Aramco declared record earnings in 2022.
