Saudi Aramco Boosts Gas to Free Oil for Exports
Saudi Arabia will increase gas output at its Fadhili gas plant to free around 250,000 b/d of crude for export markets, the country's oil ministry announced March 17. The gas will be used for power generation, displacing some of the crude.
According to the latest report, released by state-run Aramco on March 15, the Fadhili gas plant achieved 1.5bn ft3/d capacity in 2019 and is expected to reach full capacity of 2.5bn ft3/d in 2020. It says the project is nearing completion but has not given a date. Saudi Arabia boosted producction by 1.4% to 8.978bn ft3/d in 2019.
Saudi Arabia announced it would increase oil production to 12.3mn b/d in April, after Russia rejected Opec’s proposal on March 6 to cut crude output by 1.5mn b/d by Opec+. The consequences for US shale oil producers are expected to be dire, with Occidental already forced to slash its dividend.
The country produced 9.7mn b/d in February and the targeted volume for April is a little more than its believed actual capacity, although it could draw on stocks in the short term. Energy intelligence firm Kpler told NGW that the state's crude exports stood at 7.435mn b/d last month, about 395 kb/d more than January.
Increasing exports to 10mn b/d could push oil prices further down. The Brent crude benchmark plunged to $29.93 March 17. However, oil demand is already falling sharply with the economic downturn and the lower demand for jetfuel as air travel shrinks. So even leaving Saudi output as it is would extend the oversupply.
According to the International Monetary Fund’s report last October, Saudi Arabia needs oil to trade above $83/b in order to balance the state's budget.