Houston, 5 March (Argus) — Saudi Aramco will focus on expanding production at its Khurais and Shaybah fields as it brings the offshore Manifa heavy crude field onstream, chief executive Khalid al-Falih said today.
Al-Falih, speaking at the IHS CeraWeek energy conference in Houston, said Aramco plans to increase production at its Khurais field to 1.5mn b/d, up from the current 1.2mn b/d, and add another 250,000 b/d at Shaybah. He did not specify when the work will begin or when the new capacity will come on stream.
The expansions at Khurais and Shaybah are part of a five-field, 2.5mn b/d expansion Saudi Arabia announced five years ago. Aramco also has announced plans to expand its Zuluf field by 900,000 b/d; Safaniya by 700,000 b/d; and Berri by 300,000 b/d. No timelines have been given for those projects.
These expansions come as Aramco plans to bring the Manifa field in the Mideast Gulf, what al-Falih called “one of the world's largest, most complex, most exciting projects,” on stream within the next few months, ramping up production to 900,000 b/d by the end of 2014.
“All of this will allow us to offset the decline that would take place over the years and decades to come,” al-Falih said.
The $17bn Manifa project is aimed at maintaining Saudi capacity at 12.5mn b/d. Saudi Aramco will shut in production capacity at older fields once production at Manifa starts until technology improves recovery rates, keeping overall Saudi capacity steady.
The Manifa project is Aramco's largest heavy oil development with a price tag equivalent to $17,000 per b/d of capacity, compared with $10,000 per b/d for Aramco's last upstream project at the 1.2mn b/d Khurais field.
Al-Falih said Saudi Arabia has seen its spare capacity “balloon” in recent years, as the global financial crisis hampered oil demand. “Today we are sitting on about 2.5mn (b/d) of capacity, and we already are planning projects in the future to maintain it,” he said.
Before the financial crisis, “global energy and oil demand were anticipated to grow rapidly – and, some argued, unsustainably,” al-Falih said. “Now, forecast growth has moderated, not only as a result of economic stagnation but also through welcome and increasing gains in energy efficiency. Changing demographics and lifestyles, environmental pressures, and energy policies have played a role too.”
Al-Falih said that “while we believe long-term demand will be robust enough to provide us with the confidence to invest, it will not rise to the point where it creates market imbalances, and stretches the industry beyond its means.”
Aramco's largest capital program is directed toward doubling its refining capacity over the next few years, al-Falih said. The company intends to become a major petrochemical maker, as Aramco works to diversify both its portfolio and the country's revenue stream.
Aramco is building a 400,000 b/d refinery at Jizan at an estimated cost of $7bn to process Arab Heavy and Arab Medium crude, due on stream in 2016. Other spending plans include the $8.5bn, 400,000 b/d Yasref heavy oil joint-venture refinery with China's state-controlled Sinopec, due on stream in 2014, and Aramco's $20bn petrochemicals Sadara joint venture with US firm Dow Chemical in Jubail, which will become operational in 2015.
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