Aramco said last week that it would increase production in April to a record 12.3 million barrels per day in a battle over market share with Russia that contributed to the sharp decline in oil prices.
“In short, Saudi Aramco can cope with the extremely low price and can afford it for a long time … As for production in May … I doubt he will see any difference from next month,” CEO Amin Al-Nasser said on Monday at a conference call with investors and analysts regarding annual profits. . ”
Al-Nasser said that the increase in production and exports will reflect positively on the company despite the decrease in prices. And Aramco’s production costs are among the lowest in the world.
Chief Financial Officer Khaled al-Dabbagh said that Aramco is “very comfortable” with a price of $ 30 a barrel and will continue to be able to fulfill its pledges of distributions and shareholders ’expectations at that price.
He said, “We are satisfied that we can fulfill our pledges regarding distributions, and are very satisfied that we can reach our shareholders expectations at thirty dollars (per barrel) or even less.”
Al-Nasser said that the national oil giant will withdraw 300,000 barrels per day from its huge stockpile to reach that record supply next month and that it can continue producing oil with its maximum capacity of 12 million barrels per day for a year without the need for more spending. Saudi Arabia, the world’s largest oil exporter, stores hundreds of millions of barrels of crude.
He added that Aramco is evaluating an increase in its production capacity by another million barrels per day to 13 million barrels per day.
Saudi Arabia said last week that it would embark on a program to increase production capacity for the first time in more than ten years, waving to Russia and other competitors that it was ready for a long battle over production levels and market shares.
Oil has fallen 39 percent to $ 31 a barrel since talks between OPEC and independent producers collapsed on March 6, without an agreement to deepen or extend production cuts in place since 2017.
Saudi Arabia, the largest producer within OPEC, wanted to deepen production cuts to support prices hit by the Corona virus, but Russia has not agreed to further cuts.
Al-Dabbagh said Aramco has a “huge capacity” to borrow, but it does not need additional debt. The company said on Sunday that its debt to equity ratio was -0.2 percent at the end of 2019.
It also said it plans to cut capital spending on the back of the outbreak of the Coronavirus, while recording a drop in profits last year, to come in short of expectations in its first announcement of its results as a listed company.
Saudi Arabia’s decision last year to offer shares in its national oil company, the world’s most profitable company, was one of the main elements of Crown Prince Mohammed bin Salman’s program of economic and political reform.
The world’s largest IPO was promoted to increase professionalism and transparency with the world’s largest energy source.
Dalia Nehmeh and Youssef Saba participated in the coverage – Prepared by Mahmoud Salama for the Arab Bulletin – Edited by Ahmed Elhamy