After the failure of the talks between the OPEC and Russia to further deepen oil production cuts last week, the state controlled oil giant Saudi Aramco has been asked by the Saudi authorities to increase output capacity of the country by 1 million barrels a day as oil producing countries now try to get control of the global oil industry.
While achieving the additional capacity of oil production is something that will take years to achieve and will need billions of dollars in investment, this move by the Saudi establishment indicates that the Crown Prince of Saudi Arabia Mohammed bin Salman wants to stay on his aggressive stance responding to the negotiations between OPEC and Russia last week.
This order to Aramco to increase production capacity for the first time in more than a decade was given by the energy ministry of the kingdom which is headed by Prince Mohammed’s half-brother. The ministry said in a statement that Aramco – the largest exporter of oil in the world, has been asked to increase its production capacity from 12 million barrels a day to 13 million barrels a day.
“The company is exerting its maximum efforts to implement this directive as soon as possible,” Aramco Chief Executive Officer Amin Nasser said in a separate statement.
The company did not specify the time frame that it has set to achieve the increased capacity or the amount of investment that would be required to achieve it.
“To add a million barrels per day is a very major undertaking,” said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy. Mills said that it existing plans for big developments that need several years of work could be fallen back upon by Aramco.
There was no agreement on deepening of oil production cuts at the meeting of the OPEC+ coalition in Vienna last week aimed at further increasing global price of crude and petroleum. The failure of talks between the oil cartel OPEC and other producers of oil including Russia has now broken down the partnership that was being called OPEC+ even though the group had reduced production of oil globally for more than three years to prop up prices that tanked in 2013.
By Monday, days after the break down of negotiations between OPEC and Russia and after Saudi Arabia and Russia exchanged heated statements over oil price and supply, the global price of crude oil dropped by as much as 31 per cent. The breakdown of talks was an additional blow to the global oil industry that was already reeling over concerns because of the spread of the coronavirus.
Saudi Arabia has been able to play a dominant role among the oil producing countries of the world because of its additional and spare capacity to produce oil – which is higher than all oil producers including Russia. At a time when price of crude is get increased because of shortage in supply, additional supply can dampen the rise. This is the power that is now being wielded by Saudi Arabia to pile up financial pressure on on other producers.
(Source:www.bloomberg.com)
While achieving the additional capacity of oil production is something that will take years to achieve and will need billions of dollars in investment, this move by the Saudi establishment indicates that the Crown Prince of Saudi Arabia Mohammed bin Salman wants to stay on his aggressive stance responding to the negotiations between OPEC and Russia last week.
This order to Aramco to increase production capacity for the first time in more than a decade was given by the energy ministry of the kingdom which is headed by Prince Mohammed’s half-brother. The ministry said in a statement that Aramco – the largest exporter of oil in the world, has been asked to increase its production capacity from 12 million barrels a day to 13 million barrels a day.
“The company is exerting its maximum efforts to implement this directive as soon as possible,” Aramco Chief Executive Officer Amin Nasser said in a separate statement.
The company did not specify the time frame that it has set to achieve the increased capacity or the amount of investment that would be required to achieve it.
“To add a million barrels per day is a very major undertaking,” said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy. Mills said that it existing plans for big developments that need several years of work could be fallen back upon by Aramco.
There was no agreement on deepening of oil production cuts at the meeting of the OPEC+ coalition in Vienna last week aimed at further increasing global price of crude and petroleum. The failure of talks between the oil cartel OPEC and other producers of oil including Russia has now broken down the partnership that was being called OPEC+ even though the group had reduced production of oil globally for more than three years to prop up prices that tanked in 2013.
By Monday, days after the break down of negotiations between OPEC and Russia and after Saudi Arabia and Russia exchanged heated statements over oil price and supply, the global price of crude oil dropped by as much as 31 per cent. The breakdown of talks was an additional blow to the global oil industry that was already reeling over concerns because of the spread of the coronavirus.
Saudi Arabia has been able to play a dominant role among the oil producing countries of the world because of its additional and spare capacity to produce oil – which is higher than all oil producers including Russia. At a time when price of crude is get increased because of shortage in supply, additional supply can dampen the rise. This is the power that is now being wielded by Saudi Arabia to pile up financial pressure on on other producers.
(Source:www.bloomberg.com)
