Page 5 - DMEA Week 33 2022

DMEA COMMENTARY DMEA

Free cash flow (FCF) increased from $22.6bn expansion plans and output will ramp up to “a
to $34.6bn, and the company continues to pay sustainable rate” of 2 bcf (57 mcm) per day by
the $18.75bn per quarter dividend enshrined in 2030, providing feedstock for hydrogen and
its initial public offering (IPO), though with the ammonia production and help satisfy expand-
state still owning 94.3% of the company directly, ing local demand.
and another 4% through the Public Investment As in Q1-2022, the company provided an
Fund (PIF), just $319mn per quarter goes to update on the Hawiyah Unayzah Gas Reservoir
non-state entities and investors. Storage project, noting that it has reached “an
With return on average capital employed advanced stage, with the injection phase nearing
(ROACE) for Q2-2022 increasing to 31.3%, up completion”. The facility is seen providing up to
14.6% y/y, Aramco reiterated capital expendi- 2 bcf (57 mcm) per day of gas for reintroduction
ture (capex) guidance for 2022 at $40-50bn, the to the Master Gas System by 2024.
largest capital programme in its history, $18bn
more than last year and considerably more Downstream
than any other NOC or IOC, though it noted it In the downstream, Aramco announced that Aramco has
would be at the lower end of this range. Capex its long-awaited, 300,000 bpd Pengerang Pet-
for Q2-2022 was up by 25% y/y to $9.4bn. rochemical Co. (PRefChem) facility in Malay- said that work
sia had finally begun operations in May, noting
Operations that it would ramp up to full capacity by the end to integrate the
Nasser was in a buoyant mood, saying that Ara- of the year. operations of
mco expects oil demand “to continue to grow The plant’s development was hampered by a
for the rest of the decade, despite downward eco- string of accidents since Aramco made a $7bn SABIC is “ahead
nomic pressures on short-term global forecasts.” investment to acquire a 50% stake in 2018.
However, he added, “while there is a very Once at capacity, the PRefChem plant will of schedule”
real and present need to safeguard the security take Aramco’s net capacity from international
of energy supplies, climate goals remain critical, refining joint ventures (JVs) to 1.52mn bpd in
which is why Aramco is working to increase addition to its 1.46mn bpd domestic wholly
production from multiple energy sources – owned slate and another 906,000 bpd of capacity
including oil and gas, as well as renewables and at domestic JV refineries.
blue hydrogen.” Meanwhile, Aramco said that work to inte-
The company said it continued to make pro- grate the operations of Saudi Basic Industries
gress to expand maximum sustainable capac- Corp. (SABIC), in which it acquired a 70%
ity (MSC) from 12mn barrels per day (bpd) to stake for $69bn in 2019, is “ahead of schedule”
13mn bpd by 2027. Total hydrocarbon produc- with synergies offered across procurement,
tion during Q2-2022 averaged 13.6mn barrels stream integration, feedstock optimisation and
of oil equivalent per day (boepd), up 600,000 maintenance activities. Rights to polymer and
boepd on Q1-2022. No breakdown was offered monoethylene glycol (MEG) from PRefChem
for oil and gas, but data seen by NewsBase sug- have also been transferred to SABIC.
gests that Aramco’s crude oil production aver- Amid buoyant operational and financial per-
aged 10.3mn bpd, a slight increase on Q1-2022, formance, Aramco has cash on the hip and has
when output averaged 10.22mn bpd. paid down previous debts, reducing its gearing
In terms of gas development, Aramco said ratio – the ratio of net debt to net debt plus total
that it was “progressing towards increasing equity – to 7.9% from 14.2% at the end of 2021.
production” as work continues to construct the Upstream is the company’s bread and but-
3.1bn cubic feet (88mn cubic metres) per day ter, though, and the MSC expansion projects
Jafurah Gas Plant. Aramco said it is expected to including the crude increment programmes at
be completed in two phases by 2027, with the the Berri, Dammam, Khurais, Marjan and Zuluf
unconventional Jafurah field seen beginning oilfields, targeting 1.5mn bpd of new output, are
production in 2025. likely to account for the majority of its capex for
The field is the key focus of Aramco’s gas years to come. ™

Storage tanks at Ras Tanura port (Photo: Saudi Aramco)

Week 33 18•August•2022 www. NEWSBASE .com P5