Page 5 - MEOG Week 20 2022

MEOG COMMENTARY MEOG

Haradh gas increment programme and Aramco provided an update on Saudi Arabia’s plans Source: Saudi Aramco
anticipates that it will be operational next year. to increase its maximum sustainable capacity
This followed announcement in its 2021 annual (MSC) of oil production.
report that a gas storage project at the Hawiyah Speaking during the MGPC event in Bah-
Unayzah reservoir is nearing the final engineer- rain, he said that MSC would rise from the cur-
ing design phase, with the project seen providing rent level of around 12.1mn bpd to 13.3-13.4mn
up to 2 bcf (57 mcm) per day of gas for reintro- bpd by late 2026 or early 2027, exceeding the
duction to the Master Gas System by 2024. 13mn bpd directive the Ministry of Energy gave
Aramco in early 2020. He said the additional
Listing ATC capacity would come from the development of
The day after its Q1 report was released, reports the PNZ.
emerged, suggesting that Aramco is consid- “We are going to [pump] 13.3-13.4mn bpd
ering the IPO of Aramco Trading Co. (ATC), [with the additional capacity] mostly from the
with banks having been hired to prepare for the Neutral Zone by the end of 2026-27 … We can
potential listing. continue maintaining sustainable production.
Sources close to proceedings told Bloomberg Like any other producer. We’re working in a mar-
that banks including Goldman Sachs, JPMor- ket where backwardation is more a blessing than
gan Chase and Morgan Stanley have been hired a curse,” he said.
to carry out studies, with ATC’s valuation esti- He reiterated calls for other countries and
mated at up to $30bn. The sources said that the companies to invest in upstream expansion,
company could sell up to 30% in the trader. blaming years of underinvestment for current
So far this year, ATC has signed deals with high prices, noting that even for Saudi Arabia,
Germany’s Klesch Group and Red Sea National capacity expansion required a long lead time.
Petrochemicals Co. (Red Sea) for a combined He mocked comments from IOCs who he said
210,000 bpd of crude to downstream facilities have urged short-term investment in existing
in Denmark and Egypt, while discussions are fields and fields that will have a quick payback
understood to remain ongoing to supply crude period rather than new assets, saying that such
feedstock to Oman’s new Duqm refinery, which comments give the “wrong signal” to the market.
opens in 2023. “It is about pre-engineering, pipes, wells to be
Plans for the listing follow Aramco’s success- drilled. It’s not switch on, switch off, if you don’t
ful close last year of two lease-and-lease-back do it properly you look inefficient,” Prince Abdu-
deals for its oil and gas pipelines infrastructure laziz added.
arms, which netted the Saudi firm nearly $28bn Current market headwinds at least provide an
without having to give up any operational con- opportunity for the world’s top oil producers to
trol or ownership of the assets. build a war chest with which to fund upstream
expansion. However, there are none quite
Expanded MSC push like Aramco. The company reiterated capital
Aside from Aramco’s corporate news, the King- expenditure (Capex) guidance for 2022 at $40-
dom’s industry overseer-in-chief, Energy Min- 50bn, $18bn more than last year and considera-
ister Prince Abdulaziz bin Salman Al Saud, bly more than any other NOC or IOC.™

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