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which is designed to help it raise output capacity company is still working on a plan to achieve this
to 5mn bpd by 2030, with the company this week increase as maintaining production at mature
announcing more than $760mn in contract assets and tapping the Jafurah basin for gas take
awards to achieve this. priority.
Meanwhile, for Riyadh, the heightened ten- Speaking to NewsBase, Ian Simm, Prin-
sion is more based in reputation and control. cipal Advisor at consultancy IGM Energy
Saudi Arabia’s baseline of 11mn bpd has little said: “This deal lets both the Saudis and the
bearing in reality – the Kingdom has exceeded Emiratis to claim victory. From Saudi Ara-
this level only twice in history – in November bia’s perspective it was able to extend the deal
2018 and April 2020, when it hit 12.1mn bpd as while only allowing baseline level alterations
it launched a price war with Moscow, sending for key allies. Even then, the move will have
prices into freefall. In October 2018, it was run- little bearing on Iraq, which has routinely
ning at 10.77mn bpd. overproduced.”
However, Moscow and others have been Algeria and Nigeria have spoken of their
pushing to step up output and Riyadh could not displeasure about the move though, saying that
be seen to take a secondary position to Russia. allowing the bigger producers to raise their base-
That said, the closer Saudi production comes to lines unfairly penalises those with output lev-
its OPEC+ quota, the less flexibility it can wield els. However, keeping the top exporters happy
to keep others in line. appears to have won the day.
Meanwhile, state-owned Saudi Aramco has a Meanwhile, Simm added: “With Saudi
maximum sustainable capacity (MSC) of 12mn unlikely to utilise any of its additional 500,000-
bpd, which it has been instructed to increase to bpd wiggle room for the time being, allowing
13mn bpd by the Ministry of Energy. other members to add around 1.1mn bpd to
The potential upside for Saudi Arabia is that the market from May next year seems like a
once Aramco completes the projects to raise deal worth making to maintain co-operation,
MSC, it can produce at a higher level without providing they are able to keep a lid on the
being seen to flout the quotas. However, the discontent.”™

Week 29 22•July•2021 www. NEWSBASE .com P5