Page 4 - MEOG Week 25

MEOG Commentary MEOG

Aramco looks to

retrench after the

oil price collapse

The oil giant is looking at making staff cuts and is
pulling back on developing its oil and gas deposits.

saudi araBia ThE world’s biggest oil-producing company, suspended work at the two platforms for about
Saudi oil giant Aramco, has started laying off a year, according to filings from the contractors.
hundreds of employees – mostly foreign staff The producer is also quoted as delaying a related
What: – across several divisions in response to the oil $18 billion oil and gas expansion project by at
Saudi Aramco to pull price crash. least six months.
back on commitments. Aramco, which employs nearly 80,000 peo- In early May, offshore drilling contractor
ple, annually revises down its staffing, but this Noble Corporation plc said that its jack-up rig
Why: year’s job cuts are larger than before, Bloomb- Noble Scott Marks, working at the Marjan field
The drastic fall in revenue erg’s sources said, while Aramco commented on in the Persian Gulf, would stop operations for a
from the oil price fall has the report that it was not providing at this point year, beginning in mid-May. The contract sus-
hit its balance sheet. details about the actions it had taken to boost pension was expected to enter into force after the
competitiveness and resilience. jackup rig completes the well it was drilling at the
What next: The job losses were said to be mostly based time. Noble Corporation has the right to market
Further details of the on performance and similar cuts happen every the rig in pursuit of other work opportunities in
staff lay-offs are likely to year. however, this year’s cuts seem to be bigger the region, it said.
become known soon. than normal, and one source estimated that 500 Last week, Dubai-based Shelf Drilling said
people had been laid off. that operations at its offshore rig high Island IV,
“Aramco is adapting to the highly complex contracted to Aramco, would be suspended at
and rapidly changing business environment,” the the client’s request for as long as a year.
firm said in a statement. “We are not providing The planned expansion in which Saudi Ara-
information regarding the details of any action mco last July awarded 34 contracts worth a total
at this time, but all our actions are designed to of US$18 billion would boost the oil production
provide us more agility, resilience and competi- capacity of the two fields by 550,000 bpd in order
tiveness, with a focus on long-term growth.” to sustain its 12-million-bpd production capac-
Saudi Aramco’s first-quarter net income ity by the early 2020s to a combined 1.35 million,
dropped to US$16.66 billion from US$22.2 according to the International Energy Agency.
billion for Q1 2019 due to the coronavirus pan- The project would also boost gas flows by 2.5
demic and the oil price crash that Saudi Arabia billion standard cubic feet a day, sending gas by
itself helped to worsen with the oil price war in pipeline from Marjan to an onshore processing
March. plant at Berri for domestic use.
The Saudi oil giant is not the only major oil The respective quantities would see the off-
firm to slash jobs in order to cut costs during this shore Marjan field increase by 300,000 bpd of
crisis. Arabian Medium Crude Oil, while output at
Earlier this month, super-major BP said it the offshore Berri field will rise by 250,000 bpd
would cut 10,000 jobs or around 15 per cent of of Arabian Light Crude— that would help to
its workforce. replace production capacity lost from ageing
oilfields.
Brakes go on The pullback marks a rare pause in Aramco’s
Meanwhile the world’s biggest oil exporter is hit- efforts to drill wells, discover fields and expand
ting the brakes in developing some of its crude known deposits to replace the barrels it’s pump-
and natural gas deposits, idling two offshore ing from the planet’s largest conventional oil
drilling rigs as the coronavirus batters energy reserves. The halts also raise questions about the
use. kingdom’s supply of natural gas, much of which
State-run producer Saudi Aramco has is found in crude reservoirs. Saudi Arabia needs

P4 www. NEWSBASE .com Week 25 24•June•2020