DUBAI: Saudi Arabia, the world’s largest oil exporter, is reviewing its oil expansion projects and may delay some plans to boost output as prices fall, said an official from the country’s state-owned oil company.
“We’re currently reviewing our investment plan and the schedules for our projects,” Hasan al-Zahrani, general manager of project management at Saudi Arabian Oil Co (Saudi Aramco), said yesterday. “Once the review is complete we’ll decide what projects we need to defer, or speed up.”
Oil companies such as Aramco are reviewing projects and delaying project tenders to take advantage of falling prices for equipment and raw materials such as steel and cement to reduce overall cost as the world financial crisis is slowing global demand, in turn subduing prices.
At the same time, multibillion-dollar developments to drill for oil and gas to stem natural depletion and boost output are being threatened by a slump in oil revenues for producers as crude prices have fallen about 62% in four months.
Oil producers have warned that if crude prices remain at such low levels for a sustained period, there would be little incentive to invest in expensive oil and gas field developments.
“The fall in commodity prices and in oil prices is impacting our projects,” al-Zahrani said, speaking on the sidelines of a conference held by Middle East Economic Digest in Dubai.
Saudi-based Al Riyadh daily reported yesterday Aramco is preparing to retender contracts to develop its Manifa oil field, the company’s largest-ever offshore project worth an estimated $10bn that’s aimed at adding 900,000 bpd of Arabian heavy crude production by mid-2011.
According to the paper, Aramco decided to cancel a contract for Manifa previously awarded to Snamprogetti, part of Saipem, which will now be invited to bid again for the project along with Bechtel Group, Technip and Foster Wheeler.
Al Zahrani said he was unable to provide a completion date for the Manifa project and declined to comment on the cancellation of Snamprogetti’s contract.
Other Aramco projects are also facing delays, including two export refineries to be built at Jubail on the Gulf and at Yanbu on the Red Sea in joint venture with Total and ConocoPhillips respectively. – Zawya Dow Jones
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