Saudi Aramco, the world’s largest crude exporter, awarded $18 billion in contracts to boost output capacity at two offshore oil fields even as the kingdom and its OPEC partners restrict production.
Saudi Arabia’s state oil company will add a combined 550,000 barrels a day of crude-production capacity at its Marjan and Berri fields, it said Tuesday in a statement. It will raise capacity for natural gas output at the deposits by 2.5 billion standard cubic feet a day. Aramco awarded 34 contracts, with half of them going to Saudi firms, according to the statement.
McDermott International Inc., Saipem SpA of Italy, Norway-listed Subsea 7 SA, Tecnicas Reunidas SA of Spain and China Petroleum & Chemical Corp. were among the companies that won contracts, according to a photo that Aramco provided of the signing ceremony. India’s Larsen & Toubro Ltd. and Hyundai Engineering & Construction Co. of South Korea also secured deals.
The statement itself didn’t identify the 16 companies that were awarded contracts, nor did it specify when the Marjan or Berri projects would be completed.
Aramco, known officially as Saudi Arabian Oil Co., plans to bring about 1 million barrels a day of oil capacity online by 2023 in order to compensate for reductions at some other fields. Aramco plans to maintain production capacity of 12 million barrels a day even though it regularly pumps about 10 million barrels daily.
Saudi Arabia, with the world’s biggest reserves of conventional crude, has long drawn on its prolific deposits to help balance global oil markets. Riyadh seeks to keep some spare capacity ready and available for rapid use in order to respond quickly to any shortages. The Organization of Petroleum Exporting Countries and allies including Russia agreed this month to extend production cuts into 2020 to try to prop up prices amid surging U.S. supplies.
“These two programs will significantly enhance Saudi Aramco’s oil production and gas processing capabilities,” Chief Executive Officer Amin Nasser said in the statement. The field expansions will help meet “growing long-term demand for petroleum,” he said.
Marjan’s development will add capacity of 300,000 barrels a day of Aramco’s Arabian Medium crude blend, according to the statement. The Berri project will contribute 250,000 barrels a day of additional capacity for Arabian Light crude. Aramco produces more Arabian Light than any other grade.