27 January 2015, News Wires – Saudi Arabian state company Saudi Aramco plans to review its oil and gas development projects, slowing down some and renegotiating some contracts in response to falling oil prices.
“We will have to adjust to the realities of today, we will push some projects into the future, we will stretch some of them, we will renegotiate some contracts,” Reuters quoted Aramco chief executive Khalid Al-Falih as saying at a conference in the capital, Riyadh.
The comments are the first official acknowledgement of a reassessment of oil development planning by Opec’s biggest producer, which has maintained a costly spare production capacity of about 3 million barrels per day of crude in recent years and is in the midst of a massive gas investment programme to meet soaring domestic needs.
Falih described the “lower price environment” as “an opportunity for the industry as a whole to sharpen our pencils”. He thought producers “got spoiled with $100 (per barrel) oil and we were focused on building capacity and we lost focus on fiscal discipline”.
The price falls have nothing to do with Saudi policy, he said, predicting that the price of oil will reach a level where it “ultimately balances supply and demand”.
Falih did not specify what projects and plans would be affected by Aramco’s review. Earlier this year, Aramco was reported to have asked Saipem to revisit a recently awarded contract to expand capacity at the Khurais field by one quarter to 1.5 million bpd, with the aim of stretching out the project timetable.