Rystad Energy comments on Saudi Aramco's promise to restart oil production
Published by Nicholas Woodroof,
Editor
Oilfield Technology,
“Don’t get too excited. There is clear risk of a slower restart of Saudi Arabian oil production despite the optimistic guidance by Saudi Aramco.”
The national oil company Saudi Aramco reassured markets on Monday night at its highly-anticipated press conference when it announced that around 40% of the 5.7 million bpd shut-in oil production has now been restored after the attack. Furthermore, the company expects the Abqaiq oil processing facility to reach full operational capacity by the end of September.
In a note to clients, Tonhaugen said it would be prudent to remain cautious about the guidance. Rystad Energy estimates that as much as 1.6 million bpd of Arab Light and 0.35 million bpd of Arab Extra Light production will remain shut-in on average for the months of September and October, with full restoration of pre-attack processing capacity only returning as we approach the end of the year.
“In our view, there is a clear risk of a slower resumption towards full capacity,” Tonhaugen added. “Repairs to the damaged spheroids and stabilisation towers involve, to our understanding, access to expertise and spare parts which would take time to procure. Unless repairs happen much quicker than we expect, we estimate that the Abqaiq processing facility will only reach 90% capacity by mid-November. The outage would then be reduced to 0.5 million bpd for the month of November at 5.2 million bpd production. For now, we expect production to remain slightly below full capacity for December.”
Rystad Energy has developed two production ramp-up scenarios for Saudi Arabia based on the Kingdom’s current production, spare capacity, and plans by Saudi Aramco to restart production.
In Rystad's “slow restart” case, the processing facility will reach only 45% of capacity by the end of September (versus 40% currently) and 65% by the end of October.
In the “quick restart” case, the processing facility reaches 65% capacity by the end of September and 100% by the end of October.
“Markets are breathing a ‘sigh of relief’ today, which is also reflected in Brent futures sliding to sub US$64 per barrel. But we caution traders about becoming too sanguine,” Tonhaugen said.
Rystad Energy estimates that Saudi Arabia has spare crude production capacity to the tune of 1.4 million bpd. However, much of this capacity is concentrated in the Ghawar and other onshore fields which feed into the damaged Abqaiq processing facility. Several other onshore fields are likely already operating at maximum capacity.
“In other words: There’s a limit to the amount of lost production that Aramco can compensate for,” said Tonhaugen.
Read the article online at: https://www.oilfieldtechnology.com/special-reports/19092019/rystad-energy-comments-on-saudi-aramcos-promise-to-restart-oil-production/
You might also like
Halliburton launches Intelli portfolio of wireline conveyed diagnostic well intervention services
Halliburton Company has announced it has introduced the Intelli suite of diagnostic well intervention wireline logging services.