Saudi Arabia’s oil and natural gas production and drilling activities are unaffected by crude prices at current levels, the state-run producer’s chief executive officer said, signaling that the world’s biggest oil exporter will continue to protect its market share.
Saudi Arabian Oil Co., known as Saudi Aramco, will keep investing in oil projects for the long term, and its sales to buyers in East Asia are rising, Amin Nasser told reporters Wednesday at a signing ceremony for a gas-processing plant near the eastern city of Jubail.
Aramco is still working on plans for an initial public offering and is studying whether to list shares on an overseas stock exchange as well as in Saudi Arabia, he said.
“We are not worried — the number of our customers in Asia is growing, and different customers see big value in doing business with Saudi Aramco,” Nasser said. “Compared to the beginning of the year, oil prices are continuously improving.”
Saudi Arabia has been pumping at near-record levels to defend sales in Asia, its biggest market, amid an increase in global supply from high-cost producers including some U.S. shale drillers. The kingdom led the Organization of Petroleum Exporting Countries in December to abandon limits on output, and benchmark Brent crude tumbled to a 12-year low in January.
Brent futures have risen more than 70 percent since then as a slowdown in U.S. drilling and supply disruptions in Libya, Nigeria and Canada help balance the market. Brent for September settlement was down 45 cents at $46.21 a barrel in London at 3:19 p.m. local time.
Saudi policy partly reflects the kingdom’s relations with Iran, a regional rival that also targets Asian markets and has ramped up output since international sanctions were lifted in January. Saudi officials in April quashed an effort by major oil producers in Doha to freeze output after Deputy Crown Prince Mohammed bin Salman said there should be no deal without Iran’s participation. Iran, a fellow OPEC member, says it has the right to reclaim the market share it lost under sanctions.
Prince Mohammed, the 30-year-old son of King Salman, is leading a shake-up of the Saudi economy that is to include the sale of up to 5 percent of Aramco by 2018. The prince has said he expects the value of the company to exceed $2 trillion as the nation prepares what could be the world’s largest IPO.
Nasser made his remarks at a contract-signing ceremony for the Fadhili offshore gas plant. India’s Larsen & Toubro secured a contract to build the facility, which will process as much as 2.5 billion cubic feet per day after its completion by the end of 2019, Aramco said in a statement. Aramco’s total gas-processing capacity will reach 18 billion cubic feet per day by 2020, Nasser said, up from 12 billion last year.
Engie of France and Saudi Electricity Co. were awarded a contract for a power plant at Fadhili. The entire Fadhili project will cost more than 50 billion riyals ($13.3 billion), Nasser said.
(Updates with IPO details in seventh paragraph; planned gas output in eighth.)
–With assistance from Sam Wilkin